2022 (1) TMI 833 - AT - Income Tax

Unexplained cash deposited in the bank account - contention of the assessee that his submissions were not considered while adjudicating the issue - HELD THAT - Despite the assessee submitting to him that a reply justifying the source of cash deposit alongwith evidence was filed to the AO, and filing copy of the same to him also, the ld. CIT(A) has, we find, passed a cryptic order dismissing the contentions of the assessee without even dealing specifically with them. Ld. Counsel has pointed out that the source of cash deposited in bank had been explained as out of land sold, and withdrawals from the account itself as also tuition fees earned in cash by his wife who was joint holder of account. As evidence copy of sale deed of land and copy of bank account was filed. But we find and agree with the Ld. Counsel that these contentions were not dealt with by the Ld. CIT(A). The assessee has also contended filing the same to the AO on the web portal of the department. An affidavit to this effect, alongwith acknowledgement of filing reply on web portal was also filed to the CIT(A). Since the contentions of the assessee clearly have remained unaddressed, we are of the view that the issue of cash deposits in the bank account of the assessee needs to be reconsidered by the AO. In view of the same, we restore the issue back to the Assessing Officer with a direction to consider the contention of the assessee and after verifying the same decide the issue in accordance with law - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Single issue: Addition made to the income of the assessee on account of alleged unexplained cash deposited in the bank account.

Analysis:
The present appeal before the Appellate Tribunal ITAT Ahmedabad pertains to the assessment year 2011-12, where the assessee challenged the order passed by the Commissioner of Income Tax (Appeals) regarding the addition made to their income due to unexplained cash deposits in the bank account. The assessee raised various grounds in the appeal related to the source of cash deposits, including income from tuition, withdrawals, and accumulated savings. The primary contention was that the Assessing Officer had treated the cash deposits as unexplained without considering the explanations and evidence provided by the assessee.

In the initial assessment, the Assessing Officer, due to lack of response from the assessee, passed an ex-parte order treating the cash deposits of ?10,15,000 as unexplained income. The Commissioner of Income Tax (Appeals) upheld this decision stating that the explanation provided by the assessee was not substantiated with evidence. The CIT(A) emphasized that the sources of the cash deposits and the genuineness of the opening cash balance were not established based on the submissions made by the assessee.

During the appeal before the ITAT, the assessee's counsel argued that they had submitted a detailed reply justifying the source of cash deposits, which was not considered by the authorities. The counsel provided evidence such as a sale deed, bank statements, and explanations for the cash deposits, including income from tuition and withdrawals. The ITAT found merit in the argument that the submissions were not adequately addressed by the CIT(A) and that the contentions regarding the source of cash deposits were not properly dealt with.

Consequently, the ITAT allowed the appeal for statistical purposes and directed the Assessing Officer to reconsider the issue of cash deposits in the bank account. The ITAT instructed the AO to review the contentions of the assessee, verify the provided evidence, and decide the matter in accordance with the law. The assessee was granted a due opportunity of hearing in this regard. The ITAT's decision highlighted the importance of considering all relevant submissions and evidence before making additions to the income of the assessee based on unexplained cash deposits.

In conclusion, the ITAT's judgment emphasized the need for a thorough examination of the explanations and evidence provided by the assessee before concluding on the nature of cash deposits in the bank account. The decision underscored the principle of natural justice and the requirement for tax authorities to consider all relevant material while making assessments.