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2022 (1) TMI 736 - AT - Income TaxUnexpalined Cash deposited in bank account - unsatisfactory explanation as to the nature and source thereof - HELD THAT - The assessee s explanation is phony. Not only there is no evidence as to source (other than withdrawal from bank during the current year), there is also no explanation for holding the same. Equally discrediting of her explanation is the time of deposit; it being also doubtful if she was in Jabalpur on 19.12.2016, the date of deposit inasmuch as she is stated to have left Jabalpur immediately after her marriage on 08.12.2016, which is also cited as the reason for an affidavit qua cash deposit having been furnished by her father. The cash withdrawal of rs. 66,000 during the year (prior to 09/11/2016) is undisputed. No part of it; the last withdrawal being at rs. 10,000 on 30/7/2016, however, can be regarded as held on 08/11/2016, considering her forthcoming marriage for which cash is stated to be withdrawn. In fact, the entire withdrawal is from April to July, 2016, at Mumbai to which place there is no reference in the assessee s explanation, from her accounts with PNB Axis Bank, making it clear that the full facts in relation to the same have not been stated/clarified. No credit in its respect could thus be allowed. The assessee s explanation for the impugned cash deposit has in my view been therefore rightly regarded as unsatisfactory by the Revenue, finding her case as wholly unevidenced. Affidavit of the assessee s father (dated 10.10.2019), stating that no cash had been deposited (on 19.12.2016) in old currency, found false, could not be held against the assessee as he was not cross-examined - The said affidavit stood retracted on 14.10.2019, stating that some of it may have been in old currency. In this regard, even as observed during hearing, what value the said affidavit when it is an undisputed fact that cash (in old currency) at rs.2.47 lacs was deposited in bank on 19.12.2016, and toward which the assessee had in fact also furnished a disclosure on 07.02.2017 (PB pgs. 36-38). Nothing, thus, turns on the said affidavit, apart from speaking very poorly of the assessee s father, who issued the statement without confirming the facts. In fact, the affidavit being admittedly and materially incorrect, the argument is also without merit. Cash deposited with bank stands duly recorded in the assessee s books of account, no addition u/s. 69A could be made - First, where recorded in account books, it is the truth of those entries that section 68 requires the assessee to prove. And, where not, section 69/69A, likewise, requires an assessee to prove the nature and source of an asset found, as against the sum credited, signifying receipt, that he is required to explain u/s. 68. The two sections are thus in pari materia , and it would therefore matter little whether the books of account are maintained or not as either way an assessee is required to explain the nature and source of the sum under reference. Though that represents trite law, reference in this regard be usefully made to CIT v. Jauharimal Goel 2005 (4) TMI 52 - ALLAHABAD HIGH COURT As explained in CIT v. Kamaraja Pandian 1983 (9) TMI 65 - MADRAS HIGH COURT the genuineness of a credit transaction is to be, in view of section 68, established by the assessee inspite of entries to that effect in his books of account. The second reason, which may not be required to be dilated upon in view of the first, is if a compilation of bank entries, in any case available in the form of bank account statement, could by itself, i.e., without any supporting documents, be regarded as valid books of account in law. The accounts, as noted, do not reveal the activity being pursued by the assessee, much less of it being at Mumbai, or the purpose for which cash is/was being withdrawn and accumulated, much less thereat. In the context of the case, it rather also raises the question if the cash withdrawn during earlier years, assuming so, was also at Mumbai and, where so, its relevance. - Decided against assessee.
Issues Involved:
1. Maintainability of the addition of Rs. 2,47,000 to the assessee's income due to unsatisfactory explanation of the cash deposit. Detailed Analysis: Maintainability of the Addition of Rs. 2,47,000: The core issue in this appeal is the legitimacy of the addition of Rs. 2,47,000 to the assessee's income, which was deposited in her bank account during the Assessment Year (AY) 2017-18. The assessee's explanation for the cash deposit was deemed unsatisfactory by the Revenue. The Law: The law requires that the explanation for cash deposits must satisfy the parameters of identity, capacity, and genuineness of the transaction, as settled by the Apex Court. The explanation must be based on the factual background of the case. The Assessee’s Case: The assessee, a former student, claimed the cash deposit was sourced from: - Cash available at the beginning of the year (Rs. 1,97,500) - Cash withdrawn from the bank (Rs. 66,000) - Tuition income (Rs. 98,830) Aggregating to Rs. 3,62,330 as on 08.11.2016. The cash was accumulated for her impending marriage on 08.12.2016. The balance cash of Rs. 1,15,330 was not deposited as it was held in smaller denomination notes, which were not demonetized. The assessee also received Rs. 11.29 lacs as cash gifts on her marriage, explaining another deposit of Rs. 8 lacs in new currency. The Revenue’s Case: The Revenue disputed the explanation for the Rs. 2.47 lacs deposit, citing: - Absence of cash deposits before or after the demonetization period. - The tuition income was returned for the first time and was wholly un-evidenced. - The initial explanation by the assessee was that deposits up to Rs. 2.50 lacs would not be questioned by the Government, which was later retracted. Discussion/Findings: The Tribunal noted that the demonetization period was marked by anxiety and frantic attempts to deposit old currency. The assessee's explanation was found incredulous and inconsistent with human probabilities. The Tribunal observed: - The cash gifts received in new currency were not questioned, but the source and nature of the cash deposits needed satisfactory explanation under sections 69/69A. - The assessee's explanation of cash accumulation for marriage expenses lacked credibility. - There was no evidence to substantiate the source of cash available as on 31.3.2016. - The tuition income was unsubstantiated, with no details provided about the students or the subjects taught. - The timing of the cash deposit, forty days after the start of the demonetization period, and the extent of balance cash not deposited further discredited the explanation. Legal Pleas: The assessee raised two legal pleas: 1. Affidavit of Father: The affidavit by the assessee's father stating no old currency deposit was found false and retracted. The Tribunal held that the affidavit had no value as the fact of the cash deposit was undisputed. 2. Recording in Books of Account: The contention that the cash deposit recorded in the books of account should not attract addition under section 69A was dismissed. The Tribunal clarified that whether recorded in books or not, the assessee must explain the nature and source of the sum under sections 68 and 69A. Conclusion: The Tribunal dismissed the assessee’s appeal, concluding that the explanation for the cash deposit was unsatisfactory and unevidenced. The addition of Rs. 2,47,000 to the assessee's income was upheld. Order pronounced in the Open Court on January 17, 2022.
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