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Facts
The assessee, a Non-Resident Indian residing in the USA, had no taxable income in India for AY 2016-17. The Assessing Officer (AO) treated a cash deposit of Rs. 26 lakhs as unexplained and added it to the assessee's total income.
Held
The Tribunal held that the cash deposit of Rs. 26 lakhs was satisfactorily explained. The assessee had withdrawn this amount for a proposed land purchase which did not materialize, and the same cash was deposited back into the bank account. The Tribunal found a clear nexus between the withdrawal and deposit.
Key Issues
Whether the cash deposit of Rs. 26 lakhs in the assessee's bank account can be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961.
Sections Cited
139, 148, 144C(1), 68, 147, 144C(13)
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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. :
This appeal is filed by Shri Srinivas Sasapu (“the assessee”), feeling aggrieved by the order passed by the ADIT (International Taxation)-2, Hyderabad (“Ld. AO”), dated 15.01.2025 for the A.Y. 2016-17.
The assessee has raised the following grounds of appeal :
The brief facts of the case are that the assessee is a Non- Resident Indian (“NRI”), residing in the USA. The assessee had no taxable income in India for the Assessment Year (“AY”) 2016–17, therefore, he did not file a return of income under Section 139 of the Income Tax Act, 1961 (“the Act”). On the basis of information received through the insight portal, the Ld. AO issued notice under Section 148 of the Act on 31.03.2023. In response, the assessee filed return of income on 17.04.2023 declaring an income of Rs.10,084/-. The Ld. AO passed a draft assessment order under Section 144C(1) of the Act on 08.03.2024 proposing total income of Rs.2,58,93,982/-.
The assessee filed objections before the Learned Dispute Resolution Panel (“Ld. DRP”). Pursuant to the direction of Ld. DRP dated 10.12.2024, the Ld. AO treated the cash deposit of Rs.26 lakhs in bank account by the assessee as unexplained cash credit under Section 68 of the Act and added the same in the hands of the assessee . Accordingly, the Ld. AO passed final assessment order under Section 147 r.w.s. 144C(13) of the Act on 15.01.2025 assessing the total income at Rs.26,10,084/-.
5. Aggrieved with the final assessment order of Ld. AO, the assessee is in appeal before this Tribunal. The learned Authorised Representative (“Ld. AR”) invited our attention to the bank statement of the assessee with ICICI Bank placed at page no.95 of paper book and submitted that the assessee had drawn cash of Rs.15 lakhs, Rs.9 lakhs and Rs.2 lakhs on 05.03.2014, 06.03.2014 and 11.03.2014 respectively. He further submitted that, the said total cash of Rs.26 lakhs was withdrawn for a proposed land purchase in his hometown, which eventually fell through. As the land dealing could not be materialised, the same cash was deposited in his bank account on 12.06.2015 ( page no.98 of paper book ). The same facts were explained before the revenue authorities also. However, without considering the submission of the assessee the revenue authorities have added the same in the hands of the assessee. It was submitted that there is a clear nexus between the cash withdrawn and cash re- deposited on 12.06.2015. There is no evidence produced by the Revenue, that the withdrawn amount was used for any other purpose. Therefore, the cash deposit of Rs.26 lakhs is fully explained and cannot be treated as unexplained under Section 68.
Per contra, the Learned Departmental Representative (“Ld. DR”) supported the order of the Ld. AO and submitted that there was a time gap of 14 months between the cash withdrawals in March 2014 and the re-deposit in June 2015. This create doubt about whether the cash remained unutilised and available for deposit.
We have heard the rival submissions and perused the material available on record. We have gone through the bank statement of the assessee with ICICI Bank placed at page no.95 of paper book and found that the assessee had drawn cash of Rs.15 lakhs, Rs.9 lakhs and Rs.2 lakhs on 05.03.2014, 06.03.2014 and 11.03.2014 respectively. As submitted by the Ld. AR the said total cash of Rs.26 lakhs was withdrawn for a proposed land purchase in his hometown, which eventually fell through. As the land dealing could not be materialised, the same cash was deposited by the assessee in his bank account on 12.06.2015 (page no.98 of paper book). In our considered view, the assessee has demonstrated a clear nexus between the cash withdrawn and cash re-deposited on 12.06.2015. The only objection raised by the Revenue is the time gap of about 14 months between withdrawal and deposit. However, in absence of any evidence that the cash was used for other purposes, the assessee’s explanation cannot be rejected merely on account of time lapse. In view of the above, we are of the considered opinion that the cash deposit of Rs.26 lakhs made on 12.06.2015 is satisfactorily explained and no addition under Section 68 is warranted. Accordingly, the Ld. AO is directed to delete the addition of Rs.26 lakhs.
In the result, the appeal of the assessee is allowed.