2018 (12) TMI 1646 - AT - Income Tax

Unexplained cash found deposited in the bank account - addition u/s 69 - HELD THAT - Undisputedly the addition in the present case relates to cash found deposited in the bank of the assessee which is equivalent to an investment made by the assessee and therefore there is no error of law having occurred by making the impugned addition u/s 69 which deals with unexplained investments. In view of the above Ground No. 1 raised by the assessee is dismissed No explanation to cash deposits - Cash withdrawal which was attributed to having been retained by the assessee and deposited in the impugned year was 8-9 months old and though the assessee had claimed that the same was kept by her in the form of cash in hand it was noted that despite such huge amount of cash available with her she had taken loans thereafter and even made further withdrawals from the bank of substantial amounts. No explanation for the above has been given by the assessee even before us. We therefore agree with the Ld. CIT(A) that the explanation of the assessee does not appear to be plausible. As rightly held by the CIT(A) merely making cash withdrawals at one point of time cannot be a sole basis for explaining the cash deposit in future. It is the totality of all the facts and circumstances which is to be considered and thereafter a plausible view to be taken on the issue which in the present case we find that the assessee has been unable to offer to justify the cash deposits.- Decided against assessee

Summary

Issues:
- Addition made on account of unexplained cash deposits in the bank account under section 69 of the Income Tax Act.

Analysis:

1. Issue of Unexplained Cash Deposits:
- The A.O. noted unexplained cash deposits of ?20,79,000 in the assessee's bank account, questioning the source of funds.
- Assessee claimed it was from previous year's cash withdrawal for investment not made, remaining as cash in hand.
- A.O. found the explanation implausible due to subsequent loans taken and multiple cash withdrawals.
- Addition of ?20,79,000 was made to the income.

2. Commissioner of Income Tax (Appeals) Decision:
- Assessee's appeal to CIT(A) reiterated the cash was from opening cash in hand, but CIT(A) upheld the addition.
- CIT(A) found the explanation not credible based on bank account analysis showing inconsistent cash flow.
- CIT(A) emphasized that the cash deposits were staggered over months, not aligning with the claimed source.
- Assessee failed to provide substantial evidence to counter A.O.'s findings.

3. Appellate Tribunal Decision:
- Assessee appealed to the Appellate Tribunal challenging the addition under section 69 of the IT Act.
- Tribunal dismissed Ground No. 1, stating the cash deposits were equivalent to investments, justifying the addition under section 69.
- Ground No. 2 was also dismissed as the Tribunal agreed with CIT(A)'s findings of implausible explanation by the assessee.
- Assessee failed to substantiate the source of cash deposits, leading to the dismissal of the appeal.

4. Conclusion:
- The Appellate Tribunal upheld the addition of ?20,79,000 as unexplained cash deposits in the bank account under section 69 of the IT Act.
- The Tribunal found the explanation provided by the assessee to be implausible based on the analysis of cash flow and inconsistent deposit patterns.
- Assessee's appeal was dismissed, affirming the CIT(A)'s decision.