OLAPPALAYAM RAMASAMY THANGARAJ,ERODE vs. COMMISSIONER OF INCOME TAX(APPEALS), NFAC, DELHI

2 - 2. Having heard rival submission and after due consideration of material on record, our adjudication would be as given in succeeding paragraphs.

The material facts are that the assessee was subjected to reassessment proceedings and an assessment was framed on 31.12.2019. The assessment was reopened in view of the information that the assessee deposited cash of Rs.43.91 Lacs in the savings bank account during the year. The assessee offered income of Rs.3.36 Lacs and computed business income u/s 44AD. However, the assessee could not furnish proof of conduct of business and upon perusal of transactions, it appeared that the deposits were not in the nature of business activity and therefore, the claim u/s 44AD was rejected. After considering inward and outward transactions, Ld. AO concluded that there was excess cash deposit of Rs.15 Lacs and therefore, the same was added to the income of the assessee u/s 69A.

During appellate proceedings, the assessee defended its stand by way of written submissions. The assessee submitted that total credits in the bank accounts were Rs.55.23 Lacs majority of which were sourced out of agricultural loans of Rs.11.07 Lacs and cash deposit of Rs.43.91 Lacs. There were periodical withdrawals to the extent of Rs.40.02 Lacs and the balance Rs.3.89 Lacs represent past savings of the assessee. However, Ld. CIT(A) confirmed the addition against which the assessee is in further appeal before us.

Before us, Ld. AR reiterated that the credits in the accounts were fully explained and cash deposits of Rs.43.91 Lacs were sourced out of earlier withdrawals of Rs.40.02 Lacs. The balance Rs.3.89 Lacs represent past savings of the assessee which was reasonable 3 - considering the facts that the assessee was over 50 years of age during relevant period and derived agricultural income. The Ld. AR submitted that the aforesaid facts may be verified by Ld. AO. The Ld. Sr. DR, on the other hand, submitted that the complete onus to substantiate the source of cash deposit was on assessee.

Keeping in view the pleadings of Ld. AR, we find that the assessee could explain the source of cash deposit to certain extent. Considering the submissions made by Ld. AR, we direct Ld. AO to re-verify the source of cash deposit as submitted by assessee during appellate proceedings and restrict the additions to the extent the deposits that have remained unexplained. The complete onus would be on assessee to substantiate the source of cash deposit.

The appeal stand allowed for statistical purposes.