2019 (5) TMI 1902 - AT - Income Tax

Addition in respect of cash deposits in Savings Bank account - proof of availability of cash in hand from maturity of FDRs - HELD THAT - As seen that the assessee was regularly filing returns and balance sheets on year to year basis. The availability of cash in hand from maturity of FDRs in past and re-depositing of proceeds in the bank account in the instant year, cannot be doubted as the factum of maturity of FDRs has not been disputed by the AO. When the Hon ble Kerala High Court in K. SREEDHARAN 1992 (6) TMI 24 - KERALA HIGH COURT has accepted the availability of unutilized cash for four years as reasonable, there is no reason to doubt such availability for two years in the instant case - thus as satisfied that the addition was wrongly sustained, therefore, order to delete the addition. - Decided in favour of assessee.

Summary

Issues:
Confirmation of addition of cash deposits in Savings Bank account

Analysis:
The only issue raised in this appeal pertains to the confirmation of the addition of a specific amount in the Savings Bank account of the assessee. The Assessing Officer (AO) observed that a substantial sum was deposited by the assessee in her account and requested clarification regarding the source of these deposits. The assessee explained that the amount was from the encashment of Fixed Deposits (FDRs) in the previous year. The AO, however, rejected this explanation and made the addition, which was upheld in the first appeal.

Upon review, it was noted that the assessee had a history of filing returns and maintaining balance sheets regularly. The cash in hand from the maturity of FDRs in the past and subsequent redepositing in the bank account in the current year was considered. The Tribunal highlighted that the AO's skepticism regarding the genuineness of the source of deposits, based on the duration the cash was allegedly kept, was unfounded. Citing a precedent from the Hon'ble Kerala High Court, it was emphasized that the availability of unutilized cash for a reasonable period should not be doubted. Consequently, the Tribunal concluded that the addition was unjustified and ordered its deletion.

Additionally, a ground challenging the re-assessment proceedings was not pursued by the appellant and was dismissed accordingly. The appeal was partially allowed, with the order pronounced in the Open Court on a specified date.