2019 (4) TMI 1470 - AT - Income Tax

Unexplained cash deposit in the bank account u/s 68 - source from where these amounts were deposited in the bank - Whether it is probable that out of these withdrawals some amounts remained with the assessee, which can be re-deposited after two-three months? - HELD THAT - On certain occasions, the assessee has withdrawn substantial cash viz. on 29.3.2007 he has withdrawn ₹ 1,05,000/-; similarly on 20.3.2007 he has withdrawn ₹ 25,000/-, and again on 21.3.2007 he withdrew an amount of ₹ 25,000/-. Thus, out of this withdrawal, some amount must be available with the assessee, which can be used for re-deposits. He has also withdrawn ₹ 62,000/- on 18.4.2007. To our mind, it is probable when the assessee does not belong to an organized sector of business. His total deposits in a year not exceeded more than ₹ 20,0000/-. Therefore, considering total withdrawals at different intervals tabulated in details, we are of the view that at least some credit be given to the assessee out of the major withdrawals. He could able to save something from them for re-depositing. Considering all the aspects, we delete ₹ 5,00,000/- (Rupees Five Lakhs only) on an estimate basis out of total addition made by the AO and confirmed by the ld.CIT(A). - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Confirmation of addition of ?11,67,269/- by the AO on account of unexplained cash deposits in the bank account.

Issue-wise Detailed Analysis:

1. Confirmation of addition of ?11,67,269/- by the AO on account of unexplained cash deposits in the bank account:

The assessee appealed against the order of the CIT(A), Gandhinagar, which confirmed the addition of ?11,67,269/- made by the AO for the Assessment Year 2008-09. The AO had received information that the assessee deposited ?20,63,898/- in cash in his savings bank account during the relevant accounting year. Since the assessee had not been filing a return of income, the AO issued a notice under section 148 of the Income Tax Act. The assessee did not respond to the notice, leading the AO to pass an ex parte order, concluding that the cash deposits were unexplained and adding ?11,67,269/- to the income.

Upon appeal, the CIT(A) confirmed the addition, noting that the assessee failed to provide source evidence for the deposits during the assessment proceedings. Although the assessee's AR submitted a provisional cash book and a summary of funds during the appellate proceedings, they could not substantiate the sources of specific deposits. The CIT(A) highlighted the lack of proof for claimed past savings and current income, as well as the fact that neither the assessee nor his wife had been assessed to tax in earlier years, making their claims of savings without legitimate income untenable.

The Tribunal, after reviewing the records and hearing the representatives, referred to Section 68 of the Income Tax Act, which allows the AO to treat unexplained cash credits as income if the assessee fails to satisfactorily explain their nature and source. During the hearing, the assessee's counsel could not convincingly explain the sources of the deposits, merely tabulating details from bank statements.

The Tribunal observed that the assessee had withdrawn substantial amounts on several occasions, suggesting the possibility of re-depositing some of these withdrawals. Given the assessee's non-organized business sector and the total annual deposits not exceeding ?20,00,000/-, the Tribunal found it plausible that some withdrawn amounts could have been re-deposited. Therefore, the Tribunal decided to grant partial relief by deleting ?5,00,000/- from the total addition on an estimated basis, considering the major withdrawals.

Conclusion:

The Tribunal partly allowed the appeal, reducing the addition from ?11,67,269/- to ?6,67,269/-, thereby providing relief of ?5,00,000/- to the assessee. The order was pronounced on 25th March 2019.