2019 (5) TMI 1269 - AT - Income Tax

Addition of amount/cash deposited into bank - unexplained source of income - HELD THAT - Assessee s submission is that her husband did not understand the technical questions raised by the AO falls flat on the ground as the queries made by the AO were quite straightforward and there was nothing complicated in the line of questioning regarding the source of amount advanced by him. Hence, the assessee cannot take shelter under such submissions regarding illiteracy etc. , therefore, the addition of ₹ 2 lacs was right confirmed, which does not need any interference Salary paid to son AO has clearly brought out the facts where the assessee was unable to explain the source of the said amount purportedly received from her son. Therefore, we confirm the said addition by upholding the order of the Ld. CIT(A) on this issue and reject the ground raised by the assessee. As regards addition of ₹ 6 lacs on estimation basis is concerned, it is noted that the assessee deposited cash of ₹ 8,50,000/- out of her past savings of dairy work and sales of live stock etc. Statement of the assessee was recorded on 7.10.2016 and she was asked to explain the source of ₹ 8,50,000/-. It was stated by her that they were rearing 4 to 5 buffaloes and were selling milk for ₹ 4000/ to ₹ 5,000/- p.m. The assessee s family were almost remained in the fields, school/colleges, therefore, assessee s version that the huge cash amount of ₹ 8,50,000/- was lying at home does not appear to be correct. If any person has so much huge amount of cash he will keep the same in bank for safe custody and for earning interest income thereon. There were seven members in the assessee s family i.e. the assessee herself, her husband Sh. Jai Pal, her sons Sh. Pawan and Sh. Satish, wife and two daughters of Sh. Pawan. The educational qualification of Sh. Satish is 10 2. He completed 10 2 one and half year back. Sh. Satish was working as a security guard on the ATM machine of Indian Bank located in the village of the assessee. He joined as security guard approximately four months back and is drawing salary of ₹ 7,000/- p.m. The assessee was asked when the marriage of Sh. Pawan was solemnized. It was stated that her son Sh. Pawan was got married in the year 2011 it was a simple marriage and only ₹ 50,000/- was incurred on the marriage. All the above narrated facts do not strengthen the version of earning of ₹ 8,50,000/- from past savings, hence, the assessee s version cannot be accepted in toto. However, AO presumed that the assessee may be able of saving some amount from milk selling and from selling of live stock. The assessee s past saving from selling of milk and from selling of live stock was rightly estimated at ₹ 2,50,000/- and addition of ₹ 6,00,000/- was made to the taxable income of the assessee by treating the same as her income from undisclosed sources, which Ld. CIT(A) has also upheld. In view of above, I confirm the action of the Ld. CIT(A) on this issue and reject the ground raised by the assessee.

Summary

Issues Involved:
1. Legality of reopening the case under Section 147/148 of the Income Tax Act, 1961.
2. Addition of ?2,00,000/- as unexplained cash deposit.
3. Addition of ?1,37,000/- as unexplained cash deposit.
4. Addition of ?6,00,000/- as unexplained cash deposit.

Detailed Analysis:

1. Legality of Reopening the Case under Section 147/148:
The appellant challenged the reopening of the case under Section 147/148 of the Income Tax Act, 1961, arguing that the action was arbitrary and baseless, solely based on the cash deposits in the bank account. The appellant cited the ITAT Delhi's decision in the case of Shri Mahavir Prasad vs. ITO, Rewari, which held that mere deposits in a bank cannot be treated as income for the purpose of issuing a notice under Section 147/148. The Tribunal, however, did not find merit in this argument and upheld the reopening of the case.

2. Addition of ?2,00,000/- as Unexplained Cash Deposit:
The appellant contended that the amount of ?2,00,000/- was part of ?4,00,000/- given by her husband from the sale proceeds of a plot. The Assessing Officer (AO) found discrepancies in the statements of the appellant’s husband and the plot purchaser, Sh. Rajender, who confirmed only ?2,00,000/- was paid at the time of purchase, with the remaining amount paid in installments. The appellant’s husband failed to explain the source of the remaining ?2,00,000/-. Consequently, the Tribunal upheld the addition of ?2,00,000/- as the appellant failed to prove the source of the cash deposit.

3. Addition of ?1,37,000/- as Unexplained Cash Deposit:
The appellant claimed that ?2,64,000/- was contributed by her son, Sh. Pawan. Upon examination, the AO found that Sh. Pawan could only substantiate ?77,000/- from his salary, and his explanation for the remaining amount was unconvincing. The AO allowed a benefit of ?50,000/- for presumed labor work, but added ?1,37,000/- to the appellant’s income as unexplained. The Tribunal confirmed this addition, noting that the appellant failed to provide a satisfactory explanation for the remaining amount.

4. Addition of ?6,00,000/- as Unexplained Cash Deposit:
The appellant explained that ?8,50,000/- was from past savings from dairy work and sales of livestock. The AO found the explanation insufficient, given the appellant’s inability to provide details about the sales and the impracticality of keeping such a large amount of cash at home. The AO estimated the appellant’s past savings at ?2,50,000/- and added ?6,00,000/- as unexplained income. The Tribunal upheld this addition, agreeing with the AO’s assessment and the CIT(A)’s confirmation.

Conclusion:
The Tribunal dismissed the appeal, confirming the additions made by the AO and upheld by the CIT(A). The appellant’s arguments regarding the legality of the reopening and the explanations for the cash deposits were found unconvincing and unsupported by evidence. The Tribunal emphasized the importance of providing credible explanations and evidence for cash deposits to avoid additions as income from undisclosed sources.