2022 (1) TMI 1354 - AT - Income Tax

Unaccounted and unexplained of Cash deposit out of the cash withdrawals - HELD THAT - Addition as made and confirmed by the authorities below, is not justified. No reason is assigned for not accepting the contention of the assessee that deposit was made out of cash withdrawal. AO has failed to bring any evidence suggesting that the cash so withdrawn from the account was expended for any other purpose. Therefore, in the absence of such material the findings of authorities below cannot be sustained. AO is hereby directed to delete the addition. The ground is allowed.

Summary

Issues Involved:
1. Addition of Rs. 10,00,000/- made by the Assessing Officer.

Analysis:
1. The case involved an appeal against the order of the Commissioner of Income-tax (Appeals) pertaining to the assessment year 2016-17. The primary issue raised by the assessee was the addition of Rs. 10,00,000/- made by the Assessing Officer, which was the only effective ground in the appeal.

2. The Assessing Officer observed that the assessee had deposited Rs. 10,00,000/- in the bank account during the relevant year. The assessee explained that the cash deposit was from cash withdrawals made during the year, supported by documentary evidence such as bank statements. However, the Assessing Officer did not accept this explanation and proceeded to make the addition.

3. The Commissioner of Income-tax (Appeals) sustained the addition, dismissing the appeal of the assessee. The appellant contended that the authorities were unjustified in making the addition and argued that the source of the deposit was adequately explained with documentary evidence, including bank statements.

4. The Assessing Officer justified the addition by stating that the cash deposits were from unaccounted money and remained unexplained, citing a judgment of the High Court which held similar cash deposits as unexplained income. The Commissioner upheld the addition based on the AO's findings and the failure of the appellant to provide sufficient evidence to support their claim.

5. The Tribunal, after considering the submissions and evidence, concluded that the addition was not justified. It was noted that the Assessing Officer failed to provide any evidence contradicting the appellant's explanation that the deposit was made from cash withdrawals. Therefore, in the absence of such evidence, the findings of the authorities below were deemed unsustainable, and the Assessing Officer was directed to delete the addition.

6. The Tribunal allowed the appeal of the assessee, emphasizing the importance of providing supporting evidence and justifications for additions made by the Assessing Officer. The decision highlighted the necessity for the Assessing Officer to substantiate their findings with concrete evidence to uphold additions in such cases.