2015 (5) TMI 1152 - AT - Income Tax

Unexplained investment u/s 69 - cash deposits of ₹ 17,15,169 in the SB A/c of assessee - Held that - On perusal of the bank statement copy, it appears that the entire amount of ₹ 17,15,169 was deposited on 21/06/14 and the entire amount was also withdrawn on the very same day through self cheques. Apart from these deposits, there are no other deposits in the bank account. In fact the bank account copy reveals that virtually there is no other substantial transaction in the bank account apart from the deposits made on 21/06/14. It is also evident that assessee s son was granted visa on 17/12/04 for pursuing higher studies in USA. Though, it may be a fact that assessee s statement could not be cross verified by examining Sri S.N. Murthy as his whereabouts could not be found out, but, that itself will not lead to the conclusion that the statements made by assessee in the affidavit are false when circumstantial evidences as found from the bank account copy and visa granted to certain extent prove the fact that the statements made in the affidavit by assessee cannot be rejected outright and are believable. AO has not found out any other ostensible source of income, apart from source of income disclosed by assessee, which could indicate earning of such huge income by assessee. - Decided against revenue

Summary

Issues:
1. Addition of cash deposits as unexplained investment under section 69.
2. Burden of proof on the assessee to explain the source of cash deposits.
3. Discrepancy in verifying the source of cash deposits by the assessing officer.
4. Consideration of circumstantial evidence in determining the legitimacy of cash deposits.

Analysis:
1. The primary issue in this case revolves around the addition of cash deposits amounting to Rs. 17,15,169 as unexplained investment under section 69 by the Assessing Officer (AO). The Appellate Tribunal ITAT Hyderabad was tasked with reviewing the decision of the Commissioner of Income Tax (Appeals) in deleting this addition.

2. The burden of proof to explain the source of the cash deposits rested on the assessee, who claimed that the amount was deposited by a manpower consultant for the purpose of obtaining an educational visa for his son. The AO, however, disbelieved this explanation due to the unavailability of the consultant for verification.

3. Despite the discrepancy in verifying the source of cash deposits, the Appellate Tribunal considered the circumstantial evidence, including the bank statement showing the deposits and withdrawals on the same day, along with the visa granted to the assessee's son. The Tribunal noted the lack of substantial transactions in the bank account apart from the disputed deposits.

4. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) based on the belief that the statements made by the assessee in the affidavit were credible, given the circumstantial evidence and the absence of alternative sources of income to explain the substantial deposit. The Tribunal concluded that the addition made by the AO was not justified in the peculiar facts and circumstances of the case.

In conclusion, the Appellate Tribunal dismissed the appeal of the department, emphasizing the importance of considering all available evidence and circumstances in determining the legitimacy of cash deposits, especially when the burden of proof lies on the assessee to explain the source of income.