2021 (8) TMI 774 - AT - Income Tax

Unexplained cash deposits in bank account - HELD THAT - The source of cash deposits in the bank account is not in doubt in the absence of any material to the contrary on record. Further the contention of the assessee that assessee is not paying any rent for the accommodation, his children being grown up and not being dependent on assessee, the younger child is stated to be serving in Air Force and is stated to be contributing to the expenses of his parents has not been proved to be false. We are of the view that the addition is uncalled for more so, when the assessee has fully explained the source of cash deposits. Considering the totality of aforesaid facts, we direct the deletion of addition - Appeal of assessee is allowed.

Summary

Issues:
Addition of unexplained cash deposit/investment of ?11,47,000 upheld by CIT(A) - Challenge before ITAT Delhi.

Analysis:

The case involved an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Noida related to the Assessment Year 2014-15. The primary issue revolved around the addition of ?11,47,000 as unexplained cash deposit/investment made by the assessee. The Assessing Officer (AO) had added this amount to the income of the assessee under section 69 of the Income Tax Act, 1961. The CIT(A) upheld this addition but granted relief in part. The assessee contended that the addition was made solely on surmises and conjectures without any concrete evidence against the assessee.

During the proceedings, the assessee, who was employed as a Guard with Indian Railways, explained that the cash deposits were from the salary received in cash until February 2015. The assessee had a history of keeping cash at home and depositing it in the bank as needed. The AO had raised concerns regarding the accumulation of cash and subsequent deposits based on the cost of living and education expenses. However, the assessee clarified that the children were independent, one serving in the Indian Air Force and contributing to the family expenses.

Upon considering the submissions and evidence presented, the ITAT Delhi found that the source of the cash deposits was legitimate and explained by the assessee. The tribunal noted that there was no concrete evidence to dispute the source of the funds. Additionally, the circumstances presented by the assessee regarding the family's financial situation supported the explanation provided. Consequently, the ITAT Delhi held that the addition of ?11,47,000 was unwarranted and directed its deletion. The appeal of the assessee was allowed, overturning the decision of the lower authorities.

In conclusion, the ITAT Delhi ruled in favor of the assessee, emphasizing the importance of concrete evidence and legitimate explanations in cases involving unexplained cash deposits. The judgment highlighted the need for assessing officers to consider all relevant factors and not base additions solely on assumptions.