2018 (7) TMI 1092 - AT - Income Tax

Unexplained cash deposit in the bank account - Held that - The cash in hand of the earlier year is available to assessee for making cash deposit in bank account in year under appeal. Similarly, the assessee has withdrawn ₹ 2,00,000/- on 5th March, 2005 from his bank account which is available to assessee to make re-deposit on 21st March, 2005 and 23rd March, 2005 in a sum of ₹ 1,00,000/- each. AO has not brought any evidence on record to prove that the amount withdrawn by the assessee from the bank account was utilized somewhere else for other purposes. Explanation of assessee should not have been rejected for availability of cash of ₹ 2,00,000/- for making re-deposit in the bank account. Thus, the assessee was having sufficient evidence to explain, it was having availability of the cash of ₹ 13,49,879/- which would explain the deposit of ₹ 14,00,000/- in the bank account of the assessee on different dates. Set aside the orders of authorities below and delete the addition of ₹ 13,49,879/- out of ₹ 14,00,000/-. Appeal of assessee is partly allowed.

Summary

Issues:
1. Addition of ?14 lakhs on account of unexplained cash deposit in the bank account.
2. Rejection of the assessee's explanation by the AO and Ld. CIT(A).
3. Discrepancy in the assessment of the source of cash deposits by the authorities.
4. Availability of cash in hand and its utilization for bank deposits.
5. Justification of the assessee's explanations regarding cash deposits.

Analysis:
Issue 1:
The appeal was against the addition of ?14 lakhs as unexplained cash deposit in the bank account for the assessment year 2005-06. The Ld. CIT(A) had initially deleted the addition, but the ITAT set aside the order and directed the AO to reexamine the contentions of the assessee regarding the source of the deposit.

Issue 2:
The AO rejected the assessee's explanation, considering it a "cook and buy story," and made the addition based on the unexplained cash deposits. The Ld. CIT(A) upheld the addition, stating that the nature and source of the cash remained unexplained.

Issue 3:
There was a discrepancy in the assessment of the source of cash deposits between the authorities. The AO did not accept the assessee's contentions, while the Ld. CIT(A) and ITAT differed in their decisions on the matter.

Issue 4:
The AO noted the availability of cash in hand with the assessee and questioned the rationale behind making multiple deposits instead of a single deposit. The assessee's counsel argued that the cash in hand was available for making the bank deposits and provided evidence to support this claim.

Issue 5:
The ITAT considered the consistent stand of the assessee regarding the cash in hand and accepted the explanation provided. The Tribunal emphasized that unless substantive material was presented against the assessee, the revenue could not change its stance. The ITAT found the explanation of the assessee valid and deleted a portion of the addition, partly allowing the appeal.

In conclusion, the ITAT partly allowed the appeal, setting aside the orders of the authorities below and deleting a portion of the addition of ?14 lakhs, considering the availability of cash in hand and the explanation provided by the assessee for the cash deposits in the bank account on different dates.