2017 (5) TMI 837 - AT - Income Tax

Addition on account of cash deposit in the bank account - unexplained sources - Held that - Whatever contention was raised by assessee that cash belong to Smt. Saraswati Devi who in turn gave Smt. Vidya Devi and then given to the assessee have not been proved through any evidence or material on record. No independent witness has been produced to substantiate the fact that cash was actually given by Smt. Saraswati Devi. How a huge cash is kept by Smt. Saraswati Devi is not explained. If any cash amount is available to mother of the assessee which is alleged to have been given to the assessee, it is not explained why assessee was making deposits in his bank account on different dates of different amount and why full amount was not deposited in his bank account at the earliest. This itself create a serious doubt in the explanation of the assessee of availability of the cash through his grandmother. Filing a copy of ikrarnama and certificate from village Sarpanch will not prove the source of cash deposited in the bank account of the assessee. It therefore stands proved on record that assessee did not produce any evidence of source of cash deposits in his bank account. - Decided against assessee.

Issues Involved:
1. Addition of ?22,16,500/- on account of cash deposit in the bank account.
2. Admission of additional evidence under Rule 46A of the I.T. Rules.
3. Verification of the source of cash deposits.
4. Credibility of the explanation provided by the assessee regarding the source of cash.

Detailed Analysis:

1. Addition of ?22,16,500/- on Account of Cash Deposit in the Bank Account:
The primary issue in this appeal is the addition of ?22,16,500/- made by the Assessing Officer (AO) as undisclosed income under Section 69A of the I.T. Act. The AO noted that the assessee had cash deposits totaling ?25,66,500/- in his bank account with Corporation Bank, Manesar. The assessee claimed that the cash was received from his mother, who in turn received it from her mother (the assessee's maternal grandmother). However, the assessee failed to provide sufficient evidence to substantiate this claim. The AO treated the entire amount as undisclosed income, but the CIT(A) gave partial relief by allowing a benefit of ?3,50,000/- for withdrawals and re-deposits, thus confirming the addition of ?22,16,500/-.

2. Admission of Additional Evidence Under Rule 46A of the I.T. Rules:
During the appellate proceedings, the assessee submitted additional evidence, including an ikrarnama (agreement) and a copy of the bank statement of his grandmother, Smt. Saraswati Devi. The CIT(A) admitted this additional evidence under Rule 46A. The AO objected to the admission of this evidence, arguing that the assessee had not provided sufficient proof of the source of the cash deposits. Despite the objections, the CIT(A) considered the additional evidence but found it insufficient to explain the entire cash deposit.

3. Verification of the Source of Cash Deposits:
The assessee claimed that the cash deposits were sourced from his maternal grandmother, who had received compensation from the Rajasthan Government for land acquisition. The grandmother allegedly withdrew large sums of cash from her bank account, which were then given to the assessee's mother and subsequently to the assessee. However, the AO and the CIT(A) found several gaps and inconsistencies in this explanation. The receipt of compensation by the grandmother remained unverified, no gift deed was executed, and there was a significant time gap between the withdrawals and the deposits. The CIT(A) noted that it was unlikely for an elderly person to keep such large amounts of cash for extended periods without depositing them in a bank.

4. Credibility of the Explanation Provided by the Assessee:
The CIT(A) and the AO both found the assessee's explanation regarding the source of the cash deposits to be unreliable. The assessee failed to provide independent witnesses or substantial evidence to support his claim. The CIT(A) pointed out that the pattern of deposits, with varying amounts on different dates, further weakened the credibility of the explanation. The CIT(A) allowed a benefit of ?3,50,000/- for withdrawals and re-deposits but confirmed the addition of ?22,16,500/- as unexplained cash deposits.

Conclusion:
The appeal by the assessee was dismissed as the assessee failed to provide credible evidence to explain the source of the cash deposits in his bank account. The CIT(A) and the AO both found significant gaps and inconsistencies in the explanation provided by the assessee. The CIT(A) admitted additional evidence but still confirmed the addition of ?22,16,500/- as unexplained cash deposits. The judgment emphasizes the importance of providing substantial and credible evidence to support claims regarding the source of income.

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