2018 (5) TMI 958 - AT - Income Tax

Addition towards income from undisclosed sources - cash withdrawals - Held that - D.R could not bring any cogent and positive material on record to controvert the findings of the CIT(A) that there were adequate cash withdrawals to explain the subsequent deposits in the bank. Therefore, we find no good reason to interfere with the orders of the CIT(A). Hence, the grounds of appeal the revenue for both the assessment years are dismissed.- Decided in favour of assessee.

Summary

Issues:
Appeals filed by revenue against CIT(A) orders deleting additions for undisclosed income for assessment years 2012-13 and 2013-14.

Analysis:
1. The primary issue in this case was the addition of undisclosed income by the Assessing Officer based on large cash deposits in the assessee's bank accounts. The AO determined unexplained cash deposits using the peak credit method, adding significant amounts to the assessee's income for both assessment years.

2. The assessee contended that all deposits were from earlier withdrawals, especially in a cash-intensive business like transport. The CIT(A) reviewed the case, considering the cash-flow statements and bank accounts provided by the assessee. The CIT(A) found that the peak credit method used by the AO was flawed and not applicable in this scenario. The CIT(A) noted that the cash withdrawals adequately explained the subsequent deposits, leading to the deletion of additions for both assessment years.

3. The CIT(A) emphasized the importance of understanding the nature of the business and the regular cash transactions involved. The CIT(A) found no justification for the AO's approach and concluded that the additions based on peak credit were unwarranted. The CIT(A) highlighted that the AO's method did not align with the actual facts of the case, where withdrawals accounted for the deposits, making the additions unnecessary.

4. During the appeal, the Revenue failed to present any substantial evidence to challenge the CIT(A)'s findings. The Tribunal observed that the Revenue could not identify any errors in the CIT(A)'s orders or provide contradictory evidence regarding the cash withdrawals and deposits. Consequently, the Tribunal upheld the CIT(A)'s decision and dismissed the Revenue's appeals for both assessment years.

5. In conclusion, the Tribunal affirmed the CIT(A)'s deletion of the additions made by the AO for undisclosed income in the assessee's bank accounts. The Tribunal found no grounds to overturn the CIT(A)'s well-reasoned decision based on the explanations provided by the assessee regarding the source of cash deposits from earlier withdrawals in the course of the transport business.