2021 (8) TMI 1036 - AT - Income Tax

Unexplained cash deposits - assessee has made huge cash deposits, to the tune of ₹ 86,83,000/- into his bank account with various banks and assessee was asked to explain sources - HELD THAT - Undisputedly the assessee is an employee of Toddy Co-operative Society, Nizamabad and he has also submitted an affidavit of the President of the Society stating that the deposits are from the receipts of the society and such an affidavit also has not been doubted by the revenue. In such circumstances, we are of the opinion that the CIT(A) ought to have called for a report from the AO, who in turn, could have given an opportunity to assessee and also verified whether sales were recorded in books of accounts of the Society and assessee's contentions that deposits are made out of sales of the society. Hence, for this limited purpose of verification of the contentions of the assessee that the deposits are from the sales of Nizamabad Toddy Co-Op Society, we deem it fit and proper to remand the issue back to the file of the AO for de novo consideration in accordance with law. Assessee's appeal is treated as allowed for statistical purposes.

Summary

Issues:
Assessment of unexplained cash deposits in bank accounts for A.Y. 2013-14.

Analysis:
The appellant, an individual, filed an appeal against the order of CIT(A)-1, Hyderabad regarding the assessment year 2013-14. During the assessment proceedings, it was noted that the appellant received a salary from a cooperative society and declared income from long-term capital gains. The assessing officer (AO) observed significant cash deposits in the appellant's bank accounts, amounting to ?86,83,000, with withdrawals of ?24,72,000, resulting in unexplained cash deposits of ?62,11,000. The appellant claimed that the deposits were sale receipts from a society and provided an affidavit from the society's president to support this claim. However, both the AO and CIT(A) did not accept this explanation and made the addition of ?62,11,000 as unexplained cash deposits.

Upon review, the tribunal found that the appellant is an employee of the cooperative society and submitted an affidavit from the society's president confirming that the deposits were from society receipts. The tribunal noted that this affidavit was not questioned by the revenue authorities. Consequently, the tribunal opined that the CIT(A) should have sought a report from the AO to verify the sales recorded in the society's books and the appellant's claim regarding the source of the deposits. Therefore, the tribunal decided to remand the issue back to the AO for further examination in accordance with the law.

In conclusion, the tribunal allowed the appellant's appeal for statistical purposes and directed the AO to conduct a fresh assessment to verify the appellant's contentions regarding the source of the cash deposits from the cooperative society.