2022 (8) TMI 1396 - AT - Income Tax

Unexplained cash credit u/s 68 - cash deposits in two savings bank accounts - HELD THAT - As observed that assessee has deposited cash of Rs. 10, 00, 000 in the account held with Central Bank of India at one go on 20.12.2019 - On a perusal of the conveyance deed said deed was executed on 06.01.2010. Therefore assessee s claim that an amount of Rs.10, 00, 000 was received towards sale consideration of the land prior to execution of conveyance deed and deposited in bank account on 30.12.2019 to some extent is believable. Benefit of doubt can be given to the assessee. This is so because AO neither in course of assessment proceedings nor during remand has been able to dislodge assessee s claim by making any inquiry. Cash deposits in the account maintained with Central Bank of India stands explained. Balance amount deposited in the account maintained with Kotak Mohindra Bank Rohtak before rejecting the affidavits as false the Assessing Officer must make reasonable enquiry with the persons filing affidavits. This has not been done by the AO in the present case. On an analysis of the bank statement it is observed that the assessee has not only made cash deposits but has also made cash withdrawals on various dates - AO also accepted the aforesaid factual position. However he didn t make addition on peak basis on the plea that period of circulation of cash cannot be ascertained. This in my view is unacceptable. When the bank statement was available before the AO he cannot again take the plea that the period of circulation of money is not ascertained. Assessee appeal allowed.

Summary

Issues:
Appeal against addition of unexplained cash credit under Section 68 of the Income-Tax Act, 1961 for assessment year 2010-11.

Analysis:
1. The assessee contested the addition of Rs.25,20,550 as unexplained cash credit before the Commissioner of Income-Tax (Appeals) and subsequently before the Appellate Tribunal. The Assessing Officer added the amount to the assessee's income under Section 68 of the Act due to failure in explaining the source of cash deposits in the bank accounts.

2. The counsel for the assessee argued that documentary evidence was provided to support the source of cash deposits, including an amount received from the sale of ancestral land and funds received from various individuals. The counsel also contended that the bank statements alone cannot be considered as the assessee's books of accounts. The counsel cited relevant case laws to support the contentions.

3. The Departmental Representative relied on the Assessing Officer's and Commissioner's observations, rejecting the assessee's claim that no addition under Section 68 could be made based on bank statements. The Departmental Representative referred to a decision by a coordinate Bench to support this stance.

4. Upon reviewing the submissions and evidence, the Appellate Tribunal noted that the assessee deposited Rs.25,20,000 in two bank accounts during the relevant year. The Tribunal found the explanation for a portion of the deposit in one account plausible, as it was related to the sale of ancestral land. However, for the remaining amount deposited in the second account, the Tribunal found the Assessing Officer's rejection of the affidavits submitted by the assessee without proper inquiry unacceptable.

5. The Tribunal concluded that the addition of Rs.15,20,000 representing cash deposits in the second bank account was unsustainable due to lack of proper inquiry by the Assessing Officer and inconsistencies in the assessment. Consequently, the Tribunal deleted the addition made by the Assessing Officer, thereby allowing the appeal and ruling in favor of the assessee.

6. The Tribunal did not delve into the applicability of Section 68 to the cash deposits in the bank accounts, as the issue was decided on its merits. The Tribunal pronounced the order in favor of the assessee, allowing the appeal and deleting the addition made by the Assessing Officer.

This detailed analysis of the judgment highlights the key arguments, evidence, legal precedents, and the Tribunal's decision regarding the addition of unexplained cash credit under Section 68 of the Income-Tax Act for the assessment year in question.