2018 (9) TMI 1403 - AT - Income Tax

Unexplained cash flow deposits and withdrawals - source of the deposit and the destination of the withdrawal - Held that - Perusal of the cash flow statement reveals that the assessee has made the cash deposits and also withdrawals and stated to be made the redeposit in the bank account out of the withdrawls, without giving explanation for the source of the deposit and the destination of the withdrawal. The purpose of the withdrawal, whether the amount was spent or not? was not explained by the assessee. As observed that the assessee claimed the source for deposits out of small amounts of withdrawals also which is not reliable and not the practice of a customer of the bank to withdraw the small amounts without the requirement for expenditure. The assessee required to explain the source of each credit and the destination of debit independently. Every debit cannot be taken as a source. The said details were not furnished by the assessee before the CIT(A) or before the AO, therefore, the Ld.CIT(A) has rightly rejected the claim made by the assessee with regard to the cash flow statement and explanation of the sources. - Decided against assessee. Peak credits - sources of such deposits and withdrawals unexplained - Held that - For considering the peak credit, every debit and credit entries are required to be explained independently to hold that the withdrawal has come back as a source for the deposit. This exercise was not done either by the Ld.CIT(A) or by the AO. The assessee did not cooperate with the AO and did not furnish the details. Therefore, we set aside the entire issue and remit the matter back to the file of the AO to reconsider the issue afresh on merits and direct the AO to consider all the bank accounts. The assessee is directed to submit the details and not to resort to the non cooperative attitude like in the original assessment proceedings - Appeal of the assessee is allowed for statistical purpose.

Issues:
1. Delay in filing the appeal due to illness.
2. Addition of cash deposits in bank accounts.
3. Rejection of explanation regarding sources of cash deposits.
4. Consideration of peak credits in bank accounts.
5. Non-cooperation of the assessee with the assessing officer.

Issue 1: Delay in filing the appeal due to illness
The appeal was delayed by 39 days due to the illness of the assessee's wife. The delay was supported by medical certificates and discharge certificates. The Appellate Tribunal considered the submissions and objections, concluding that there was a reasonable cause for the delay, and thus, the delay was condoned.

Issue 2: Addition of cash deposits in bank accounts
The Assessing Officer found that the assessee made significant deposits in two bank accounts jointly held with another individual. Despite several notices and opportunities to explain the sources of these deposits, the assessee did not respond. Consequently, the AO made an addition to the income based on these deposits.

Issue 3: Rejection of explanation regarding sources of cash deposits
The assessee appealed to the CIT(A) and submitted additional evidence in the form of a cash flow statement. However, the CIT(A) found the explanations unsatisfactory, as the sources of various credits and debits were not adequately explained. The CIT(A) directed the AO to consider peak credits from specific bank accounts for the addition.

Issue 4: Consideration of peak credits in bank accounts
The assessee appealed to the Tribunal, arguing that all three bank accounts should be considered, not just two as directed by the CIT(A). The Tribunal observed discrepancies in the cash flow statement and the lack of proper explanations for deposits and withdrawals. They set aside the issue and remitted it back to the AO for fresh consideration, emphasizing the need for cooperation from the assessee.

Issue 5: Non-cooperation of the assessee with the assessing officer
The Tribunal noted the lack of cooperation from the assessee in providing details and explanations regarding the bank transactions. They directed the assessee to submit the necessary details and cooperate with the AO in the fresh assessment proceedings.

In conclusion, the appeal of the assessee was allowed for statistical purposes, and the matter was remitted back to the AO for a fresh assessment considering all bank accounts and requiring the assessee's cooperation.

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