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Facts
The assessee, an individual, filed her return of income and was selected for limited scrutiny due to large cash deposits. The AO treated cash deposits of Rs. 59,67,000/- as unexplained and added it to the income. The CIT(A) granted partial relief, sustaining an addition of Rs. 29,24,571/-.
Held
The Tribunal held that the cash withdrawn by the assessee was more than the cash deposited. In the absence of any findings regarding the utilization of withdrawn cash for other purposes, the Tribunal agreed with the assessee that the withdrawn cash was redeposited.
Key Issues
Whether the addition sustained by the CIT(A) on account of unexplained cash credit is justified when the assessee provided evidence of prior cash withdrawals exceeding the deposits.
Sections Cited
250, 69A, 115BBE, 143(2), 142(1), 143(3), 274, 271AAC(1), 234B, 234C, 234D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYASHRI SANDEEP SINGH KARHAIL
Date of Hearing – 26/06/2025 Date of Order - 30/06/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M.
The assessee has filed the present appeal against the impugned order dated 20.09.2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2017-18.
In this appeal, the assessee has raised the following grounds: - “1. That under the facts and circumstances of the case, Ld. CIT(A) of National Faceless Appeal Center (NFAC), Delhi has erred in law as much as in fact in sustaining the addition of Rs. 29,24,571/- out of addition of Rs. 59,67,000/- made by the AO on account of alleged unexplained cash credit being amount deposited in the bank account of the assessee during FY 2016-17 relevant to AY 2017-18 which period also includes demonetization period which is added u/s 69A/115BBE of the Income Tax Act, 1961 ("the Act") and levying tax thereon u/s 115BBE of the Act. The addition of Rs. 29,24,571/- sustained by the CIT(A) is liable to be deleted.
2. That under the facts and circumstances of the case, Ld. CIT(A) of NFAC has failed to appreciate the explanation of the assessee that these deposits were out of earlier cash withdrawals made from the same bank for which all the evidence was submitted and it was also explained that the cash withdrawals remained unutilized and were forming part of the 'cash in hand'. Thus, there was no reason to disbelieve the explanation of the assessee regarding cash deposit having been made out of earlier cash withdrawals and was forming part of 'cash in hand' as per cash flow submitted along-with copy of bank account. The explanation submitted by the assessee was perfectly plausible and could not have been rejected by the CIT(A) of NEAC.
3. That under the facts and circumstances of the case, Ld. CIT(A) of NFAC while partly sustaining the addition, has failed to appreciate that after the assessee has submitted explanation with regard to cash deposit in the bank out of earlier cash withdrawals from the same bank account, the burden was shifted on the Revenue to show that the cash withdrawals were utilized by the assessee somewhere else and without discharging such onus by the AO, the addition of Rs. 28,00,000/- could not be sustained.
4. That under the facts and circumstances of the case, Ld. CIT(A) of NFAC and AO have failed to appreciate that there is no law preventing the assessee either to withdraw cash out of bank account and keeping the same as cash in hand and such act of the assessee does not warrant any explanation to justify the redeposit of the cash withdrawn by her forming part of cash in hand, therefore, invocation of provisions of section 69A/115BBE of the Act is wholly unwarranted and unlawful.
5. That under the facts and circumstances of the case Ld. AO has erred in law as much as in fact in initiating penalty u/s 274 r.w.s 271AAC (1) of the Act.
6. That under the facts and circumstances of the case, the Ld. AO has erred in law as much as in fact in levying the interest under 234B, 234C and 234D of the Act.”
3. The only grievance of the assessee is against the addition of Rs.29,24,571/- sustained by the learned CIT(A) on account of cash deposited in the assessee’s bank account.
We have considered the submissions of both sides and perused the material available on record.
The brief facts of the case are that the assessee is an individual and for the year under consideration, filed her return of income on 31.07.2017, declaring a total income of Rs.25,93,460/-. The return filed by the assessee was selected for limited scrutiny through CASS, inter alia, for verification of larger cash deposits during the year. Accordingly, statutory notices under 143(2) and section 142(1) were issued and served on the assessee. During the assessment proceedings, it was observed that the assessee deposited cash aggregating to Rs.59,67,000/- during the year under consideration, which, inter alia, also included cash deposits of Rs.34,50,000/- during the demonetization period in its three different savings bank accounts held in DCB Bank. Accordingly, the assessee was asked to explain the nature and source of such huge cash deposits. In response, the assessee submitted that the cash was deposited out of the opening cash in hand and the regular cash withdrawals by the assessee during the year under consideration. It was further submitted that the assessee was suffering from a medical ailment and therefore such huge cash in hand was maintained to meet any medical emergency. The Assessing Officer (“AO”) vide order dated 14.12.2019 passed under section 143(3) of the Act disagreed with the submissions of the assessee and by treating the entire cash deposited as unexplained made the addition of Rs.59,67,000/- under section 69A r.w. section 115BBE of the Act.
The learned CIT(A), vide impugned order, granted partial relief to the assessee and accepted her contention only regarding the availability of cash in hand total amounting to Rs.30,42,429/- and sustained the balance addition of Rs.29,24,571/-. From the perusal of the bank statement forming part of the paper book, we find that during the year under consideration as well as in the preceding year the assessee withdrew a total of Rs.67,91,000/- from its bank account maintained with DCB Bank out of which Rs.29,87,000/- was withdrawn in the year under consideration itself. The details of which are as follows: - Sr. Name of the Account No. Period Amount No. Bank 1. DCB Bank 03110200000347 04.2015-03.2016 Rs.19,67,000 2. DCB Bank 06212500004732 04.2015-03.2016 Rs.18,37,000 3. DCB Bank 03110200000347 04.2016-03.2017 Rs.17,58,000 4. DCB Bank 06212500004732 04.2016-03.2017 Rs.12,29,000 Total Rs.67,91,000 7. Therefore, from the above details, it is evident that the amount of cash withdrawn was more than the amount of cash deposited by the assessee in his bank account. Therefore, in the absence of any findings of the lower authorities regarding the usage/utilization of the said cash withdrawn for any other purpose, we agree with the submissions of the assessee that the cash withdrawn during the year under consideration was deposited in her bank account. Accordingly, the balance addition of Rs.29,24,571/- sustained by the learned CIT(A) is also deleted. As a result, Grounds No. 1 to 4 raised by the assessee are allowed.
Ground No.5 raised in assessee’s appeal pertains to the initiation of penalty under section 274 r.w. section 271AAC(1) of the Act, which is premature in nature. Therefore, this ground is dismissed.
Ground No.6 raised in assessee’s appeal pertains to the levy of interest under section 234B, 234C and 234D of the Act, which is consequential in nature. Therefore, this ground needs no separate adjudication.
In the result, the appeal by the assessee is partly allowed. Order pronounced in the open Court on 30/06/2025