2015 (9) TMI 371 - AT - Income Tax

Addition u/s 69A on account of cash deposit in the bank account - Held that - On examining the bank account submitted by the assessee we find that the assessee had withdrawn cash in most of the instances by way of issuing cheques to various parties from Surat and other places. Similarly, cash was deposited from various places in the assessee s bank account. This points out that there was some activity carried on by the assessee relating to business. The revenue has it means to find out the nature of transactions transacted in the bank accounts of the assessee. However, the revenue has failed to make such exercise and simply presumed the facts to its convenience that the entire cash deposited by the assessee was the income of the assessee. We do not subscribe to this view of the revenue. The revenue has also not brought anything on record before us stating that the assessee had made any investment from such income. Further, considering the particulars of transactions reflected in the bank statement one can presume that the assessee was indulging in trading activities probably of art silk cloth as claimed by the assessee. No doubt, the onus is on the assessee to establish his claim which he has not complied fully. However, the revenue has also not brought anything on record to show that the cash deposited in the bank account of the assessee was his income from undisclosed sources without commenting on the cash withdrawals made by the assessee. Thus the entire deposits of ₹ 45,85,861/- made by the assessee in his bank account as observed by the learned AO has to be treated as total turnover of the assessee with respect to his undisclosed business of trading in art silk cloth and accordingly the income of the assessee shall be estimated at 8% of the total turnover. It is ordered accordingly. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Addition of cash deposit in bank account under section 69A of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Addition of cash deposit in bank account under section 69A of the Income Tax Act, 1961.

The appeal was filed by the assessee against the order of the CIT(A) confirming the addition of Rs. 45,85,861 under section 69A of the Income Tax Act, 1961, for the assessment year 2008-09. The assessee contended that the cash deposit in the bank account was related to business transactions of sales and purchases of Art Silk Cloth. However, the AO added the amount as unexplained money due to various reasons, including the failure of the assessee to explain the source of the deposits and the nature of transactions. The CIT(A) upheld the AO's decision, stating that the appellant failed to provide evidence supporting the claim of carrying out trading activities. The appellant relied on previous ITAT and High Court decisions to support the appeal.

Upon examination of the bank account details, it was noted that the assessee had withdrawn cash by issuing cheques to various parties and deposited cash from different places. This indicated some business activity by the assessee. However, the revenue authorities failed to conduct a thorough investigation into the nature of transactions and presumed that the entire cash deposit constituted the assessee's income. The ITAT disagreed with this approach, stating that the revenue did not provide evidence that the cash deposits were from undisclosed sources or that the assessee made investments from such income. Considering the transactions reflected in the bank statement, the ITAT estimated the income at 8% of the total turnover, treating the deposits as turnover from the undisclosed business of trading in art silk cloth.

In conclusion, the ITAT partly allowed the appeal, overturning the addition made by the revenue authorities and estimating the income based on the turnover of the undisclosed business activity.

This detailed analysis covers the issues involved in the judgment, providing a comprehensive understanding of the legal reasoning and decision-making process.