2023 (6) TMI 965 - AT - Income Tax

Addition on account of cash deposit to the bank account of the assessee - assessee is consistently submitting that the assessee has two bank accounts in her name and the assessee is earning cash income from tuition since very long time and has been filing her return of income for 20 to 25 years showing tuition income, rental income and interest income which was earned by the assessee from providing loans to her husband s brother firm and these amounts consists of income as well as savings of assessee earned during the long period of life - HELD THAT - From the copy of the passbook with SBI it is clear that the assessee has withdrawn Rs. 24 lakhs during the FY 2014-15 from the period 29.05.2014 to 21.03.2015 and the amount of cash deposit to UCO bank i.e. Rs. 9,99,000/- and lesser than the amount of cash withdrawals by the assessee during the same financial period. AO was not correct in considering the available cash out of cash in hand of Rs. 3,24,500/- for the purpose of adjudication the issue keep aside the factum of huge cash withdrawals from the bank account of the assessee with State Bank of India. Addition made by the AO and sustained by CIT(A) is not sustainable as the factual position stated by the assessee in her submission before the ld CIT(A) as well as before the AO have not been controverted neither by the authorities below nor by the Sr. DR before us as noted above. Therefore, AO is directed to delete the addition.- Decided in favour of assessee. Addition on account of stamp duty paid on purchase of property - paid out of alleged unexplained sources - HELD THAT - This is well known fact to understand the fabric of society and habits of Indian home maker women and issue has to be seen from the angle of normal women who has normal sources of income and has spent big part of her life s earning to financially strengthen her family from doing tuition work and again utilizing the tuition income for giving loans to the relatives for earning interest income. It is not the case of the AO that the assessee has not paid any tax or has not filed return of income but the submission of the AO noted by the ld CIT(A) have not been controverted by the ld CIT(A) while restricting the addition to the tune of Rs. 6 lakhs. Therefore, explanation submitted by the assessee is a plausible explanation. Amount invested by the assessee towards payment of stamp duty in cash cannot be doubted in view of the conduct of assessee in the capacity of a consistent tax payer since 20 to 25 years and thus addition cannot be held as sustainable - Decided in favour of assessee.

Summary

Issues involved:
The issues involved in this case are:
1. Addition of cash deposited in bank account treated as unexplained income.
2. Addition of stamp duty paid on purchase of property from alleged unexplained sources.

Issue 1: Addition of cash deposited in bank account:
The assessee appealed against the order of the National Faceless Appeal Centre (NFAC) confirming additions made by the AO. The AO added Rs. 6,74,500 on account of cash deposited in the bank, treating it as unexplained income. The assessee argued that the cash deposits were from legitimate sources, including tuition income, rental income, and interest income. The AO did not consider the cash withdrawals made by the assessee from another bank account, leading to an incorrect addition. The Tribunal found that the cash deposits were supported by the cash flow statement and withdrawals from the State Bank of India, concluding that the addition was unjustified. Therefore, the appeal on this ground was allowed.

Issue 2: Addition of stamp duty paid on property purchase:
The second issue pertained to the addition of Rs. 6 lakhs for stamp duty paid on the purchase of a property. The AO questioned the source of this payment, along with other investments made by the assessee. The assessee explained that the stamp duty amount was saved over the years and was from known sources of income like tuition and interest income. The Tribunal noted that the assessee had a history of filing returns and had provided explanations and evidence for the sources of income. The Tribunal found the explanation plausible and held that the stamp duty payment was not from undisclosed sources. Therefore, the entire addition of Rs. 6 lakhs was directed to be deleted. Consequently, the appeal was allowed on this ground as well.

Conclusion:
In conclusion, the Tribunal allowed the appeal filed by the assessee against the additions made by the AO. The Tribunal found that the cash deposits in the bank account were supported by legitimate sources of income, and the stamp duty payment was made from savings accumulated over the years. The Tribunal directed the AO to delete both additions, emphasizing the importance of considering all relevant evidence and explanations provided by the assessee in such cases.