2019 (1) TMI 587 - AT - Income Tax

Unexplained cash deposits - source of cash deposit is in controversy - additional evidence filed without following due procedure - Held that - Except for the narrative made out towards deposit of ₹ 2,57,500/- out of old savings from 2001 to 2009, there is no cogent material to support the plea. Assessee has also not explained the reasons for holding such large cash in hand particularly when the assessee has already gone abroad (UK) for job purpose on 21.11.2009. Thus, we hardly find any semblance of bonafide in the plea of the assessee on the source of such cash deposits. The typical pattern of deposits below ₹ 50,000/- in multiple tranches only accentuates the lack of bonafides. Nevertheless, possibility of holding some cash at any point of time cannot be entirely ruled out. In the absence of any evidence, we resort to estimations for probable holding of cash by a person of ordinary prudence and assign the same to be ₹ 1 Lakh. Therefore, we deem cash deposit to the extent of ₹ 1 Lakh out of ₹ 2,57,500/- as explained. Accordingly, remaining addition to the extent of ₹ 1,57,500/- is sustained. As regards other deposit of ₹ 7,60,800/- out of cash withdrawals of ₹ 19 Lakhs claimed to have been withdrawn on 25.11.2011, the explanation from the assessee does not provide any satisfactory basis. The claim of the assessee that cash was withdrawn for proposed purchase of residential house property (which eventually did not take place) does not inspire confidence. A taxpayer would be expected to explain why such large amount of cash was needed for proposed purchase of residential house property. The entries in the bank statement also demonstrate that these sum were marked chq. paid which is unlike cash withdrawals. A bare and unverified confirmation from the HDFC bank (without any reference number) introduced before the Tribunal without following the procedure laid down in Rule 29 of the Income Tax (Appellate Tribunal) Rules is also curious. The circumstances for mentioning the chq. paid where the cash was stated to be withdrawn is not explained in the impugned additional evidence. Simultaneously, it is also difficult to put blinkers on uncharacteristic pattern of re-deposits of small amounts allegedly having withdrawn such large amount of ₹ 19 Lakhs for the purpose which remained unserved. Therefore, we do not see any justifiable reasons to admit the additional evidence on record at this juncture attempted to be introduced without following the prescribed procedure. The assessee in the instant case has only made out a narrative which remains unexplained. In the light of above discussion, the additional evidence filed without following due procedure and without showing the bonafides cause for its belated admissions deserves to be rejected and the action of the Revenue requires to be upheld except to the extent of an estimated sum of ₹ 1 Lakh. - Decided partly in favour of assessee.

Summary

Issues:
1. Unexplained cash deposits of ?10,18,300 in the bank account.
2. Source of cash deposits and withdrawals as per the explanation provided by the assessee.
3. Admissibility of additional evidence filed by the assessee before the Tribunal.

Issue 1: Unexplained Cash Deposits
The appeal was filed by the Assessee against the order of the CIT(A) concerning the addition of ?10,18,300 as unexplained cash deposits in the bank account. The Assessing Officer (AO) observed cash deposits totaling the said amount in the HDFC bank account of the Assessee on various dates. The AO initiated an enquiry into the source of these deposits. The Assessee claimed that part of the deposits was from past savings and the remaining amount was withdrawn for a house purchase. However, the AO found inconsistencies in the explanations provided and made the addition of ?10,18,300 towards unexplained cash deposits.

Issue 2: Source of Cash Deposits and Withdrawals
The Assessee contended before the Tribunal that the cash deposits should be divided into two parts: ?2,57,500 and ?7,60,800. The Assessee explained that the first part was from past savings and the second part was from a cash withdrawal of ?19 lakhs. The Assessee provided a confirmation letter from the bank to support the explanation. The Tribunal analyzed the explanations provided and found that the Assessee failed to provide satisfactory evidence for the source of the cash deposits and withdrawals. The Tribunal estimated a portion of the deposits to be explained and sustained the remaining addition.

Issue 3: Admissibility of Additional Evidence
The Assessee submitted additional evidence before the Tribunal, including a confirmation letter from the bank, to support the explanation for cash withdrawals. However, the Tribunal found the additional evidence to be unverified and introduced without following the prescribed procedure. The Tribunal rejected the additional evidence and upheld the action of the Revenue authorities, except for a portion of the estimated sum.

In conclusion, the Tribunal partially allowed the appeal of the Assessee, sustaining the addition of ?1,57,500 as unexplained cash deposits. The Tribunal emphasized the importance of providing verifiable evidence to support claims related to cash deposits and withdrawals, highlighting the need for adherence to procedural requirements in introducing additional evidence before the Tribunal.