2018 (12) TMI 978 - AT - Income Tax

Unexplained cash credits in his bank accounts u/s 68 - Held that - There is no reason to suspect the genuineness of the assessee s claim since the extent of cash withdrawals far exceed the cash deposits made, even if for some reason the version of the assessee having received money from his father-in- law has to be disbelieved. In this view of the matter, the addition made in the order of assessment of ₹ 1,25,700/- as unexplained cash credits, is deleted. - Decided in favour of assessee Charge of interest u/s 234A and 234B - Held that - The charging of interest is consequential and mandatory and the assessee has no discretion in the matter. This proposition has been upheld by the Hon ble Apex Court in the case of Anjum H. Ghaswala 2001 (10) TMI 4 - SUPREME COURT and therefore uphold the action of the AO in charging the said interest.

Summary

Issues:
1. Unexplained cash deposits in bank accounts.
2. Justification for addition of cash deposits.
3. Charge of interest under sections 234A and 234B of the Act.

Analysis:

Issue 1: Unexplained cash deposits in bank accounts
The case involved an individual assessee earning income from salary who faced scrutiny for cash deposits in his bank accounts. The Assessing Officer (AO) added unexplained cash credits to the assessee's income due to insufficient explanations for certain cash deposits. The CIT(A) upheld the addition, citing lack of evidence from the assessee regarding the source of cash deposits.

Issue 2: Justification for addition of cash deposits
The assessee appealed to the Tribunal challenging the CIT(A)'s decision. The grounds raised included contentions that the cash deposits were from withdrawals made to meet medical needs, and subsequently redeposited by the father-in-law, a retired government pensioner. The Tribunal noted the assessee's status as a salaried employee with evidence of cash withdrawals for medical expenses. The Tribunal found the explanations provided by the assessee to be genuine and acceptable, leading to the deletion of the addition of unexplained cash credits.

Issue 3: Charge of interest under sections 234A and 234B of the Act
Regarding the charge of interest under sections 234A and 234B of the Act, the assessee contested liability for the interest. However, the Tribunal upheld the AO's action in charging the interest, citing the mandatory nature of the provision. The Tribunal directed the AO to re-compute the interest chargeable under the specified sections.

In conclusion, the Tribunal partially allowed the assessee's appeal for Assessment Year 2008-09, deleting the addition of unexplained cash credits while upholding the charge of interest under sections 234A and 234B of the Act.