2024 (2) TMI 1517 - HC - Income Tax

Unexplained cash credit - unexplained income - HELD THAT - Assessee has failed to offer any explanation for the cash deposited in the bank account of the assessee in the month of February and March 2015. Tribunal after considering the submissions has also given relief of Rs. 2, 80, 000/- and made addition of Rs. 22, 00, 000/- out of Rs. 24, 80, 000/- by the Assessing Officer confirmed by the CIT(Appeal). It appears from the explanation placed on record along with the memo of appeal by way of paper book in the submissions made before the CIT(A) the assessee tried to explain the cash deposit in the bank account however such explanation is not accepted either by the CIT(Appeal) as well as the Tribunal. Decided against assessee.

Summary

ISSUES PRESENTED and CONSIDERED1. Whether the Tribunal was justified in sustaining the addition of unexplained cash credit amounting to Rs. 22,00,000 under the Income Tax Act, 1961?2. Whether the appellant provided a satisfactory explanation for the cash deposit in the bank account during the relevant period?ISSUE-WISE DETAILED ANALYSISThe appellant, a Hindu Undivided Family (HUF), filed a return of income for the assessment year 2015-16, declaring a total income of Rs. 3,21,069. The Assessing Officer, after noting a cash deposit of Rs. 24,80,000 in the appellant's bank account, sought an explanation for the source of the deposit. The appellant claimed to have withdrawn Rs. 37,32,000 and received cash sales of agricultural products amounting to Rs. 4,93,952, asserting that there was sufficient cash balance for the deposit. However, the Assessing Officer did not accept this explanation and made an addition of Rs. 24,80,000.The appellant appealed to the CIT (Appeal), who upheld the assessment order. Subsequently, the appellant approached the Tribunal, which affirmed the addition of Rs. 22,00,000 as unexplained income, granting a benefit of Rs. 2,80,000. The Tribunal found that the appellant failed to provide a satisfactory explanation and evidence for the cash deposits, despite claiming to have sufficient cash balance and agricultural income.The appellant contended that it had adequately explained the cash balance and agricultural income before the authorities, but their submissions were disregarded. The Tribunal, after considering the appellant's arguments, upheld the addition of Rs. 22,00,000, concluding that no substantial question of law arose from their decision.SIGNIFICANT HOLDINGSThe Tribunal upheld the addition of Rs. 22,00,000 as unexplained income, despite the appellant's assertions of sufficient cash balance and agricultural income. The Tribunal's decision was based on the appellant's failure to provide a satisfactory explanation for the cash deposits, leading to the dismissal of the appeal for lack of merit. The Tribunal's ruling emphasizes the importance of substantiating sources of income and providing clear explanations for financial transactions to avoid additions under the Income Tax Act, 1961.