2023 (9) TMI 602 - AT - Income Tax

Addition on Cash Deposit made in bank account - As submitted appellant has received freight charges and made withdrawal from bank and the cash on hand has been deposited in to the bank account - HELD THAT - We observe that the assessee has been able to reasonably explain that the source of deposits made in the bank account were out of the cash withdrawals made by the assessee from the bank account from time to time and also from the cash in hand held by the assessee. It is also notable that in the Remand Report, the Assessing Officer has not made any specific adverse inference against the assessee. Looking into the facts of the instant case, wherein the assessee has given a detailed explanation that the source of cash deposits was out of cash withdrawals from the bank account and the cash in hand generated from the business of transportation, and nothing specific has been placed on record by the revenue authorities to controvert the assertion made by the assessee, then the source of such cash deposits can be said to be explained by the assessee. It is a well-settled principle of law that once there are substantial cash withdrawals which have been made by the assessee from his bank account, then the source of cash deposits in the same bank account can be presumed to have been made from the earlier cash deposits, unless certain specific facts are brought on record to establish that the assessee has spent or invested the aforesaid amount so that such cash is not available with the assessee for redeposit. Accordingly, we are of the considered view that the additions are liable to be deleted. Appeal of the assessee is allowed.

Summary

Issues involved:
The issues involved in this legal judgment pertain to the confirmation of addition of Rs. 8,49,000 on cash deposits made in a bank account without considering the sources of the cash deposits and the explanation provided by the assessee.

Grounds of Appeal:
The appellant contended that the Ld. CIT(A) erred in law and on facts by confirming the addition of Rs. 8,49,000 on cash deposits made in the bank account without considering the sources of the cash deposits and the related lack of cogent evidence.

Assessment by AO:
During the assessment, the Assessing Officer observed that the assessee had deposited Rs. 8,49,000 in his bank account with Kotak Mahindra Bank Ltd. The assessee failed to provide a specific explanation for the source of this cash deposit, leading to the addition of the amount as unexplained income.

Submission before Ld. CIT(A):
In the appeal, the assessee, engaged in transportation business, submitted that the cash deposits were from freight charges, cash withdrawals from the bank, and cash on hand. Additional evidence such as cash book, bank ledger, and bank statement were presented. However, Ld. CIT(A) confirmed the additions citing discrepancies in the appellant's submissions.

Appellant's Arguments:
The appellant argued that the cash deposits were from withdrawals made from the bank and cash on hand. The Assessing Officer did not raise adverse comments on the merits of the case. The appellant provided a cash flow statement, bank statement, and cash book to support the explanation for the source of the cash deposits.

Decision of the Tribunal:
The Tribunal noted that the appellant reasonably explained that the cash deposits were from withdrawals and cash on hand. No adverse inference was made by the Assessing Officer, and Ld. CIT(A) did not provide concrete evidence to challenge the appellant's explanation. Citing legal precedents, the Tribunal concluded that the additions were to be deleted as the source of the cash deposits was adequately explained by the appellant.

Conclusion:
The Tribunal allowed the appeal of the assessee, emphasizing that the source of the cash deposits was satisfactorily explained and no specific evidence was presented to refute the appellant's assertions. The additions of Rs. 8,49,000 were directed to be deleted.