2024 (11) TMI 566 - AT - Income Tax

Addition u/s 68 - Appellant had failed to give the details of source of cash deposits - as argued cash deposit were made out of cash balance available with the Appellant as also the cash withdrawals made by the Appellant - HELD THAT - As submitted that the return filed by the Appellant for the immediately preceding Assessment Year 2015- 16 has been accepted and the availability of cash-in-hand as on the last date of the relevant previous year 2014-15 was not in dispute. However, on perusal of record we find that the aforesaid submissions made by the Appellant are not supported by any material on record. As observed by the CIT(A), the summary of cash deposits and withdrawals on which reliance was placed by the Learned Authorized Representative for the Appellant is not supported by corresponding supporting documents such as bank statement, income tax return pertaining to Assessment Year 2015- 16, and financial statements. On the other hand we note that the Orders passed by the authorities below are silent on this issue. The details of cash deposits and withdrawals for the relevant previous year 2015-16 have been reproduced by the CIT(A) in the order impugned according to which cash-in-hand was available with the appellant as on 01/04/2015. Accordingly, given facts and circumstances of the present case we deemed it appropriate to remand the issue pertaining to addition u/s 68 back to the file of Assessing Officer with the directions to adjudicate the same a fresh after granting Appellant reasonable opportunity of being heard. Appellant is directed to file all documents/details and supporting evidence explaining source of cash deposits including relevant financial statements, bank statement, ledger accounts and return of income to substantiate the availability of cash in hand - Ground allowed for statistical purposes.

Summary

Issues:
Appeal against order by National Faceless Appeal Centre under Income Tax Act, 1961 for Assessment Year 2015-16. Addition of cash deposits under Section 69A. Application of Peak Credit Theory. Dispute over source of cash deposits.

Analysis:

The Appellant filed an appeal against the order passed by the National Faceless Appeal Centre (NFAC) under the Income Tax Act, 1961 for the Assessment Year 2015-16. The issue revolved around the addition of cash deposits under Section 69A of the Act. The Assessing Officer initiated re-assessment proceedings as the Appellant's explanation for cash deposits was deemed insufficient. The Appellant claimed the deposits were from past savings and withdrawals, but lacked documentary evidence. The Assessing Officer added INR 96,00,000 under Section 69A, citing failure to explain the source of cash. The CIT(A) partially allowed the appeal, applying the Peak Credit Theory and reducing the addition to INR 79,53,025, considering it the maximum cash available to the Appellant during the relevant period.

The Appellant contended that the cash deposits were sourced from available cash balance and withdrawals. However, the CIT(A) and Assessing Officer found the Appellant's submissions unsubstantiated. The CIT(A) upheld the addition but limited it based on peak credit theory. The Appellant challenged this decision before the Tribunal, arguing the opening cash balance supported the deposits. The Tribunal noted the lack of supporting documents for the Appellant's claims and remanded the issue back to the Assessing Officer for fresh adjudication. The Appellant was directed to provide necessary documents and evidence to explain the source of cash deposits, failing which the Assessing Officer could decide based on existing records.

In conclusion, the Tribunal allowed the appeal for statistical purposes, remanding the issue of cash deposits back to the Assessing Officer for a fresh decision based on the evidence to be provided by the Appellant. The decision highlighted the importance of substantiating the source of cash deposits and providing supporting documentation in income tax assessments.