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2013 (6) TMI 623 - AT - Income TaxUnexplained cash credit - cash deposits could not be considered out of the sale proceeds of agricultural land because of time gap between the withdrawals from the bank account with Gurgaon Gramin Bank and deposits in the bank account with Punjab National Bank - CIT(A) deleted the addition - Held that - It is not disputed that the sale proceeds of the agricultural land were deposited in Gurgaon, Gramin Bank, Account No. 3136 and this amount was withdrawn from the account from 11/12/2008 to 20/12/2008. In the cash flow statement reproduced these entries have been shown as cash received from bank account no. 3136 between 11/12/2008 to 20/12/2008. The amount was deposited in PNB account no. 3415 from 22/01/2009 to 18/03/2009. These amounts are also reflected in the cash flow statements which are in conformity with the information obtained from PNB by issuing notice u/s 133(6) by AO. Therefore, the cash flow statement submitted by assessee was rightly not treated as additional evidence by CIT(A) because the primary evidence in the form of bank statement had already been submitted by assessee before the AO. Therefore, do not find any merit in the submission of ld. DR regarding no opportunity being provided to AO by ld. CIT(A). Admittedly, the AO had not pointed out any other investment being made by assessee out of the withdrawals made form Gurgaon, Gramin Bank. Therefore, merely because of the gap of 1 to 3 months between the date of withdrawal and date of deposits, it could not be inferred that the source of deposits in PNB remained unexplained. In favour of assessee.
Issues:
1. Addition of cash deposits as unexplained income under section 69B of the Income Tax Act, 1961. 2. Consideration of cash deposits from sale proceeds of agricultural land. 3. Acceptance of cash flow statement as evidence. Analysis: Issue 1: Addition of cash deposits as unexplained income The Assessing Officer (AO) made an addition of Rs. 28,66,594/- to the income of the assessee under section 69B of the Income Tax Act, 1961, as the assessee failed to explain the source of cash deposits in the Punjab National Bank account. The AO observed that the cash deposits were not from the sale proceeds of agricultural land based on the timing of withdrawals and deposits in different bank accounts. Issue 2: Consideration of cash deposits from sale proceeds of agricultural land The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition made by the AO. The CIT(A) noted that the cash deposits were explained by the assessee as withdrawals made from another bank account. The CIT(A) emphasized that in the absence of evidence proving the money withdrawn was spent elsewhere, the explanation provided by the assessee should be accepted. The CIT(A) referred to various Tribunal decisions to support this reasoning. Issue 3: Acceptance of cash flow statement as evidence The Departmental Representative (DR) argued that the cash flow statement was submitted for the first time before the CIT(A) and no opportunity was given to the AO to verify it. However, the assessee contended that the cash flow statement was prepared based on bank statements already submitted to the AO. The Tribunal found that the cash flow statement was not additional evidence as it was a compilation from the bank accounts. The Tribunal upheld the acceptance of the cash flow statement as it aligned with the bank statements and no other investments were highlighted by the AO from the withdrawals made. In conclusion, the Tribunal dismissed the Department's appeal, affirming the deletion of the addition of cash deposits as unexplained income. The Tribunal emphasized the importance of considering explanations provided by the assessee and the alignment of the cash flow statement with the bank transactions.
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