2015 (1) TMI 304 - AT - Income Tax

Unexplained cash deposits - Additions u/s 68 Held that - Huge amount of cash was found to have been deposited in assessee s bank account - during the assessment proceeding apart from claiming that the amounts were received from the buyers of real estate to be given to the sellers of real estate which was temporarily parked in the bank account, assessee has not produced any other supporting evidence - However, assessee has not furnished any supporting evidence to substantiate claim by way of confirmation letters either from the buyers of real estate or from the sellers - Assessee has not even furnished a single name and address of either buyer or seller of the property or particulars of property transacted through him - assessee s explanation cannot be accepted on the face value in absence of supporting evidences - it is not understood why and how the buyers were handing over the sale consideration, that too in cash, to assessee instead of paying directly to sellers. It is hard to believe that when assessee is carrying out transactions of the magnitude of ₹ 2,78,44,000 he has failed to remember a single name and address of the person on whose behalf he has carried out such Shri Ramishetty Nageswar Rao transaction or who has paid money to him - CIT(A) was not justified in accepting assessee s explanation with regard to cash deposits made in the bank account in absence of any supporting evidence by putting the onus on AO - When cash deposits are found in the bank account of the assessee, onus is on the assessee to prove the source of such deposits with adequate evidence - Merely, because AO did not find any other investment in the name of the assessee cannot be the only reason to conclude that deposits in the bank accounts do not belong to the assessee even in absence of any other supporting evidence - as the CIT(A) has deleted the addition without proper supporting evidence, the order of the CIT(A) is set aside and the matter is remitted back to the AO for verification of claim Decided in favour of revenue.

Summary

Issues:
- Deletion of an amount treated as unexplained cash deposits by AO

Analysis:
- The department's appeal was against the CIT(A)'s order deleting an amount of Rs. 1,59,35,000 treated as unexplained cash deposits by the AO.
- The assessee, an individual, did not file an income tax return initially for the AY in question but later declared income of Rs. 86,230 in response to a notice u/s 148.
- The AO observed cash deposits of Rs. 2,67,35,000 in the assessee's bank account and sought explanations, which the assessee attributed to real estate brokerage transactions without providing substantial evidence.
- The CIT(A) initially dismissed the assessee's appeal ex-parte but upon ITAT's direction, reheard the case and accepted the explanation that the deposits were from real estate transactions, setting the income at Rs. 69,610.
- The department argued that the assessee failed to provide evidence supporting the claim of deposits from buyers, shifting the burden of proof to the assessee.
- The assessee contended that the cash deposits were temporary and related to real estate transactions, as evidenced by the nil closing balance in the bank account.
- The ITAT found the CIT(A) erred in accepting the explanation without adequate evidence and remanded the case to the AO to verify the source of deposits with proper evidence, directing a re-examination of the issue.

Conclusion:
- The ITAT allowed the department's appeal for statistical purposes, emphasizing the need for the assessee to substantiate the source of cash deposits from real estate transactions with supporting evidence to avoid additions to income.