2018 (12) TMI 583 - HC - Income Tax

Addition u/s 68 - Unexplained cash credit - Held that - Explanation of the assessee connecting the other cash withdrawals to cash deposits was rejected noticing the time difference between the withdrawals and deposits. The dates of withdrawal and deposits in cash, we observe, are not disputed and challenged. This reasoning has merit in view of rather illusionary explanation given by the appellant-assessee for making withdrawal of more than ₹ 99,00,000/- in cash during 12 months from April, 2009 to March, 2010. Pertinently, the alleged deal did not materialize. Reasoning of the assessing officer was for additional reason confirmed by the Commissioner of Income Tax (Appeals). Aforesaid factual findings have been upheld by the Tribunal, which is the final fact finding authority. Burden to explain the source of cash deposit was on the appellant-assessee, who as per the finding has not been able to discharge this burden. The evidence on record is undisputed, and the inference and factual findings recorded we would observe are supported by cogent and weighty reasoning. Explanation of the assessee has been duly considered and not ignored. Implausible and lame justification for making cash withdrawals has exposed and dented the concocted explanation regarding source of the cash deposit. Factual findings are based on cumulative effect of all facts covering all essential points. We would not interfere with factual findings unless they are irrational and absurd, which no person acting judicially and properly instructed in the field of law of taxation would have passed.

Summary

Issues Involved:
1. Application for condonation of delay in filing the appeal.
2. Legitimacy of the addition of ?26,25,000/- as unexplained cash deposits.
3. Assessment of the appellant-assessee's explanation for cash withdrawals and deposits.

Detailed Analysis:

1. Application for Condonation of Delay:

The appeal filed by the appellant-assessee was delayed by 59 days. Before issuing notice on the application for condonation of delay (C.M. No. 46157/2018), the court decided to examine the appeal on its merits. Ultimately, the court dismissed the application for condonation of delay, along with the appeal, due to the lack of merit in the appellant-assessee's case.

2. Legitimacy of the Addition of ?26,25,000/-:

The Tribunal upheld the addition of ?26,25,000/- as unexplained cash deposits, which was initially sustained by the Commissioner of Income Tax (Appeals). The appellant-assessee challenged this finding as perverse, arguing that the source of the cash deposit of ?35,25,000/- was explained by previous withdrawals of ?75,50,000/- from her bank account. However, the Assessing Officer (AO) rejected this explanation due to several inconsistencies and the lack of a credible link between the withdrawals and deposits.

3. Assessment of the Appellant-Assessee's Explanation:

The appellant-assessee claimed that the cash was withdrawn for a property deal that did not materialize. The AO noted several discrepancies:
- The appellant-assessee withdrew ?99,25,000/- despite being advised to keep only ?42,50,000/- ready.
- The pattern of withdrawals and deposits did not align with the explanation provided.
- The appellant-assessee failed to produce the real estate agent or any supporting proof regarding the property deal.
- The AO concluded that the withdrawals were not meant for the property transaction but for some other undisclosed purpose, making the cash deposits unaccounted income.

The Commissioner of Income Tax (Appeals) partially accepted the appellant-assessee's explanation for ?9,00,000/- due to a small time gap between the withdrawal and deposit but upheld the addition of ?26,25,000/- due to the significant time difference between other withdrawals and deposits.

The Tribunal, as the final fact-finding authority, upheld these factual findings. The court emphasized that the burden to explain the source of cash deposits was on the appellant-assessee, who failed to discharge this burden. The court found the AO's reasoning cogent and weighty, rejecting the appellant-assessee's explanation as implausible and concocted.

Conclusion:

The court dismissed the application for condonation of delay and the appeal, affirming the addition of ?26,25,000/- as unexplained cash deposits due to the appellant-assessee's failure to provide a credible explanation for the source of the cash deposits.