2016 (8) TMI 313 - AT - Income Tax

Addition on account of cash deposited in the bank account - Held that - In the present case, it is noticed that out of the addition of ₹ 3,94,900/- sustained by the ld. CIT(A) a sum of ₹ 1,54,900/- was the opening cash balance which was brought forward by Smt. Sunita Sharma in her cash book, so, the said amount was not pertaining to the year under consideration and cannot be added. The another addition of ₹ 40,000/- was sustained for the deposits on 03.04.2009. However, on the perusal of the bank account, it is noticed that there was no such deposits on 03.04.2009. However, there was cash deposit of ₹ 40,000/- on 13.04.2009. It, therefore, appears that the date was wrongly mentioned by the ld. CIT(A) in the impugned order because the observations of the AO in the assessment order was that a sum of ₹ 40,000/- was deposited on 13.04.2009 for which no source of deposit was shown in cash flow statement and in the copy of the cash book also. In opinion, if no such entry had been shown, the addition to that extent deserves to be sustained. Accordingly, addition of ₹ 40,000/- is sustained. The another addition of ₹ 2,00,000/- was sustained by the ld. CIT(A) on account of house hold expenses out of the cash withdrawals. In opinion, the said addition was not sustainable, particular when nothing was brought on record to substantiate that out of the withdrawals an amount to the extent of ₹ 2,00,000/- were used by the wife of the assessee for incurring house hold expenses. In view of the above discussion the addition to the extent of ₹ 40,000/- is sustained and the remaining addition of ₹ 3,54,900/- is deleted.

Summary

Issues:
Appeal against addition of cash deposits in bank account.

Analysis:
1. The assessee appealed against the addition of ?3,94,900 made by the AO on account of cash deposits in the bank account, challenging the order of the ld. CIT(A)-2, Gurgaon dated 12.11.2015.

2. During the assessment proceedings, the AO observed various deposits and withdrawals in the bank account maintained with Axis Bank, Rohtak. The AO sought explanations regarding the source of each credit entry and purpose of debit entries. The assessee claimed that the transactions were related to his wife and submitted an affidavit to support the claim. The AO accepted one deposit but disallowed others totaling ?6,09,000.

3. The assessee contended before the ld. CIT(A) that the bank account was joint with his wife, who maintained records of all transactions. The wife's cash book covering transactions from 01.04.09 to 31.03.2010 was provided as evidence. The appellant argued that the AO lacked justification for disbelieving the affidavits and failed to consider withdrawals as a source for deposits.

4. The ld. CIT(A) partially allowed the appeal, restricting the addition to ?3,94,900. The CIT(A) noted the lack of evidence linking the transactions to the in question. The appellant's explanation regarding the opening balance and certain deposits was rejected, but household expenses were considered, reducing the addition.

5. The assessee further appealed, emphasizing the joint ownership of the bank account with his wife. The appellant challenged the addition of the opening cash balance and certain deposits, arguing they were not relevant to the assessment year. The ld. DR supported the lower authorities' decisions, asserting that the joint account implied ownership by the assessee.

6. Upon review, the Tribunal found that the opening balance and certain deposits were not attributable to the relevant year and should not have been added. However, a deposit of ?40,000 was sustained due to discrepancies in the dates mentioned. The addition for household expenses lacked substantiation and was therefore deleted.

7. Consequently, the Tribunal partially allowed the appeal, sustaining the addition of ?40,000 while deleting the remaining ?3,54,900. The decision was pronounced on 29/06/2016.