2025 (1) TMI 179 - AT - Income Tax

Addition u/s 69A - unexplained money - cash deposited by assessee in his bank account during the year - HELD THAT - Assessee claims to have deposited Rs. 47,53,965/- from the various amounts kept by his wife as gifts received during the 11 years on account of marriage, marriage anniversary, celebrations on account of birthday of two children, cash received from uncle, sister, mother and brother. It is a fact that the appellant/assessee has failed to furnish the details of business activities carried by him. As per e-filing portal, assessee filed Income-tax Returns for the years 2010-11, 2011-12 2015-16 only. The bank statements show that assessee conducted activities beyond assessment year 2015-16 but had not filed any ITR. The assessee has not offered income arising out of his activities for taxation. Be that as it may, in view of facts and circumstances of the case, to balance equity and to meet the ends of justice, we hold that source of cash deposits to the extent of Rs. 10,00,000/- as unexplained and remaining cash deposits to be out of explained source. Assessee had transferred Rs. 10,00,000/- each vide entries dated 11.05.2013 14.05.2013 to Harbans Lal Gulati who had returned Rs. 20,00,000/- vide bank entry dated 19.01.2017 in South Indian Bank, Janakpuri stand fully explained. The deposits in bank thus represents repayment of earlier payment to Gulati. Appellant/assessee has claimed that his family members vide various bank credit entries had transferred Rs. 2,63,600/- (i.e. Rs. 2,09,600/- from his mother, Rs. 27,000/- from his wife, Rs. 17,000/- from his brother and Rs. 10,000/- from his father). As such, the additions of Rs. 23,26,003/- under section 69A is unsustainable and is deleted. Appeal filed by assessee is partly allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions presented and considered in this judgment are:

• Whether the addition of Rs. 47,49,200/- under section 69A of the Income Tax Act, 1961, as unexplained cash deposits during the demonetization period, is justified.
• Whether the addition of Rs. 23,26,003/- under section 69A of the Act, representing aggregate credit entries in the bank accounts, is justified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Addition of Rs. 47,49,200/- as unexplained cash deposits

• Relevant legal framework and precedents: Section 69A of the Income Tax Act, 1961, pertains to unexplained money, where the burden of proof lies on the assessee to explain the source of any money found to be in their possession.
• Court's interpretation and reasoning: The Tribunal examined the assessee's claim that the cash deposits were accumulated over 11 years from various personal occasions and gifts. The Tribunal considered the plausibility of such accumulation against human probabilities.
• Key evidence and findings: The assessee provided a breakdown of cash received over the years from family members and personal events. However, the Tribunal noted the lack of detailed business activity records and inconsistent filing of Income Tax Returns.
• Application of law to facts: The Tribunal applied Section 69A, requiring the assessee to substantiate the source of cash deposits. The Tribunal found the explanation for Rs. 10,00,000/- as unexplained, while the remaining deposits were deemed to be from explained sources.
• Treatment of competing arguments: The Tribunal balanced the assessee's claims against the Department's skepticism of the accumulation over 11 years. The Tribunal partially accepted the assessee's explanation but maintained a portion as unexplained.
• Conclusions: The Tribunal concluded that Rs. 10,00,000/- of the cash deposits remained unexplained, while the rest were satisfactorily explained.

Issue 2: Addition of Rs. 23,26,003/- as unexplained credit entries

• Relevant legal framework and precedents: Section 69A of the Income Tax Act, 1961, also governs unexplained credit entries in bank accounts, requiring the assessee to explain the source of such credits.
• Court's interpretation and reasoning: The Tribunal evaluated the transactions involving Rs. 20,00,000/- returned by Harbans Lal Gulati and other credits from family members.
• Key evidence and findings: The assessee demonstrated that Rs. 20,00,000/- was a repayment from Harbans Lal Gulati, and additional credits were from family members.
• Application of law to facts: The Tribunal applied Section 69A, considering the evidence provided by the assessee to substantiate the sources of the credit entries.
• Treatment of competing arguments: The Tribunal accepted the assessee's explanation for the credit entries, finding them to be satisfactorily explained.
• Conclusions: The Tribunal concluded that the addition of Rs. 23,26,003/- was unsustainable and deleted it.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: The Tribunal stated, "In view of facts and circumstances of the case, to balance equity and to meet the ends of justice, we hold that source of cash deposits to the extent of Rs. 10,00,000/- as unexplained and remaining cash deposits to be out of explained source."
• Core principles established: The judgment reinforces the principle that the burden of proof under Section 69A lies on the assessee to satisfactorily explain the source of cash deposits and credit entries.
• Final determinations on each issue: The appeal was partly allowed, with Rs. 10,00,000/- of cash deposits remaining unexplained, while the addition of Rs. 23,26,003/- as unexplained credit entries was deleted.