2017 (7) TMI 136 - AT - Income Tax

Addition being the deposit in the bank account unexplained - Held that - As per the cash flow statement, the available cash balance from withdrawals made in from 20th to 28th August 2008 and the net withdrawals from Axis Bank in the month of September 2008 amounted to ₹ 14,00,000/ which were deposited to the extent of ₹ 9,24,760/- from 13/10/2008 to 21/10/2008. Thus, cash was retained for a period of one month which cannot be said to be an unreasonable period . Further, withdrawal in cash from Axis bank on 10/11/2008 of ₹ 7 lakhs was deposited to the extent of ₹ 2,30,000/- on 17.01.2009. Again, the holding period is approximately 2 months which cannot be said to be unreasonably long. Moreover we find that it is not the case of the Revenue that the assessee utilized the cash in any other manner. The Hon ble Punjab and Haryana High Court in the case of Shiv Charan Dass vs.CIT, Punjab (1980 (4) TMI 74 - PUNJAB AND HARYANA High Court) has held that where the explanation of the assessee was reasonable and there was nothing on record to show that the amount was utilized by the assessee in any other manner than the one which was represented by the assessee, the onus lay on the department to show that the explanation of the assessee should not be accepted. We hold that the deposits stand explained and addition on account of the same, therefore, be deleted.- Decided in favour of assessee.

Summary

Issues:
Addition of unexplained cash deposits in bank account.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of ?8,54,760 deposited in the bank account. The only issue was the addition made on account of unexplained cash deposited in the bank account.

2. During the assessment proceedings, the assessing officer noticed cash deposits of ?33,09,520 in the savings bank account of the assessee. The assessee explained the deposit through a cash flow statement, attributing it to withdrawals from another bank account. However, the AO added ?25,09,520 to the income of the assessee, which was reduced by the CIT(A) to ?8,54,960 due to lack of justification for the withdrawals and re-deposits.

3. The Tribunal considered the source of the deposit of ?8,54,760 in the bank account. The cash balance available with the assessee at the time of deposits was explained through withdrawals made earlier. The Tribunal found the explanations reasonable, noting that the cash was retained for a reasonable period and not utilized elsewhere, citing a precedent where the burden lay on the department to disprove the explanation.

4. The Tribunal held that the deposits were adequately explained, and the addition was deleted. The appeal of the assessee was allowed, concluding that the deposits of ?8,54,760 were justified and the addition should be removed.

Conclusion:
The Tribunal ruled in favor of the assessee, allowing the appeal and deleting the addition of ?8,54,760 made on account of unexplained cash deposits in the bank account.