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Facts
Melayil Razak, a furniture manufacturer, had Rs. 26,00,000/- out of Rs. 74,00,000/- cash deposits in an NRE account treated as unexplained income for AY 2015-16 under Section 143(3). The assessee claimed the funds were a loan from his wife's cousin but failed to prove the lender's creditworthiness.
Held
The CIT(A) confirmed the addition. Before the ITAT, the assessee presented a new explanation, claiming the deposits were from an opening cash balance, but again failed to provide substantiating evidence. Given the inconsistent and unsubstantiated explanations for the source of funds, the Tribunal found no reason to interfere with the lower authorities' orders.
Key Issues
Whether the assessee could explain the source of significant cash deposits in his bank account and prove the creditworthiness of the alleged lender or substantiate claims of opening cash balance.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
Assessment Year: 2015-16 Melayil Razak .......... Appellant 12/467,Melayil Hosue, Nannammukku P.O. Malappuram 679575 [PAN: AVSPR2508K] vs. The Income Tax Officer, Ward-2, Tirur .......... Respondent Assessee by: ------- None ------- Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 06.11.2025 Date of Pronouncement: 21.11.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 28.02.2025 for Assessment Year (AY) 2015-16.
Brief facts of the case are that the appellant is an individual engaged in the business of manufacturing the sale of furniture. The return of income for AY 2015-16 was filed on 11.06.2016 declaring total income of Rs. 3,60,000/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-4, Tirur (hereinafter called "the AO") vide order dated 26.12.2017 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) by treating Melayil Razak the cash deposits to the extent of Rs. 26,00,000/- out of the total cash deposits of Rs. 74,00,000/- made in NRE account of Canara Bank as unexplained money of the appellant and brought to tax the same in the hands of the appellant for the alleged failure of the appellant to explain the source of the deposits.
Being aggrieved, an appeal was filed before the CIT(A) contending that the cash deposits are made out of loan received from wife’s cousin. Since the appellant had failed prove the creditworthiness of wife’s cousin, the addition was confirmed by the CIT(A).
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceed to dispose of the appeal after hearing the learned Sr. DR.
I heard the rival contentions and perused the material available on record. The made addition of Rs. 28,00,000/- on account of cash deposits made in the bank account for the failure of the appellant to discharge the onus cast upon him to prove the source of the cash deposits. Before the CIT(A), the appellant took a plea that the said cash deposits are made out of loan borrowed from wife’s cousin. However, the CIT(A) had not given any credence to the explanation for the reason that the appellant had not proved the creditworthiness Melayil Razak of wife’s cousin to lend the money. Before this Tribunal the appellant took an all together different stand stating that the cash deposits are made out of opening cash balance. However, the said explanation was not substantiated by filing evidences in support of the same. Thus, the appellant had been offering different versions in support of the source of cash deposits. Therefore, I do not find any reason to interfere with the orders of the learned lower authorities.
In the result, the appeal filed by the assessee stands dismissed.
Order pronounced in the open court on 21st November, 2025.