2022 (3) TMI 145 - AT - Income Tax

Unexplained cash deposit - assessee is a senior citizen and is a widow - HELD THAT - The cumulative cash withdrawal upto 08.11.2016 is of ₹ 53,76,500/- and the corresponding cash deposits upto 08.11.2016 is of ₹ 10,61,000/-. This means that as on 08.11.2016, the assessee had cash in hand of ₹ 43,15,500/- from the cash withdrawals made during the period 01.04.2016 to 08.11.2016. This fact is well proved with the copies of bank statements filed by the assessee and the same remains uncontroverted by the ld. D/R. Under these given facts the Revenue hardly has any case because immediately prior to deposit of the alleged cash sum of ₹ 16,00,500/- the assessee had cash in hand of ₹ 43,15,500/- which is sufficient enough to explain the source of alleged cash deposit. We, therefore, find merit in the contention of the ld. Counsel for the assessee and fail to find any merit in the finding of the CIT(A) and thus, hold that the assessee has duly explained the alleged cash deposit of ₹ 16,00,500/- and therefore, no addition is called for u/s 68 - We accordingly delete the addition and allow the grounds raised by the assessee challenging the addition for unexplained cash deposit - Decided in favour of assessee.

Summary

Issues:
Appeal against order of CIT(A) for AY 2017-18 - Addition for unexplained cash deposit of ?16,00,500.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income-tax (Appeals) for the Assessment Year 2017-18, challenging the addition of ?16,00,500 as unexplained cash deposit. The Assessing Officer (AO) had made the addition under section 68 of the Income Tax Act, 1961, for cash deposits during the demonetization period. The appellant contended that the cash deposits originated from disclosed bank accounts and were fully explained and corroborated.

2. The appellant raised multiple grounds challenging the CIT(A)'s order. The appellant argued that the CIT(A) failed to consider the presented evidence and merely reproduced the AO's observations without independent application of mind. The appellant also highlighted the regular cash withdrawals and occasional deposits made, indicating the availability of sufficient internally generated cash balance, thus precluding the inference of using extraneous money.

3. The Tribunal considered the delay in filing the appeal due to pandemic circumstances and condoned the delay of 48 days. The main issue revolved around the unexplained cash deposit of ?16,00,500. The appellant, a senior citizen, declared income of ?7,24,280 for the AY2017-18. The AO observed cash deposits in the appellant's bank accounts during the demonetization period, which the appellant explained as originating from cash withdrawals. However, the AO did not accept the explanation, leading to the addition under section 68.

4. During the Tribunal proceedings, the appellant presented evidence showing cash withdrawals before the alleged cash deposits. The appellant's cumulative cash withdrawals exceeded the cash deposits, indicating a sufficient cash balance prior to the deposits. The Tribunal found merit in the appellant's contentions, noting that the appellant had adequately explained the cash deposit. Consequently, the Tribunal deleted the addition of ?16,00,500 and allowed the appeal.

5. The Tribunal's decision was based on the appellant's demonstrated cash withdrawals exceeding the cash deposits, establishing a sufficient cash balance to explain the source of the alleged cash deposit. The Tribunal held that the appellant had adequately explained the cash deposit and, therefore, concluded that no addition was warranted under section 68 of the Act. As a result, the Tribunal allowed the appeal, overturning the CIT(A)'s decision on the unexplained cash deposit issue.

This detailed analysis covers the issues raised in the appeal, the arguments presented by the parties, and the Tribunal's decision based on the evidence and legal provisions involved in the case.