2023 (3) TMI 463 - AT - Income Tax

Addition u/s 69A - unexplained cash deposits in the bank account of the appellant - contention of the assessee is that he has received the amount from his parents and wife who are also assessed to income tax and they have given confirmation letters - contention of the revenue on this aspect is that there is time gap between the sale deed and deposit of cash in the bank account of the assessee - HELD THAT - It is not a valid reason to make addition u/s 69A simply for the reason that there is time gap. The persons who gave money are none other than the assessee s parents and wife. The assessee has filed paper book which established the sale transaction of the family members considering the above evidence. Therefore that the assessee has explained his source properly. Therefore direct the AO to delete the addition made u/s 69A - Appeal of the assessee is allowed.

Summary

Issues:
1. Addition of Rs.31,00,000 as unexplained income under section 69A of the Income Tax Act.
2. Appeal against the order of Commissioner of Income Tax (Appeals) regarding the addition made by the Assessing Officer.

Analysis:
1. The issue in question revolves around the addition of Rs.31,00,000 as unexplained income under section 69A of the Income Tax Act. The Assessing Officer (AO) had disallowed this amount on account of gifts received by the assessee from his father, mother, and wife through the sale of agricultural lands. The AO treated this sum as unexplained income due to a lack of circumstantial evidence and a time lag between the availability of the source and the deposit. The CIT(A) upheld this addition, leading to the appeal before the Tribunal.

2. The Tribunal considered the arguments presented by both parties. The assessee contended that the cash deposits were gifts received from his parents and wife, who are also income tax assesses, supported by confirmation letters and evidence of the sale transactions. The revenue, on the other hand, argued that the timing of the transfers did not align with acceptable norms, questioning the genuineness of the gifts. However, the Tribunal found merit in the assessee's explanation. The Tribunal noted that the source of the funds was established through the sale transactions of family members and confirmed assesses, dismissing the time gap as a sole reason for addition under section 69A. Consequently, the Tribunal directed the AO to delete the addition of Rs.31,00,000 made under section 69A of the Act.

3. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the assessee had adequately explained the source of the disputed funds. The Tribunal's decision highlights the importance of substantiating claims with proper documentation and evidence to refute allegations of unexplained income, even in cases where timing discrepancies exist between transactions and deposits.