2023 (7) TMI 1205 - AT - Income Tax

Unexplained cash deposits u/s. 69A - assessee claims to have received loans from his friends to commence business and the same has been deposited into his bank account - HELD THAT - Although, the assessee claims to have received loans from friends and relatives, but could not justify his arguments with credible evidences. AO had also not given any conclusive reasons to come to the conclusion that the cash deposits found with bank account of assessee is unexplained income. Therefore, the only possible option left with us is to estimate income from cash deposits found with savings bank account of the assessee maintained with Karur Vysya Bank. Therefore we are of the considered view that the entire cash deposits cannot be treated as unexplained money of the assessee and thus, we direct the AO to allow relief to the tune of Rs. 8 lakhs, because the source for cash deposits to that extent may be loans received from friends and relatives of the assessee. For balance amount assessee could not file any evidence to prove source for cash deposits. Therefore, we direct the Assessing Officer to sustain additions to the extent u/s. 69A of the Act - Appeal filed by the assessee is partly allowed.

Issues involved:
The appeal challenges the order of the Commissioner of Income Tax (Appeals) regarding the addition of unexplained money under section 69A of the Income-tax Act, 1961 for the assessment year 2012-13.

Grounds of Appeal:
1. The National Faceless Appeal Centre's order was deemed contrary to law, erroneous, and unsustainable.
2. The addition of Rs. 15,92,000 as unexplained money under section 69A was contested.
3. The explanation provided for cash deposits in the bank account was claimed to be valid and should have resulted in deletion of the addition.
4. The source of cash deposits from savings in Kuwait employment and friends for a new business was explained, justifying deletion of the addition.
5. Withdrawal of funds due to the failed business venture and return of money to friends was highlighted to challenge the sustained addition.
6. The appellant's occupation as a vegetable vendor was cited as a legitimate source of income, warranting deletion of the addition.
7. Overall, the appellant's submissions were argued to justify deletion of the addition under section 69A of the Act.

Judgment Details:
The appellant, an individual, did not file the income tax return for the relevant assessment year. Substantial cash deposits were made into a savings bank account, leading to a reassessment under section 147 of the Act. The Assessing Officer made an addition of Rs. 15,92,000 under section 69A due to unexplained cash deposits. The appellant's appeal to the CIT(A) was unsuccessful, resulting in the current appeal.

Upon review, the appellant presented additional evidence, including confirmation letters from individuals claiming to have provided loans for a business venture. The appellant explained that the cash deposits were from friends for the failed business, with subsequent withdrawals to repay loans. The appellant's inability to provide concrete evidence for the source of cash deposits was a point of contention.

After considering the arguments and evidence, the Tribunal found that while the appellant claimed loans from friends for the business, the lack of substantial proof led to an estimation of income from cash deposits. The Tribunal directed relief of Rs. 8 lakhs, considering this amount as sourced from loans, with the remaining Rs. 7,92,000 being treated as unexplained income under section 69A.

In conclusion, the appeal was partly allowed, with the Tribunal's decision pronounced on 26th July, 2023 in Chennai.

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