2022 (5) TMI 102 - AT - Income Tax

Unexplained cash deposit - assessee challenged the action of the AO before the CIT(A) and explained the source of cash deposit received from his father and uncle from the sale proceeds of agricultural land - HELD THAT - Since the assessee has produced receipts of transfer of money by his sister through her husband Sh. Rajendra Singh which was received by the assessee in India through the money transfer agent Western Union. The transfer of money was about Rs. 50,000/- in each tranche and there are nine tranche of money transfers. Eight transfers or about Rs. 50,000/- and one is about 1 Lac. Therefore, prima facie, the assessee has discharged its onus to show the source of deposit made in the bank account to the extent of Rs. 5 Lac as the money was received by the assessee as remittance by NRI sister. There is an entry of Rs. 4 Lac in the savings bank account of another sister Smt. Radhika Singh with UCO Bank and therefore, this amount of Rs. 4 Lac is received through banking channel. The bank account statement of the sister shows that there is a transfer of Rs. 4 Lac in the name of the assessee on 13.01.2010. Hence, the assessee has produced the documentary evidence to show transfer through bank account as well as the availability of the money in the bank account is sister. Accordingly, in the facts and circumstances of the case, the addition to the extent of Rs. 9 Lac is deleted and the balance amount of Rs. 3,20,000/- as accumulated savings remains unexplained and the addition to the extent is confirmed. - Decided partly in favour of assessee.

Summary

Issues:
1. Addition of unexplained cash deposit and non-allowance of receipts from sisters.
2. Treatment of total deposit in bank account as concealed income and denial of peak credit benefit.
3. Validity of assessment on factual and legal grounds.

Analysis:
1. The assessee, an individual non-filer of income tax return, faced an addition of Rs. 22,20,200 as unexplained cash deposit in the bank account for the assessment year 2010-11. The Assessing Officer initiated proceedings under section 148, and despite the assessee's explanations, proceeded to frame the assessment under section 144, adding the total deposit amount as unexplained. The CIT(A) partially accepted the source of deposit from the sale proceeds of agricultural land but sustained the addition of Rs. 12,20,000. The Tribunal considered the submissions regarding cash gifts from sisters, with the AR providing documentary proof of the source of deposits from the sisters. The DR argued lack of evidence for the source of deposit and questioned the correlation between money received from sisters and bank deposits. The Tribunal analyzed the CIT(A)'s discussion, noting the establishment of the availability of cash from the father and uncle but lack of proof for the sisters' creditworthiness and accumulated savings, ultimately allowing a partial deletion of the addition.

2. The Tribunal found that the CIT(A) accepted the source of deposit from the father and uncle but confirmed the addition related to cash gifts from sisters due to the failure to prove their creditworthiness. However, the Tribunal acknowledged the documentary evidence provided by the assessee, showing the transfer of money from the NRI sister and the bank account transfer from another sister. The Tribunal concluded that the assessee had discharged the burden of proof for the source of deposits from the sisters, leading to the deletion of the addition to the extent of Rs. 9 Lac. The remaining amount of Rs. 3,20,000 as accumulated savings was deemed unexplained and confirmed in the assessment.

3. In conclusion, the Tribunal partially allowed the appeal, deleting the addition of Rs. 9 Lac related to cash gifts from sisters based on documentary evidence but confirming the addition of Rs. 3,20,000 as accumulated savings. The judgment emphasized the importance of establishing the source of deposits and creditworthiness, highlighting the need for documentary proof to support claims and explanations in income tax assessments.