2021 (2) TMI 72 - AT - Income Tax

Unexplained cash deposit in bank account u/s 69A - story created by assessee for withdrawing the amount for settlement of the matrimonial dispute - assessee made cash deposit of ₹ 15 lakhs in her bank account during demonetization period - HELD THAT - Amounts withdrawn earlier in year 2014 from the bank account of the assessee was in ten installments of ₹ 1 lakh to ₹ 3 lakh respectively. When the matrimonial dispute was not settled till August, 2019, there was no reason for the assessee to keep the cash at home. When assessee made cash deposits of ₹ 15 lakhs in three installments in her bank account in November, 2016, would lead to irresistible conclusion that assessee was keeping unaccounted cash money of ₹ 15 lakhs with her at the time of demonetization period and the assessee realizing that such currency cannot be used anywhere, she deposited same in her bank account and purposely the return of income was filed belatedly on 25.03.2018 after expiry of the period provided u/s 139(1) for filing of the return of income within the period of limitation. There is a contradiction in the explanation of the assessee made before AO as well as before Ld. CIT(A). Thus assessee failed to explain the source of cash deposit in her bank account during demonetization period. Thus, assessee failed to explain the sources, therefore, no interference is called for in the matter. - Decided against assessee.

Summary

Issues:
Challenging addition of ?15 lakhs on account of unexplained cash deposit in bank account under section 69A of the IT Act for AY 2017-18.

Analysis:
The appellant, an individual with income from house property and other sources, deposited ?15 lakhs in HDFC Bank during demonetization. Claiming it as life savings and part of cash withdrawn earlier, the appellant's explanation was rejected, resulting in the addition to income under section 69A and 115BBE. The CIT(A) upheld this decision, stating the explanation was improbable and not maintainable. The appellant's submissions regarding a matrimonial dispute and cash withdrawals were deemed unconvincing.

The appellant's arguments, based on Tribunal decisions and a High Court judgment, were countered by the Departmental Representative's assertion that the source of the cash deposit remained unexplained. The Tribunal noted the appellant's failure to provide detailed explanations or evidence regarding the source of funds for household expenditures during the relevant period. The story of cash withdrawals for the matrimonial dispute settlement was found to lack credibility, especially as the dispute was resolved years later.

The Tribunal concluded that the appellant failed to substantiate the source of the cash deposit during demonetization. The pattern of withdrawals and deposits, coupled with the delayed filing of the income tax return, raised suspicions about the origin of the funds. The contradictory explanations and lack of supporting documentation led to the dismissal of the appeal. The Tribunal found no grounds for interference and upheld the addition to the appellant's income.

In summary, the Tribunal dismissed the appeal, affirming the addition of ?15 lakhs as unexplained income. The decision was based on the lack of credible explanations and evidence regarding the source of the cash deposit during demonetization, as well as inconsistencies in the appellant's submissions before the authorities.