2015 (5) TMI 710 - AT - Income Tax

Unaccounted deposits - CIT(A) deleted the addition - Held that - Commissioner of Income-tax (Appeals) has correctly decided the issue because admittedly the assessee had disclosed a sum of ₹ 1.03 crores in the assessment year 2007-08, and a sum of ₹ 10 lakhs in the assessment year 2008-09. This amount was surrendered during the search and tax have been duly paid and the assessed income includes this amount of surrender. Further, cash is duly reflected in the wealth-tax return. Once the fact of having cash deposited by the Revenue during wealth-tax assessment proceedings, then later on the Revenue cannot challenge the existence of cash, therefore, we find nothing wrong with the order of the learned Commissioner of Income-tax (Appeals) and we confirm the same - Decided against revenue.

Issues involved:
- Addition of cash deposits in the Savings Bank Account
- Justification of the source of cash deposits
- Assessment of disclosed income under section 132(4)
- Acceptance of cash in hand as per wealth-tax returns
- Challenge to the existence of cash deposits

Detailed Analysis:
1. The appeal was filed by the Revenue against the Commissioner of Income-tax (Appeals)-I, Ludhiana, challenging the deletion of an addition of Rs. 94,40,180 made by the Assessing Officer due to the failure of the assessee to prove the source of cash deposits in the Savings Bank Account.
2. During assessment proceedings, it was noted that the assessee had deposited a total sum of Rs. 94,40,180 in cash in the account. The Assessing Officer raised concerns about the source of these deposits as the assessee failed to provide sufficient evidence.
3. The assessee submitted a cash flow statement showing that Rs. 80 lakhs were available with them as of April 1, 2009, from income surrendered under section 132(4) for the assessment years 2007-08 and 2008-09. This amount was duly reflected in the wealth-tax return.
4. The Assessing Officer added the Rs. 94,40,180 to the income of the assessee, questioning the availability of cash from the search conducted in 2007 and suggesting possible expenditures like a son's marriage.
5. On appeal, the Commissioner of Income-tax (Appeals) sided with the assessee, emphasizing the acceptance of the disclosed income in previous assessments and the reflection of cash in the wealth-tax return.
6. The Departmental representative supported the Assessing Officer's decision, questioning the availability of the surrendered amount from 2007 and the justification for retaining such a significant sum.
7. The counsel of the assessee presented the wealth-tax return and assessment orders, demonstrating the acceptance of the disclosed income and the availability of cash, supporting the decision of the Commissioner of Income-tax (Appeals).
8. The Commissioner of Income-tax (Appeals) highlighted the admitted facts regarding the availability of cash as per the wealth-tax returns and the acceptance of the disclosed income, concluding that the addition made by the Assessing Officer was based on suspicion and lacking factual evidence.
9. The Tribunal concurred with the Commissioner of Income-tax (Appeals), noting the disclosure and acceptance of income in previous assessments and the reflection of cash in the wealth-tax return, affirming the decision in favor of the assessee.
10. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the decision of the Commissioner of Income-tax (Appeals) based on the established facts and the absence of valid grounds to challenge the source of the cash deposits.

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