2023 (5) TMI 1204 - AT - Income Tax

Unexplained cash deposits - cash deposits made during demonetization period - assessee submitted that source for cash deposits was out of sale proceeds of ancestral property (agricultural land) and initially receipts from sale of property was deposited into joint account of assessee and sister-in-law and later sister-in-law has withdrawn money from her bank account and gave a gift to the assessee. The source for cash deposit is out of gift received from my sister-in-law - HELD THAT - From the sequence of events and arguments of the assessee right from the assessment stage to appellant stage, we find that there is inconsistency in arguments in respect of source for cash deposits. Assessee could not file any corroborative evidence to substantiate his arguments, that why the money received towards sale of property was kept in his sister-in-law bank account, when he was having right and interest in the property. Assessee could not also explain how the amount withdrawn in the year 2013 was made available for depositing in the year 2016, that too during demonetization period. The arguments of the assessee that money was kept for the purpose of treatment of his brother was also unproved, because no evidence has been filed to justify his arguments and further, there was no proof as to how much was spent for treatment and how much balance was available with the assessee. It is difficult to accept the evidences filed by the assessee to prove the source for cash deposits during demonetization period - Decided against assessee.

Summary

Issues Involved:
1. Condonation of Delay.
2. Validity of Cash Deposits during Demonetization Period.
3. Explanation and Evidence for Source of Cash Deposits.

Summary:

Condonation of Delay:
The appeal was initially delayed by 177 days due to the sudden demise of the auditor handling the tax matters. The assessee filed a petition for condonation of delay, explaining that the delay was neither intentional nor for any undue benefit. The Tribunal found the reasons to be genuine and condoned the delay, admitting the appeal for adjudication.

Validity of Cash Deposits during Demonetization Period:
The assessee deposited Rs. 48,59,000/- during the demonetization period into his Axis Bank account. The source of these deposits was claimed to be a gift from his sister-in-law, Smt. Pakkiriammal, who had withdrawn the amount from her bank account in January 2013. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) (CIT(A)) were not convinced by the explanation, citing inconsistencies and lack of corroborative evidence.

Explanation and Evidence for Source of Cash Deposits:
The assessee provided a notarized confirmation letter and affidavit from Smt. Pakkiriammal, claiming the cash was a gift. The AO noted discrepancies in the bank statements and questioned the improbability of holding such a large amount of cash for nearly four years. The CIT(A) applied the Doctrine of Preponderance of Probabilities, concluding that the appellant failed to substantiate the source of the cash deposits. The Tribunal upheld the findings of the AO and CIT(A), stating that the assessee's explanations were inconsistent and unsupported by evidence, thus dismissing the appeal.

Conclusion:
The Tribunal dismissed the appeal, confirming the addition of Rs. 48,59,000/- as unexplained investment under Section 69 of the Income Tax Act, 1961. The appeal was dismissed on the grounds of insufficient evidence and inconsistencies in the assessee's explanations regarding the source of the cash deposits during the demonetization period.