2017 (6) TMI 650 - AT - Income Tax

Addition on account of cash deposit in the bank account - unexplained sources - Held that - No supporting documents have been filed. The assessee did not produce any independent evidence in support of cash flow statement. No evidence of any amount is received on occasion of marriage and birthday have been filed. Even during the course of arguments the assessee was not able to produce any evidence to prove that in fact marriage of the assessee had been performed in February 2007. Anyhow if the claim of assessee may be considered favourably for receipt of marriage gift and birthday gift assessee would have spent some expenditure on those celebrations but no evidence in this regard has also been filed. Ld. CIT(A) after examining the bank account noted that withdrawals have been made in small amount very frequently. Therefore it could not be considered as redeposit in the bank account of the assessee. The assessee failed to co-relate the withdrawals from the bank account for the purpose of redeposit in the same account. No evidence in support of cash summary has been filed. Therefore whatever contentions have been raised by the assessee before the authorities below to explain cash deposit in the bank account has not been supported by any evidence. - Decided against assessee.

Summary

Issues:
Challenging addition of cash deposit in bank account.

Analysis:
The case involved an appeal by the assessee against the addition of a substantial amount on account of cash deposit in a bank account. The assessee failed to comply with statutory notices during scrutiny, leading to an ex parte assessment order by the Assessing Officer (AO). The AO treated the cash deposit as income from undisclosed sources. The assessee later explained that the cash deposit was sourced from withdrawals made for various purposes, including a portion from gifts received during marriage and birthday celebrations. The AO, however, found the explanations vague and self-serving, lacking independent evidence to support the claims. The AO and the CIT(A) rejected the explanations, emphasizing the lack of concrete evidence and the frequent, small withdrawals from the bank account that did not correlate with the deposit. The CIT(A) upheld the addition, dismissing the appeal ground of the assessee.

The CIT(A) noted that the assessee's explanations lacked supporting documents and failed to provide independent evidence for the cash flow statement, including the claimed gifts received during marriage and birthday. The CIT(A) observed that the withdrawals from the bank account were frequent and small, not indicative of redepositing the same amount. The absence of evidence to substantiate the cash summary and the failure to correlate withdrawals for redeposit further weakened the assessee's case. The CIT(A) also highlighted the non-cooperative behavior of the assessee during the assessment process, wherein no relevant evidence was presented despite statutory notices. Comparisons to other judgments were made, emphasizing the lack of credibility in the assessee's explanations due to the absence of supporting evidence. Ultimately, the appeal was dismissed based on the failure to provide substantial and credible evidence to explain the cash deposit in the bank account.

The judgment underscored the importance of providing concrete and verifiable evidence to support claims during assessments. The assessee's failure to produce relevant documentation and the lack of coherence between withdrawals and deposits led to the dismissal of the appeal. The judgment highlighted the significance of cooperation and transparency in tax proceedings, emphasizing the need for factual and evidentiary support to substantiate financial transactions and sources of income.