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Facts
The assessee's case for AY 2016-17 was selected for scrutiny due to cash deposits totaling Rs.35,29,000/- across Axis Bank, Punjab National Bank, and HDFC Bank accounts. The assessee explained these deposits as cash withdrawals, a Rs.10 lakh gift from his father's retirement benefits, and a hand loan from Mr. D. Satish. The Assessing Officer and CIT(A) rejected these explanations, making additions under Section 69A of the Income Tax Act.
Held
The Tribunal confirmed the addition of Rs.1,90,000/- for Axis Bank deposits made before corresponding withdrawals, but deleted Rs.13,20,000/- for deposits after withdrawals, as the revenue failed to prove the withdrawn cash was spent elsewhere. For Punjab National Bank deposits, Rs.9,50,000/- (gift from father) was confirmed due to a long time gap, while Rs.5,50,000/- (gold loan/withdrawal) and Rs.2,00,000/- (previous withdrawal) were deleted. The addition of Rs.2,69,000/- for HDFC Bank was sustained as the assessee could not prove the creditworthiness of the lender Mr. D. Satish. In total, out of Rs.35,29,000/-, Rs.20,70,000/- was deleted, and Rs.14,59,000/- was sustained.
Key Issues
Whether the source of cash deposits made into various bank accounts was adequately explained by the assessee, and consequently, whether additions made under Section 69A of the Income Tax Act were justified.
Sections Cited
69A
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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH : VISAKHAPATNAM
Before: SHRI G. MANJUNATHA & SHRI K. NARASIMHA CHARY
ORDER PER G. MANJUNATHA, A.M. : This appeal filed by the assessee has been directed against the order dated 13.10.2023 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC”], Delhi, relating to assessment year 2016-2017.
2 ITA.No.287/VIZ./2023 2. Brief facts of the case are that, the assessee is an employee of United Telecoms Limited. The assessee has filed his return of income for the assessment year 2016-17 on 29.12.2016 admitting total income of Rs.3,62,520/-. The case of the assessee was selected for scrutiny under CASS to verify the cash deposited into the bank accounts. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has made cash deposit of Rs.15,10,000/- into Axis bank account and Rs.17,50,000/- into Punjab National Bank account and Rs.2,69,000/- into HDFC bank account. The Assessing Officer called the assessee to explain the source of cash deposits. In response thereto, the assessee submitted that the source for cash deposits were out of cash withdrawal from same bank account or from other bank accounts on earlier occasions. The assessee further submitted that, he had also received a sum of Rs.10 lakhs gift in cash from his father Shri Muppala Venkateswara Rao and source for his father is out of retirement benefits received from his service. The assessee further submitted that he has received hand loan
3 ITA.No.287/VIZ./2023 from Mr D Satish to clear car loan. The Assessing Officer after considering the relevant submissions of the assessee and also take a note of amount of cash deposited observed that, the assessee could not establish the source for cash deposited with known source of income which is evident from ITR filed by the assessee where the assessee has declared total income of Rs.3,62,520/-, whereas, the cash deposited in his bank accounts were at Rs.35,29,000/-. Although, the assessee claimed to have received loan from Mr D Satish, but, could not substantiate his claim with relevant evidence. Therefore, the Assessing Officer rejected the arguments of the assessee and made the addition of Rs.35,29,000/- u/sec.69A of the Income tax Act ,1961 [in short “the Act”].
On being aggrieved by the assessment order, the assessee filed an appeal before the learned CIT(A). The assessee reiterated the submissions made before the Assessing Officer and argued that source for cash deposit is out of withdrawal from bank accounts before depositing cash into bank accounts. The assessee had also 4 ITA.No.287/VIZ./2023 submitted that he had also received cash from his father viz., Shri Muppalla Venkateswara Rao out of his retirement benefits and to support his arguments, filed Bank account statement of his father. The learned CIT(A) after considering the submissions of the assessee and have taken note of various reasons given by the Assessing Officer and rejected the explanation of assesse and sustained the additions made by the Assessing Officer towards cash deposited in bank accounts on the ground that, although, the assessee claimed to have deposited cash into bank accounts out of the withdrawal from same bank account on earlier occasions, but, on perusal of the cash book which contains only cash withdrawal from bank accounts and there were no entries of expenditure which takes place on day-to-day basis. The argument of the assessee that in anticipation of medical expenses, his father has kept cash in hand with him out of the withdrawal from bank account on earlier occasion which contention is also not substantiated with relevant evidence. He also failed to substantiate the claim of loan received from Mr D Sathish. Therefore, the 5 ITA.No.287/VIZ./2023 learned CIT(A) rejected the arguments of the assessee and sustained the additions made by the Assessing Officer towards cash deposited in the bank accounts u/sec.69A of the Act.
Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal.
Learned Counsel for the Assessee submitted that the CIT(A) has failed in not appreciating the relevant evidences filed by assessee to explain the source for cash deposited into bank accounts. Learned Counsel for the Assessee further submitted that the assessee has made cash deposit of Rs.17,50,000/- in Punjab National Bank bank account. The assessee has made cash deposit of Rs.9,50,000/- on 12.06.2015. The source for above cash deposit is explained out of gift of Rs.9,50,000/- received from his father. His father has explained the source out of his retirement benefits. Although, the assessee has filed all evidences, the learned CIT(A) ignoring the evidences filed by 6 ITA.No.287/VIZ./2023 the assessee, sustained the additions made by the Assessing Officer. 5.1. Further, the assessee has made cash deposit of Rs.5,50,000/- on 30.06.2015 and the source is out of gold loan taken from Punjab National Bank of Rs.5 lakhs and the same has been drawn on 28.05.2015. The assessee has re- deposited the sum of Rs.5,50,000/- out of source available from gold loan and also withdrawal of Rs.1 lakh on 04.06.2015. The Assessing Officer and the learned CIT(A) ignoring the explanation filed by the assessee, made the impugned addition.
5.2. Learned Counsel for the Assessee further submitted that the assessee has made cash deposit of Rs.15,10,000/- in his Axis bank account starting from 03.04.2015 to 19.01.2016 as narrated by the Assessing Officer. The source for above cash deposit is cash withdrawal of Rs.15 lakhs on 15.06.2015 from Punjab National Bank. The assessee has furnished relevant bank statements and also explained the reasons for withdrawal of cash from Punjab National Bank and re-deposited into Axis
7 ITA.No.287/VIZ./2023 bank account. However, the learned CIT(A) ignored the evidences filed by the assessee and sustained the additions made by the Assessing Officer.
5.3. Similarly, the assessee has deposited Rs.2,69,000/- into HDFC bank account. The source for the same is, out of loan from Mr D Satish which were subsequently repaid. Mr D Satish’s confirmation letter and bank statement has been filed by the assessee in support of his contention. However the Assessing Officer and the learned CIT(A) ignoring the evidences filed by the assessee, made the addition in the hands of assesse. Therefore, he submitted that the additions made by the Assessing Officer and sustained by the learned CIT(A) should be deleted.
The learned Sr. AR Dr. Aparna Villuri for Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that assesse could not explain as to why huge amount of cash has been withdrawn from different bank accounts and re-deposited into other bank accounts. Further, the assesse could not explain the 8 ITA.No.287/VIZ./2023 amount of gift received from his father. Although, the assessee has claimed that his father has withdrawn cash from bank account out of his retirement benefits, but, there is huge gap of more than one year when compared to cash withdrawal by his father and cash deposited by the assessee in the bank account. Similarly, the assessee could not substantiate loan received from Mr. D. Satish and, therefore, the Assessing Officer and the learned CIT(A) after considering relevant facts has rightly sustained the addition made by the Assessing Officer towards cash deposited in three different bank accounts and, therefore, the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the cash deposits of Rs.35,29,000/- into three different bank accounts. In fact, the assessee has admitted cash deposit into Punjab National Bank account, Axis bank account and HDFC bank account.
9 ITA.No.287/VIZ./2023 7.1. Coming to the cash deposit into Axis bank account. The assessee has deposited the sum of Rs.15,10,000/- on different dates starting from 03.04.2015 to 19.01.2016. The assessee has explained the source for cash deposit into Axis bank account out of cash withdrawal of Rs.15 lakhs on 15.06.2015 from his Punjab National Bank account.
7.2. We have gone through the relevant bank statements of Punjab National Bank and Axis bank accounts of the assessee. There is no dispute with regard to the fact that the assessee has drawn Rs.15 lacs on 15.06.2015. However, the assessee has started cash deposit into Axis bank account from 03.04.2015 to 07.04.2015 which is much before the date of withdrawal from Punjab National Bank account. Therefore, the explanation offered by the assessee to prove source of cash deposited on 03.04.2015 and 27.04.2015 aggregating to Rs.1,90,000/- cannot be considered as cash deposit, out of cash withdrawn on 15.06.2015 from Punjab National Bank. Therefore, to this extent, we are of the considered view that,
10 ITA.No.287/VIZ./2023 the assessee is not able to explain the source of cash deposit into Axis bank account of Rs.1,90,000/- and thus, we confirm the addition made by the Assessing Officer to the extent of Rs.1,90,000/-. In so far as remaining cash deposit of Rs.13,20,000/- starting from 16.06.2015, the assessee is having enough source out of cash withdrawal from Punjab National Bank on 15.06.2015 which is more than the amount of cash deposited into bank account. When the assessee is explained cash deposit out of withdrawal from other bank account, in our considered view, the Assessing Officer and the learned CIT(A) ought to have give credit for the same, unless the Assessing Officer makes-out a case that cash withdrawal from Punjab National Bank account has been spent for some other purposes. Since the Assessing Officer and the learned CIT(A) failed to made-out a case that, the cash withdrawn from Punjab National Bank is spent for any other purpose, in our considered view, the explanation of assessee that cash deposited into Axis Bank is out of cash withdrawal from Punjab National Bank has to be considered. Thus, we direct
11 ITA.No.287/VIZ./2023 the Assessing Officer to delete the addition to the extent of Rs.13,20,000/- towards cash deposited into Axis bank account between the period from 16.06.2015 to 19.01.2016.
Coming back to cash deposited into Punjab National Bank account, the assessee has made cash deposit of Rs.17,50,000/- right from 20.05.2015 to 28.01.2016. The first cash deposit of Rs.5000/- was on 20.05.2015 and the assessee explained the source out of his own source of income. The next cash deposit of Rs.9,50,000/- on 12.06.2015. The assessee explained the cash deposit out of gift of Rs.9,50,000/- received from his father Shri Muppala Venkateswara Rao. To support his arguments, the assessee filed Gift Deed from his father along with his bank account statement.
8.1. We have gone through the bank account statement of Shri Muppala Venkateswara Rao’s, [father of the assessee] bank account held with Union Bank of India, in which, there are two credits i.e., on 24.05.2014 of Rs.5 lakhs and 07.07.2014 of Rs.7,95,106/- aggregating to 12 ITA.No.287/VIZ./2023 Rs.12,95,106/- and his father has drawn cash right from 30.06.2014 to 30.10.2014 about Rs.11 lakh on different dates. If we go by the cash withdrawn by Shri Muppala Venkateswara Rao, father of the assessee, from his bank account and cash deposited by the assessee into his Punjab National Bank account, there is a huge gap of more than one year. Although, the assessee explained the reasons for his father to keep cash in hand, but, the reasons, in our considered view, appears to be an afterthought, but, not a bonafide explanation with regard to the source of cash deposited in Punjab National Bank Account. Therefore, in our considered view, the assessee is unable to prove source of cash deposited of Rs.9,50,000/- on 12.06.2015 and, therefore, we sustain the additions made by Assessing Officer and the learned CIT(A) to the extent of Rs.9,50,000/.
In so far as remaining cash deposit of Rs.5,50,000/- on 30.06.2015 into Punjab National Bank account, the assessee explained the source out of gold loan taken from Punjab National Bank for Rs.5 lakhs on 25.05.2015 and the same has been credited to his bank
13 ITA.No.287/VIZ./2023 account on 25.05.2015. The appellant has drawn cash of Rs.5 lakhs on 28.05.2015 and there is another cash withdrawal of Rs.1 lakh on 04.06.2015. Thus, there is cash withdrawal of Rs.6 lakhs out of gold loan and other credits and out of the said cash withdrawn, the assessee has made cash deposit of Rs.5,50,000/- on 30.06.2015. Going by cash withdrawn and cash deposited into bank account, hardly there was a delay of less than one month. Therefore, we are of the considered view that, once there is sufficient cash withdrawn from the same bank account and deposited on subsequent date in the very same bank, in our considered view, the Assessing Officer ought to have accepted the explanation of the assessee, unless he makes out a case that the cash withdrawal has been spent for some other purposes. Since the Assessing Officer has not make-out a case of non-availability of cash in the hands of the assessee, in our considered view, the explanation of assesse with regard to source for cash deposited in Punjab National Bank of Rs.5,50,000/- on 30.06.2015 needs to be accepted. Thus, we direct the Assessing Officer to delete the addition of 14 ITA.No.287/VIZ./2023 Rs.5,50,000/- towards cash deposited on 30 06 2015 into Punjab National Bank.
Similarly the assessee has made cash deposit of Rs.2 lakhs on 28.01.2016 into Punjab National Bank and the source for the above cash deposit is cash withdrawn from Punjab National Bank on 05.10.2015 for Rs.3,17,000/-. Since there is sufficient withdrawal from same bank account on previous occasion, in our considered view, the explanation of assessee with regard to cash deposit of Rs.2 lakhs on 28.01.2016 needs to the accepted. Therefore, we direct the Assessing Officer to delete the addition of Rs.2 lakhs dated 28.01.2016. In other-words, out of total cash deposit of Rs.17,50,000/- into Punjab National Bank account, the assessee gets relief of Rs.7,50,000/- and the balance addition of Rs.9,50,000/- is here by confirmed.
Coming back to cash deposit of Rs.2,69,000/- in HDFC Bank account, the assessee made cash deposit of Rs.2,64,000/- on 02.06.2015 and Rs.5000/- on 15 ITA.No.287/VIZ./2023 17.07.2015. The assessee explained the source out of loan received from Mr D Sathish for clearing the car loan. In this regard, the assessee has furnished bank account statement of Mr D Satish and filed confirmation letter.
On going through the evidences filed by the assessee, we find that except filing confirmation from Mr D Satish, no other evidences including his ITR was filed for the relevant assessment year to prove the creditworthiness of the creditor. Therefore, we are the considered view, that assessee is unable to explain the loan cliamed to have been received from Mr D Sathish to explain the cash deposit into HDFC bank account. Thus, we reject the explanation of assessee and sustained addition made by the Assessing Officer towards cash deposited into HDFC bank account of Rs.2,69,000/-.
To sum-up, out of total additions made towards cash deposits into three bank accounts for Rs.35,29,000/-, the assessee gets relief of Rs.20,70,000/- and the balance
16 ITA.No.287/VIZ./2023 amount of Rs.14,59,000/- is hereby sustained. Accordingly, the grounds raised by the assessee are partly allowed.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 12.03.2025.