AMUDHA RAJENDRAN,CHENNAI vs. ITO NON CORPORATE WARD 20(5), CHENNAI

The appeal was filed against the order of the learned Commissioner of Income Tax (Appeals)-14 (in brevity Ld. CIT(A)), Chennai passed u/s. 250(6) of the Income Tax Act, 1961 (in brevity ‘the Act’) for the assessment year 2014-15 and the order passed on 02.02.2017.

The Ld. AO rejected the explanation of the assessee and made the addition in following manner: “4. Unexplained cash credit: It was seen from the Canara Bank statement that, cash deposits were made in the assessee’s accounts on various dates to the tune of Rs. 63,09,393/-. The assessee vide his submission dated 16.12.2016 had stated that a sum of rs. 23,78,197/- were the cash deposits made out of agricultural activities and stated that the source for balance cash deposits will be provided later. When the assessee is not the owner of any agricultural land or had not done any agricultural activity as discussed above, the assessee was requested to showcause as to why not the explanation given by the assessee for the source of cash deposits i.e. the deposits are by way of agricultural activity be denied and why not the entire cash deposits to the tune of Rs. 60,09,393/- be treated as ‘unexplained cash credits’ and brought to tax. As usual, the assessee had not responded for this query also. Hence, as per the provisions of section 68 of the Income tax act, 1961 which read as under: “Where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the [Assessing] officer satisfactory, the sum so credited may be charges to income tax as he income of the assessee of that previous year.” The case deposits found in assessee’s Canara Bank account is treated under section 68, as unexplained cash credits.”

Against the order of the ld. AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) reduced the addition and made the following observations: “22. For the Assessment year 2014-15, the Assessing Officer also made another addition of Rs. 36,31,196/- (60,09393-23,78,197) on the ground that no explanation was furnished by the assessee. During the course of appeal proceedings, the appellant explained that the money withdrawn from the bank account was redeposited into the bank account. Perusal of the bank account :-4-: ITA. No:1642/Chny/2019 shows only two withdrawals i.e., Rs. 11,00,000/- on 03.12.2012 and Rs. 24,46,250/- on 07.12.2012. If the above sums were not utilized for the purpose for which they were withdrawn or less utilized, then the entire sum or the balance sum as the case may be must have been redeposited into the bank account on a few occasions. But there are several deposits made into the bank account after the date of above withdrawals. There is no need to split the withdrawal into several portions and redeposit the same in the bank account. This defies any logic. The appellant is not able to establish the nexus between the withdrawals and the redeposits. Therefore, cash deposit of Rs. 36,31,196/- added u/s. 68 of the Act is hereby confirmed.”

The Ld. Counsel for the assessee argued that after withdrawing the cash for purchasing the land the particular deal was cancelled and amount was deposited in bank in the different dates, so the addition u/s. 68 of the Act cannot be sustained.

We heard both the parties. In this stage it is not possible for us to verify each and every cash deposit related to this cash withdrawn as explained by the Counsel of the assessee. In both the stages i.e., in assessment and in appeal the assessee was unable to explain the link between cash withdrawn and cash deposit in the bank. So, the explanation to section 68 of the Act related to deposit of cash would be once to be verified. Considering the fact of the case, the matter is set aside to the Ld. AO, for further verification related deposit of cash amount to Rs. 36,31,196/-.