PARAMAKUMAR, NAMAKKAL vs. ITO CIRCLE 1, ERODE, ERODE

The Assessee raised the following grounds of appeal : “1) The Impugned Order is bad, erroneous and unsustainable in law.

Briefly, the appellant is an Individual engaged in the business of Transport Contracts. No regular Return of Income under the provision of section 139(1) of the Act was filed for the Assessment Year 2011-12. However, based on the information that the appellant made cash deposits of Rs.16,67,900/- in the savings bank account maintained with Axis Bank, Erode Branch during the previous year relevant to assessment year under consideration, the Assessing Officer formed an opinion that the income got escaped assessment from tax.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), contending that the cash deposits in the Axis Bank made out of the withdrawals made from UCO Bank. The appellant also filed a copy of the statement of UCO Bank, wherein withdrawals to the extent of Rs.59,68,861/- were shown. However, the ld.CIT(A) had rejected the explanation by holding that the appellant had failed to establish the nexus between the withdrawals and subsequent deposits in the Axis Bank and the withdrawals sought have been utilized for some other purpose.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. The learned Counsel reiterated the same submission and submits that in the absence of any evidence to the contrary that withdrawals have been utilized for some other purpose, it should be presumed that deposits are utilized for the purpose of subsequent deposits.

On the other hand, Learned Sr.DR vehemently opposed the above submissions and submits that the order passed by the ld.CIT(A) is a reasoned one and required no interference by this Tribunal.

We heard rival submissions and perused the material available on record. The solitary issue that arises for our consideration is that whether the ld.CIT(A) was justified in sustaining the addition of Rs.16,67,900/- having regard to the facts of the case. There is no dispute about the fact that the appellant made cash deposits of Rs.16,67,900/- in the bank account maintained with Axis Bank. The appellant had been consistently taking the stand that the said withdrawals made from UCO Bank, were utilized for the purpose of deposits in the bank account maintained with Axis Bank. During the course of proceedings before the ld.CIT(A), the appellant also filed a copy of the statement of account with UCO Bank, wherein withdrawals aggregating to Rs.59,68,861/- were made during the previous year relevant to assessment year under consideration. It is settled position of law that in the absence of material on record to show that these withdrawals were utilized for some other purposes, withdrawals were presumed to have been utilized for subsequent deposits in the Axis Bank. Therefore, in view of this well settled legal position, the ld.CIT(A) ought to have accepted the explanation of the appellant and deleted the addition. Accordingly, orders of the Lower Authorities are set-aside and we direct the Assessing Officer to delete the addition of Rs.16,67,900/-.

In the result, appeal filed by the Assessee stands allowed. Order pronounced in the open Court on 12th June, 2026.