2020 (5) TMI 592 - AT - Income Tax

Unexplained deposit in assessee s bank account - proof of spending earlier withdrawals made by the assessee - HELD THAT - Department has no material to show that the earlier withdrawals made by the assessee has been spent for any specific purposes and not the said amount available with the assessee to redeposit into the bank account. There is also no evidence that the assessee has made withdrawals on various dates for any other purposes than the admission of assessee s son in a medical college. It cannot be said that the withdrawals have not been utilized to redeposit with the bank account. Therefore, it has to be presumed that the assessee has withdrawn the cash and the same remained to be unutilized for one reason or the other, and the cash remained with the assessee. In such circumstances, due credit has to be given for such withdrawal of cash by the assessee. See SHRI MATHEW PHILIP 2019 (11) TMI 1404 - ITAT COCHIN wherein held cash deposits made by the assessee on various dates should be reasonably presumed that it is from earlier withdrawals made by the assessee on various dates. - Decided in favour of assessee.

Summary

Issues Involved:

1. Sustaining the addition of ?10,10,000 on account of unexplained deposit in the assessee's bank account.

Issue-wise Detailed Analysis:

1. Sustaining the Addition of ?10,10,000 on Account of Unexplained Deposit in Assessee's Bank Account:

The assessee contested the order of the CIT(A) dated 27.11.2019 concerning the assessment year 2013-14, which upheld an addition of ?10,10,000 due to unexplained deposits in the assessee's bank account. The Assessing Officer (A.O.) observed a cash deposit of ?20,80,000 on 03.11.2012 in the ICICI Bank account, which was converted into a Fixed Deposit (FD) of ?20,00,000 on 05.11.2012. The assessee claimed the source of this deposit was from prior withdrawals from SBI and ICICI bank accounts, providing a detailed table of these transactions.

The A.O. rejected this explanation, arguing that a tech-savvy individual would not withdraw and hold large sums of money at home only to deposit them later. The A.O. also noted discrepancies such as the redeposit of ?4,10,000 into the SBI account on 27.06.2012 and subsequent payment through cheque. Consequently, the A.O. added ?20,80,000 to the taxable income.

Upon appeal, the CIT(A) upheld the A.O.'s decision, noting the assessee's failure to reconcile the withdrawals and deposits satisfactorily. The Tribunal, in its earlier order dated 15.03.2018, remanded the case back to the CIT(A) for reconsideration, emphasizing the need to examine the CA's certificate and provide reasoning for any rejection.

In the second appeal, the assessee explained the withdrawals were for securing medical admission for his son, which did not materialize, leading to the redeposit of funds. The CIT(A) partially accepted this explanation, reducing the addition to ?10,10,000, reflecting withdrawals made in June 2012 that were not satisfactorily explained or related to the deposit in November 2012.

The Tribunal, upon reviewing the case, noted the lack of evidence from the department to refute the assessee's claim that the withdrawals were not used for other purposes. The Tribunal referenced a similar case (Sri. Mathew Philip v. ITO) where it was held that unless contrary evidence is provided, earlier withdrawals should be presumed available for redeposit.

Given the absence of material evidence against the assessee's explanation, the Tribunal concluded that the withdrawals could reasonably be presumed to have been redeposited. Thus, the Tribunal deleted the addition of ?10,10,000, allowing the appeal in favor of the assessee.

Conclusion:

The Tribunal allowed the appeal, deleting the addition of ?10,10,000, based on the principle that earlier withdrawals should be presumed available for redeposit unless contrary evidence is provided. The decision emphasized the need for the department to provide concrete evidence when disputing the source of deposits.