2017 (2) TMI 1179 - AT - Income Tax

Unexplained cash deposit in the bank account - Held that - In the present case there is no doubt about the identity of the person who has given a gift of ₹ 1720000/ to the assessee but the creditworthiness of the mother of the assessee and genuineness of the transaction is not established by the assessee. Furthermore, as per the statement of the assessee. Thus, total sale price of the jewellery allegedly sold by his mother for assessment year 2007 08 is ₹ 17,20,000/- then neither the Ld. CIT appeal nor the assessing officer has examined the wealth tax aspect in the hands of the mother of the assessee. This is also required to be examined specifically with respect to the fact that assessee is a salaried employee and drawing a meager salary of ₹ 110000/-and has entered into a transaction of depositing and withdrawal in cash from his bank account and receiving used gift from his mother. Moreover with respect to deposit of cash in the bank account out of withdrawal in cash in past, in absence of verification of cash book along with reasons of withdrawal and holding cash on hand in the hands of salaried person, these facts are required to be brought on record. Thus in the interest of justice we set aside the order of the Ld. CIT appeal and restore the matter back to the file of the Ld. assessing officer to examine the cash deposited by the assessee by withdrawing in cash with the cash book with reasons for such huge withdrawal and deposits and also the fact of sale of gold by the mother of the assessee to the private parties by examining those private parties with respect to the date of sale, quantity of gold sold, rates at which it is sold as well as the fact of cash payment made by them.

Summary

Issues:
Appeal against deletion of addition for unexplained cash deposit in bank account.

Analysis:

1. Cash Deposit Explanation:
The assessee deposited a significant amount in cash in his bank account, attributing it to a combination of cash withdrawal, a gift from his mother, and a friendly loan. The assessing officer rejected this explanation and made an addition to the total income. The CIT(A) partially upheld the addition. The issue revolved around the credibility of the sources of the cash deposit.

2. Gift from Mother:
The assessee claimed to have received a substantial gift from his mother, supported by a gift deed and affidavits. The department raised doubts about the capacity of the mother to provide such gifts, the frequency of gifts, and the source of funds for the jewelry sold. The CIT(A) accepted the explanation based on the presented documents, but the departmental representative contested the genuineness of the transaction.

3. Judicial Analysis:
The Tribunal analyzed the evidence presented, including bank statements, affidavits, and gift deeds. It noted discrepancies in the explanations provided by the assessee, especially regarding the regularity of gifts from the mother and the sale of jewelry. The Tribunal emphasized the need for thorough verification of the sources of income and the genuineness of transactions. It highlighted the lack of detailed evidence, such as bills of sale for the jewelry, and the failure to establish the creditworthiness of the mother as a lender. The Tribunal concluded that the CIT(A) had erred in accepting the explanations without proper examination.

4. Decision and Directions:
The Tribunal set aside the CIT(A)'s order and directed the assessing officer to re-examine the cash deposits, withdrawals, and the source of funds, including the sale of jewelry by the mother. The Tribunal emphasized the importance of establishing the creditworthiness of the lender and the genuineness of transactions. The assessee was granted the opportunity to provide further evidence. Ultimately, the appeal of the revenue was allowed for statistical purposes, indicating a reversal of the CIT(A)'s decision.

This detailed analysis highlights the complexities of the case, the conflicting arguments presented, and the Tribunal's decision to remand the matter for further investigation to ensure a fair and thorough assessment of the issues involved.