2022 (5) TMI 162 - AT - Income Tax

Addition u/s 69A - unexplained cash deposits made on various dates into his bank account - assessee contended that assessee has sold agricultural land and received sale consideration by way of cash as well as through RTGS and later on in the month of December on 24.12.2008 assessee withdrew an amount of Rs.16,62,000/- intended to purchase land - HELD THAT - On perusal of the bank statement it is noticed that the assessee has withdrawn Rs.16,62,000/- on 24.12.2008 and also deposited an amount of Rs.12 lakhs on 08.01.2009. Similarly, it is noticed that assessee has withdrawn Rs.30,75,000/- on 13.02.2009 and Rs.25 lakhs was deposited on 17.02.2009. The explanation of the assessee that the monies were withdrawn intending to purchase land but since no suitable land could be found the assessee re-deposited into bank account cannot be brushed aside especially when the assessee and his family who are all agriculturists and they have sold their lands vide sale deed dated 05.08.2008 which is evident from the assessment order itself. Further on perusal of the certificate issued by HDFC Bank withdrawn cash on those dates. Even without going into the additional evidence in the form of the letter for HDFC Bank furnished by the assessee it is abundantly clear from the bank statement furnished by the assessee that there were cash withdrawals and cash deposits into bank accounts. In the case on hand the time gap between cash withdrawals and the cash deposits is not more than 15 days, where the cash deposit of Rs.12 lakhs was made. In case of cash deposit of Rs.25 lakhs made by the assessee the time gap was only 3 days. Similar view has been taken by the Delhi Bench in the case of Moongipa Investment Limited Vs. ITO 2011 (8) TMI 1067 - ITAT DELHI Explanation given by the assessee is a plausible explanation and the bank statement reflects both cash withdrawals and cash deposits within a gap of few days and, therefore, direct the Assessing Officer to delete the addition made u/s 69A - Decided in favour of assessee.

Summary

Issues:
1. Addition of Rs.37 lakhs under section 69A of the Income Tax Act.
2. Rejection of the assessee's explanation for cash deposits.
3. Consideration of additional evidence in the form of a bank certificate.
4. Applicability of legal precedents supporting the assessee's case.

Analysis:

Issue 1: Addition of Rs.37 lakhs under section 69A of the Income Tax Act
The appeal was filed against the order of the Ld. Commissioner of Income Tax (Appeals) sustaining the addition of Rs.37 lakhs made by the Assessing Officer under section 69A of the Act. The Assessing Officer treated cash deposits of Rs.12 lakhs and Rs.25 lakhs as unexplained income, leading to the dispute.

Issue 2: Rejection of the assessee's explanation for cash deposits
The assessee explained that the cash deposits were sourced from withdrawals made for purchasing land, supported by bank statements. The Ld. CIT(Appeals) rejected this explanation, citing lack of evidence. The assessee then submitted a certificate from HDFC Bank confirming the withdrawals, emphasizing that the deposits were linked to the withdrawn amounts for land deals.

Issue 3: Consideration of additional evidence in the form of a bank certificate
The additional evidence in the form of a certificate from HDFC Bank was crucial in substantiating the assessee's claim regarding the source of cash deposits. The Tribunal acknowledged the relevance of this evidence, indicating that it directly supported the explanation provided by the assessee and was integral to the case.

Issue 4: Applicability of legal precedents supporting the assessee's case
The assessee relied on legal precedents such as ACIT Vs. Baldev Raj Charla & Ors., Moongipa Investment Limited Vs. ITO, and Jaya Aggarwal Vs. ITO to bolster their argument. These cases emphasized that when cash deposits are explained by corresponding withdrawals, they cannot be treated as unexplained cash credits, especially when the time gap between withdrawals and deposits is minimal.

In the final judgment, the Tribunal found the assessee's explanation plausible, considering the evidence presented and the short time gaps between withdrawals and deposits. Relying on the bank statement and legal precedents, the Tribunal directed the Assessing Officer to delete the addition made under section 69A of the Act and re-compute the income accordingly, ultimately allowing the appeal of the assessee.

This detailed analysis highlights the key issues addressed in the judgment, the arguments presented by both parties, the role of evidence in the case, and the legal principles applied by the Tribunal in reaching its decision.