2021 (2) TMI 1032 - AT - Income Tax

Addition of cash deposits in the bank account of the assessee - assessee submitted that cash was deposited on behalf of his client Shri P.S. Narayana for Life Insurance Premium - HELD THAT - We do not agree with the contention of assessee because assessee made a cash deposit of the impugned amount in his bank account, therefore, burden was upon the assessee to explain the source of the cash deposit in his bank account through evidence. However, assessee has failed to prove the source of the same, therefore, it being unexplained investment was rightly added to the income of the assessee. It is also unbelievable that cash amount if received earlier would have been deposited in installments in bank account of the assessee. The entire circumstances would lead to irresistible conclusion that when assessee was caught by the Revenue authorities to explain the cash deposits in his bank account, assessee made a frivolous claim of the alleged amount received from Shri P.S. Narayana for getting insurance policies. It is also a fact that no evidence has been produced before the authorities below of the source of the cash deposited in the bank account of the assessee. No creditworthiness of Shri P.S. Narayana is also established through any evidence of giving any cash to the assessee on different occasions as alleged in the letter of Shri P.S. Narayana. Totality of the facts and circumstances, clearly show that assessee failed to explain the source of the cash deposit in his bank account through any reliable and cogent evidence, therefore, authorities below were justified in making and confirming the addition of the impugned amount in the hands of the assessee - Decided against assessee.

Summary

Issues:
Challenging addition of cash deposits in bank account under section 69 of the Income Tax Act.

Detailed Analysis:

Issue 1: Addition of Cash Deposits
- The appellant challenged the addition of ?20,87,000 on account of cash deposits in the bank account.
- The AO noted the cash deposits and issued a notice under section 148 of the Act as the appellant had not filed the return of income.
- The appellant, a salaried person, failed to provide a satisfactory explanation for the cash deposits, leading to the addition under section 69 of the Act.
- The appellant claimed the cash was deposited on behalf of a client for life insurance premium, supported by statements and documents.
- The CIT(A) did not accept the explanation and confirmed the addition.

Issue 2: Burden of Proof
- The appellant contended that the burden to explain the source of cash deposits should not have been on him.
- The tribunal disagreed, stating that since the appellant made the cash deposits, the burden was rightfully on him to provide evidence of the source.
- The appellant failed to substantiate the source adequately, leading to the addition of the unexplained investment to his income.
- Discrepancies were noted between the appellant's and the client's statements regarding the cash transactions, casting doubt on the credibility of the explanation.
- Lack of evidence establishing the creditworthiness of the client and the delay in depositing the cash raised suspicions about the authenticity of the appellant's claims.

Conclusion:
- The tribunal dismissed the appellant's appeal, upholding the addition of the cash deposits to his income.
- The appellant's failure to provide reliable and cogent evidence regarding the source of the cash deposits led to the confirmation of the addition by the authorities.
- The tribunal found no merit in the appellant's arguments and upheld the decision of the lower authorities.
- The appeal was dismissed, affirming the addition of the impugned amount to the appellant's income.

This detailed analysis highlights the legal proceedings and reasoning behind the judgment, emphasizing the burden of proof on the appellant and the lack of credible evidence supporting his claims, resulting in the dismissal of the appeal.