Loading judgment…
Facts
The assessee's case was reopened due to unexplained cash deposits in his bank account. The Assessing Officer made additions for unexplained cash deposits and profits from share transactions. The CIT(Appeals) upheld these additions. The assessee appealed to the Tribunal.
Held
The Tribunal held that a portion of the cash deposits was explained by earlier withdrawals from the same bank account and another portion by marriage gifts. However, the amounts claimed from agricultural income and family savings were not substantiated with evidence. Therefore, the addition was partly sustained.
Key Issues
Whether the additions made by the Assessing Officer on account of unexplained cash deposits and profits from share transactions are justified, and if the assessee has provided sufficient explanation and evidence for the same.
Sections Cited
147, 148, 142(1), 143(2), 144, 69A, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A), Panaji vide order dated 31.07.2025 passed for A.Y. 2010-11.
The assessee has taken the following grounds of appeal:
“1. The Ld. CIT (Appeal) has erred in law as well as facts while considering the facts that appellant was not given proper opportunity of being heard in assessment proceeding and assessment order passed ex-parte and therefore on the basis of facts and law the appellant pray your honour that he should get proper opportunity of being heard and provide details for making judicious assessment and therefore pray to restore the assessment by set aside ex-parte assessment order.
The Ld. CIT (Appeal) has erred on law as well as on facts while confirming the addition of Rs. 12,27,065/- made by Ld. A.O. on account of unexplained cash deposit in bank account. The Addition is confirmed on conjecture and surmises and on the basis of law and fact of the case the same is required to be deleted.
Shri Abhishekbhai Ashokbhai Patel vs. ITO Asst. Year –2010-11 - 2– 3. The Ld. CIT (Appeal) has erred on law as well as on facts while confirming the addition of Rs. 46,590/- made by Ld. A.O. on account of profit earned from sale of shares. The Addition is confirmed on conjecture and surmises and on the basis of law and fact of the case the same is required to be deleted.
The appellant reserves the right to delete, add, alter, and/or modify the grounds of appeal either before or during the course of hearing of the appeal.”
3. The brief facts of the case are that the assessee is an individual and his case was reopened under section 147 of the Act on the basis of AIR information indicating that he had made cash deposits of Rs.12,27,000/- in his bank account during the relevant financial year, though no return of income was filed. The Assessing Officer issued notices under sections 148, 142(1) and 143(2) of the Act, however, the assessee failed to comply with the same. Consequently, the Assessing Officer completed the assessment ex parte under section 144 read with section 147 of the Act. During the course of assessment, the Assessing Officer obtained the bank statement under section 133(6) of the Act and observed cash deposits aggregating to Rs.12,27,000/-, the source of which remained unexplained. Accordingly, the said amount was added under section 69A of the Act as unexplained money. Further, interest income of Rs.65/- was also added. The Assessing Officer also made an addition of Rs. 46,590/- being profit from share transactions based on information received from Angel Broking Ltd. Thus, total addition of Rs.12,73,655/- was made.
4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(Appeals). In Ground No. 1, the assessee contended that the cash deposits represented family savings accumulated from agricultural and dairy activities and withdrawals from bank, which were used for share Shri Abhishekbhai Ashokbhai Patel vs. ITO Asst. Year –2010-11 - 3– trading. The CIT(Appeals) examined the contention and held that the assessee failed to furnish any documentary evidence to substantiate the claim of family savings, such as identity of contributors, their creditworthiness, or evidence of accumulation of such savings. The CIT(Appeals) further observed that no documentary trail linking withdrawals to deposits or evidence of share trading activity was produced. Accordingly, relying on the provisions of section 69A and judicial precedents including CIT vs. P. Mohanakala (2007) 291 ITR 278 (SC) and Kale Khan Mohammad Hanif vs. CIT (1963) 50 ITR 1 (SC), the CIT(Appeals) upheld the addition and dismissed Ground No.
1. In Ground No. 2, the assessee contended that since income from share transactions was below the taxable limit, return of income was not filed. The CIT(Appeals) held that this contention was irrelevant to the issue of unexplained cash deposits and that the assessee was under obligation to explain the source of substantial cash deposits irrespective of taxable income. The CIT(Appeals) further observed that no evidence such as demat statements, contract notes, or broker details were furnished. Placing reliance on judicial precedents including Signature Hotels (P) Ltd. vs. ITO (2011) 338 ITR 51 (Del) and Roshan Di Hatti vs. CIT (1977) 107 ITR 938 (SC), the CIT(Appeals) dismissed Ground No.
Accordingly, the appeal of the assessee was dismissed in entirety.
The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the appeal of the assessee.
The issue involved in the present appeal relates to addition made under section 69A of the Act on account of cash deposits of Rs.12,27,000/- in the bank account of the assessee. The assessee has explained that the deposits were made out of (i) cash withdrawals from the same bank account, (ii) family savings including agricultural income, and (iii) gifts received at the time of marriage in the preceding year.
On perusal of the bank statement and cash flow placed on record, we find that to the extent of Rs.5,96,000/-, the assessee has demonstrated that the deposits are out of earlier withdrawals from the same bank account. The availability of cash from withdrawals and proximity between withdrawals and redeposits lends credence to the explanation of the assessee. It is a settled position of law that once the source of deposits is explained through withdrawals from the same bank account, no addition can be sustained to that extent.
Further, the assessee has explained a sum of Rs.1,50,000/- as received out of gifts during the marriage in the immediately preceding year. Considering the social customs prevalent in Indian society and the reasonable quantum involved, we find merit in the explanation of the assessee to this extent and the same is accepted.
However, with regard to the balance amount claimed to be sourced from agricultural income and family savings, we find that the assessee has Shri Abhishekbhai Ashokbhai Patel vs. ITO Asst. Year –2010-11 - 5– failed to furnish any cogent documentary evidence such as proof of ownership of agricultural land, details of agricultural produce, sale bills, or evidence of generation of agricultural income. Mere general statements without supporting evidence are not sufficient to discharge the burden cast upon the assessee under section 69A of the Act.
Accordingly, considering the totality of facts and circumstances, we hold that the addition to the extent of Rs.5,96,000/- being explained out of withdrawals and Rs.1,50,000/- being explained as marriage gifts is liable to be deleted, whereas the balance addition is sustained.
In the result, the appeal of the assessee is partly allowed. 12. This Order is pronounced in the Open Court on 09/04/2026