2021 (3) TMI 987 - AT - Income Tax

Cash deposits as unexplained investments u/s. 69A - HELD THAT - No finding was given on such documentary evidence. No adverse evidence was acquired by the Assessing Officer except assuming and presuming the deposit in the bank account has unexplained cash credit. The assessee has admitted the ownership of the credit and that outgoes have gone to her son for his study in Australia. The lower authorities were of the view that the assessee has not explained the sources. Before us, the assessee has also filed the copies of ownership of land holdings of about fifty bigha of land. Considering the entire facts and circumstances of the case, we are of the view, it is a fit case for granting benefit of peak credit to the assessee, as no adverse material is brought on record except taking view that keeping of such cash at home is abnormal. Therefore, we deem it appropriate to restore the appeal to the file of assessing officer to consider the plea of assessee to grant her the benefit of peak credit and grant appropriate relief to the assessee. Ground No. 1 of the appeal is allowed for statistical purposes.

Summary

Issues Involved:
1. Addition under Section 69A for unexplained investments.
2. Addition of bank interest under the head 'income from other sources'.

Detailed Analysis:

1. Addition under Section 69A for Unexplained Investments:

The primary issue in the appeal was the addition of ?34,01,300/- under Section 69A as unexplained investments. The Assessing Officer (AO) noted significant cash deposits in the assessee's bank accounts, which were deemed abnormal given the assessee's status as a salaried individual. The AO issued show cause notices to the assessee to explain the source of these deposits. The assessee responded that the deposits were from accumulated savings and agricultural income, primarily from her husband, intended to fund their son's education in Australia. The AO, however, rejected this explanation, citing discrepancies and lack of evidence regarding the agricultural income and the genuineness of the transactions with various entities.

The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's decision, stating that the assessee failed to provide satisfactory evidence for the source of the cash deposits. The assessee argued that the AO violated the principles of natural justice by not providing the replies from third parties used to discredit the agricultural income claims.

Upon appeal, the Tribunal noted that the assessee and her husband had provided sufficient documentary evidence, including cash flow statements, income tax returns, and proof of agricultural income. The Tribunal found that the lower authorities did not adequately consider these documents and that the AO's assumption of abnormal cash deposits was not substantiated by adverse material. Consequently, the Tribunal deemed it appropriate to grant the benefit of peak credit to the assessee and remanded the case back to the AO for reconsideration of this plea.

2. Addition of Bank Interest under the Head 'Income from Other Sources':

The second issue involved the addition of ?592/- as bank interest under the head 'income from other sources.' The CIT(A) upheld this addition due to the absence of any submission or contestation from the assessee on this ground. The Tribunal noted that the assessee did not press this ground of appeal; hence, it was dismissed.

Conclusion:

The appeal was partly allowed. The Tribunal remanded the issue of unexplained investments back to the AO for reconsideration, granting the benefit of peak credit to the assessee. The addition of bank interest was dismissed as the assessee did not contest it. The order was announced on 8th March 2021.