2019 (11) TMI 1404 - AT - Income Tax

Unexplained investments u/s 69 - Cash deposits made by the assessee on various dates as presumed from earlier withdrawals - HELD THAT - AO has not disputed the existence of Bank accounts and withdrawal from the same. The earlier withdrawal of ₹ 50 lakhs from the Bank account on 31/12/2013 or withdrawal from various Bank accounts on different dates is not disputed. The assessee might have kept the cash withdrawals with him and redeposited into various Bank accounts on a later date. It is quite possible that the assessee might have withdrawn the cash for some purpose but the same remains to be utilized for one reason or the other and the cash continues to be remained with him. Cash withdrawals from Bank accounts continues to remain as cash balance with the assessee even for many months and sometimes cash withdrawn is utilized on the same day. All these probable aspects of the matter cannot simply be ignored or brushed aside but the fact remains that the cash has been withdrawn from the Bank and that is not at all disputed. Explanation of the assessee deserves to be accepted, unless contrary is brought on record which has not been done in this case Cash deposits made by the assessee on various dates should be reasonably presumed that it is from earlier withdrawals made by the assessee on various dates. Accordingly, we delete the entire addition of ₹ 32.5 lakhs made by the Assessing Officer. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Sustaining the addition of ?32,50,000/- as unexplained investments under Section 69 of the Income Tax Act, 1961.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was filed with a delay of 59 days. The assessee submitted a condonation petition supported by an affidavit, stating that he is a cancer patient undergoing regular treatment, which left him physically and mentally exhausted, thus causing the delay. The Revenue did not raise serious objections to this petition.

The Tribunal examined the condonation petition and found that the assessee’s medical condition constituted a "good and sufficient cause" for the delay. Consequently, the delay was condoned, and the appeal was admitted for adjudication.

2. Sustaining the Addition of ?32,50,000/- as Unexplained Investments:
The assessee challenged the addition of ?32,50,000/- made by the Assessing Officer (AO) under Section 69 of the Income Tax Act, 1961, which was sustained by the Commissioner of Income Tax (Appeals) [CIT(A)].

Facts of the Case:
The assessee, deriving income from partnership, house property, long-term capital gains, and other sources, made several cash transactions and deposits in various bank accounts. The AO treated certain cash deposits as unexplained investments due to the lack of proximity between the withdrawals and deposits.

Key Transactions:
- Withdrawal of ?50,00,000/- on 31/12/2013 from Union Bank of India.
- Deposits:
- ?3,00,000/- on 02/04/2014
- ?1,50,000/- on 27/08/2014
- ?50,00,000/- on 26/09/2014

The AO argued that the assessee did not file a wealth tax return showing the cash in hand, thus questioning the availability of cash for the deposits. The AO allowed credit for ?23,50,000/- and treated ?28,50,000/- as unexplained sources.

Assessee's Arguments:
The assessee contended that:
- The cash deposits were sourced from earlier withdrawals and sales of property.
- The ?50,00,000/- withdrawn on 31/12/2013 was available for the deposits made in 2014.
- The assessee's medical condition and the need for liquid cash for emergencies justified holding large cash amounts.

Tribunal's Findings:
The Tribunal noted that:
- The assessee had indeed withdrawn ?50,00,000/- on 31/12/2013, which was not disputed by the AO.
- There was no evidence that the withdrawn cash was used for other purposes or deposited elsewhere.
- The AO did not provide contrary evidence to dispute the assessee's claim that the withdrawn cash was redeposited.

The Tribunal acknowledged the possibility that the assessee might have kept the withdrawn cash for medical emergencies and other expenses. Given the lack of evidence to the contrary, the Tribunal accepted the assessee's explanation and concluded that the cash deposits were reasonably presumed to be from earlier withdrawals.

Conclusion:
The Tribunal deleted the entire addition of ?32,50,000/- made by the AO, allowing the appeal in favor of the assessee.

Order Pronouncement:
The order was pronounced in the open court on 29th November, 2019.