2021 (6) TMI 289 - AT - Income Tax

Addition u/s 69A - unexplained cash deposit - HELD THAT - When huge cash is available in the hands of the assessee at the end of the financial year 2011-12 and 2012-13 and such cash balance was accepted by the learned AO, therefore, in the absence of any material available with the learned Assessing Officer, he cannot say that no cash was available with the assessee for the alleged deposits in the subsequent assessment years. There is proper and satisfactory explanation from the assessee in respect of the cash deposits and when the Revenue wants to bring such cash deposits to tax, the burden squarely rests with the Revenue and in the absence of any material in support of such a premise, we find it difficult to accept the reasoning of the learned Assessing Officer to make the addition and for that matter, the reasoning for confirming the addition by the Ld. CIT(A). CIT(A) when recorded that without borrowing or having opening cash balance, there is no way the cash deposits for the respective years can be explained through salary and by the assessee, missed the aspect of the assessee holding sufficient opening balance for the respective years. With this view of the matter we find it difficult to sustain the impugned orders. We, accordingly, while allowing these appeals direct the learned Assessing Officer to delete the additions made - Decided in favour of assessee.

Summary

Issues:
- Addition of unexplained money based on cash deposits exceeding salary income.
- Justification of additions under section 69A of the Income Tax Act.
- Assessment of cash balances and deposits for multiple assessment years.
- Burden of proof on the Revenue to justify additions.
- Consideration of opening cash balance for explaining subsequent deposits.
- Decision on sustaining or deleting the additions made by the Assessing Officer.

Analysis:
1. The case involved the aggrieved party challenging the additions made by the Assessing Officer under section 69A of the Income Tax Act, based on the difference between cash deposits and salary income for various assessment years. The Assessing Officer treated the disparity as unexplained money and added the amounts to the income of the assessee.

2. The party contended that sufficient cash balances were available, and unutilized portions were deposited in subsequent years. The Assessing Officer and the Commissioner of Income Tax (Appeals) upheld the additions, citing the lack of evidence to explain the deposits solely through salary earnings. The party argued that the authorities failed to consider the available opening cash balance for each year.

3. The appellate tribunal analyzed the balance sheets and cash balances for multiple financial years, noting the consistent cash on hand at year-end. The tribunal observed that the deposits did not exceed a certain limit and that the personal expenses of the assessee were relatively low. The tribunal emphasized that the Revenue had to prove the lack of cash availability for the alleged deposits, which was not substantiated.

4. Based on the evidence presented, the tribunal found that the party had a proper explanation for the cash deposits, considering the substantial cash balances available at the end of each year. The tribunal concluded that the burden of proof rested with the Revenue, and in the absence of concrete evidence contradicting the party's explanation, the additions made by the Assessing Officer were unjustified.

5. Consequently, the tribunal allowed the appeals, directing the Assessing Officer to delete the additions made for the respective assessment years. The decision highlighted the importance of considering opening cash balances and the Revenue's responsibility to substantiate claims of unexplained money. The judgment emphasized the necessity for proper justification before adding amounts to an individual's income under the Income Tax Act.