2016 (11) TMI 1298 - AT - Income Tax

Addition of unexplained cash deposits in Bank Account - Held that - In case cash was available with the assessee out of withdrawals made from the bank account, where was the necessity to draw ₹ 1000/- to ₹ 2000/- from day-to-day and even on one particular day, the withdrawal of money by two or three different transactions through ATM. The assessee has deposited sum of ₹ 50,000/- on 26.03.2007 and further sum of ₹ 30,000/- on 30.03.2007, before depositing sum of ₹ 14,600/- on 05.02.2007, against which there were no cash withdrawals in intervening dates. The availability of cash in the hands of assessee in these circumstances is thus, doubted except as referred in the paras above that the assessee had made cash withdrawals of ₹ 15,000/- on 05.06.2006 and ₹ 16,000/- on 09.06.2006, which can be said to be available with the assessee. Coming to the second stand of assessee that the source of cash deposit in the bank account is out of withdrawals made by the husband of assessee. The assessee has filed on record the bank statement of her husband. Undoubtedly, there are cash withdrawals from the said bank account but the withdrawals are similarly made by her husband in the range of ₹ 2000/- to ₹ 5000/- and on some occasions higher withdrawals of ₹ 10,000/- to ₹ 15,000/- has been made. However, the explanation filed by the assessee cannot be accepted in the entirety as the household expenses are also to be met out of withdrawals made by the assessee and her husband. Accordingly, the plea of the assessee is accepted to the extent of availability of cash of ₹ 1 lakh from her husband. Further, sum of ₹ 31,000/- out of withdrawals from the account of assessee is accepted and addition to that extent is deleted. However, the addition to the extent of ₹ 69,900/- is confirmed. - Decided partly in favour of assessee

Summary

Issues:
1. Addition of ?2,00,900 as unexplained cash deposits in bank account.
2. Denial of liability to pay interest under sections 234B and 234C of the Income-tax Act, 1961.

Issue 1: Addition of ?2,00,900 as unexplained cash deposits in bank account:
The appellant contested the addition of ?2,00,900 made by the Assessing Officer, claiming it to be arbitrary and based on surmises. The CIT(A) rejected the appellant's explanation that the deposits were made from withdrawals by her husband, citing lack of evidence. The appellant argued before ITAT that the cash deposits were sourced from withdrawals made by both the appellant and her husband. The ITAT analyzed the bank account statements and withdrawals made by the appellant and her husband. The ITAT accepted that ?31,000 was available as cash in hand from the appellant's withdrawals but doubted the availability of the remaining amount. Regarding the husband's withdrawals, the ITAT partially accepted the appellant's claim, allowing ?1 lakh as available cash from her husband's withdrawals. Ultimately, the ITAT confirmed the addition of ?69,900 and partly allowed the appeal.

Issue 2: Denial of liability to pay interest under sections 234B and 234C:
The appellant denied liability to pay interest under sections 234B and 234C of the Income-tax Act, 1961. The ITAT dismissed this ground, stating that the levy of interest was consequential. Therefore, the ITAT upheld the interest charged under sections 234B and 234C. As a result, the appellant's appeal on this issue was dismissed.

In conclusion, the ITAT partially allowed the appeal regarding the addition of unexplained cash deposits in the bank account, confirming a portion of the addition while partially accepting the appellant's explanation. The ITAT dismissed the appellant's denial of liability to pay interest under sections 234B and 234C, upholding the levy of interest as consequential.