2018 (9) TMI 1016 - AT - Income Tax

Addition being cash deposited in the bank account - Assessee explained that he has filed cash book before the Assessing Officer as well as the CIT(A) which was not accepted by stating the same to be afterthought - Held that - Assessing Officer as well as the CIT(A) after examining the cash book of the assessee, wherein, the source of deposit of money in the bank account was explained has not brought any material on record to show that the assessee could not have the amount of ₹ 2,60,000/- with him to deposit the same in the bank account. It is a settled position of law that a plausible explanation of the assessee cannot be rejected by the Assessing Officer without examining the same and bringing any material on record to show that why the said explanation was not acceptable. After considering the entire facts and circumstances of the case, in our considered view, the addition of ₹ 2,60,000/- on account of deposit in the bank made by the Assessing Officer and confirmed by the CIT(A) cannot be sustained in law. We, accordingly, set aside the orders of lower authorities and delete the addition of ₹ 2,60,000/-. - Decided in favour of assessee

Summary

Issues:
Sole issue: CIT(A) erred in sustaining the addition of ?6,89,000/- being cash deposited in the bank account.

Detailed Analysis:

1. Assessing Officer's Observation: The Assessing Officer noted a cash deposit of ?11,89,000/- in the assessee's bank account and sought explanations. The assessee claimed the deposits were from previous year's withdrawals and loan repayments by various individuals.

2. Verification of Loan Repayments: The Assessing Officer issued notices under section 133(6) to verify loan repayments. After receiving confirmations from some individuals, the Assessing Officer accepted ?5 lakhs but added ?6,89,000/- as undisclosed income.

3. Appeal Before CIT(A): The assessee submitted confirmations from all individuals involved in the loan repayments. However, the CIT(A) rejected this evidence as belated, as the letters were dated prior to the assessment date.

4. Explanation Rejection: The CIT(A) did not accept the explanation for the remaining cash deposits of ?4,29,000/- and ?2,60,000/-, considering them an afterthought and lacking supporting evidence.

5. Appellate Tribunal Decision: The Appellate Tribunal considered the assessee's explanations. It found the deposits of ?4,29,000/- were adequately explained from savings of previous years and deleted this addition. Additionally, the Tribunal found the lack of evidence from the Assessing Officer to justify the addition of ?2,60,000/- and deleted this amount as well, resulting in the deletion of the total addition of ?6,89,000/-.

6. Conclusion: The Tribunal allowed the appeal, emphasizing the sufficiency of funds from earlier years to explain the cash deposits and the lack of justification for the additional amounts added by the Assessing Officer and CIT(A).

This detailed analysis showcases the progression of the case, from the Assessing Officer's initial observations to the final decision by the Appellate Tribunal, highlighting the key points and legal reasoning involved in each stage of the judgment.