2024 (8) TMI 223 - AT - Income Tax

Unexplained cash deposits in bank account - unexplained money u/s 69A - HELD THAT - Prior to aforestated cash deposit the assessee had obtained a Gold-Loan from the same bank and made equal cash withdrawal for the purpose of his daughter s marriage who recently completed her Master in Pharmacy. Postponing assessee-father s plan, the daughter wanted to continue further education/studies and by her fortunate she was able to get admission in Narsee Monjee Institute of Management Studies, Shirpur, Dist. Dhule on 16/07/2016 for MBA degree . But natural the assessee had to postpone daughter s marriage plan due to which the balance cash available with him after payment of MBA admission Fee was deposited into the same bank, since as was not required for the time-being. Though the period of cash deposits coincided with period of demonetisation, the source available with assessee in our considered view has been fully satisfactorily explained by him before both the tax authorities below. Revenue on the other hand could hardly dismantle the explanation by bringing any deprecative material on record to prove otherwise. The burden of proof that, the nature sources of amount of cash deposits made into bank account do not in any way represents income is on claimant assessee and when discharged the same fully satisfactorily then the Revenue in view of Hon ble Apex Court decision in Shashi Garg 2019 (7) TMI 410 - SC ORDER is not entitled to treat the same as unexplained income u/s 69A of the Act and saddled the assessee on mere conjecture guesswork. We set-aside the impugned order and direct the Ld. AO to delete the addition in its entirety. Assessee appeal allowed.

Summary

Issues: Appeal challenging assessment order under Income-tax Act, 1961 for AY 2017-18; Cash deposits treated as unexplained income under section 69A; Burden of proof on assessee to explain nature and source of cash deposits.

Analysis:
The appeal before the Appellate Tribunal challenged the assessment order passed under the Income-tax Act, 1961 for the assessment year 2017-18. The case involved cash deposits of Rs. 7,51,939 made by the individual assessee into a bank account with the Nashik Merchant Co-op. Bank Ltd. The Income Tax Officer treated these cash deposits as unexplained money under section 69A of the Act and taxed them under section 115BBE. The assessee's explanation was not accepted by the CIT(A), leading to the appeal before the Tribunal.

Prior to the cash deposits, the assessee had obtained a Gold-Loan of Rs. 8,50,000 from the same bank for his daughter's marriage expenses. However, due to his daughter's decision to pursue further studies and enroll in an MBA program, the marriage was postponed. The cash deposited into the bank account post the daughter's MBA admission was surplus and not immediately required. The assessee provided a detailed explanation for the source of the cash deposits, which coincided with the demonetization period. The Tribunal found the explanation satisfactory, noting that the Revenue failed to provide any contradictory evidence.

The burden of proof to establish that the cash deposits do not represent income was on the assessee, as per legal precedents. The Tribunal referred to the Supreme Court decision in 'Shashi Garg Vs PCIT' to emphasize that the Revenue cannot treat such deposits as unexplained income under section 69A without concrete evidence. Since the assessee satisfactorily explained the nature and source of the cash deposits, the Tribunal set aside the orders of the lower authorities and directed the AO to delete the addition entirely.

The Tribunal allowed the assessee's appeal, emphasizing that the action of the tax authorities below was not justified based on the explanation provided by the assessee. The order was pronounced in open court, overturning the previous assessment and providing relief to the assessee in this matter.