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Facts
The assessee challenged an addition of Rs. 50,71,354/- made by the Assessing Officer (AO) and confirmed by the CIT(A) under section 69A of the Income Tax Act, treating cash deposits in a bank account as unexplained income. The assessee contended that these deposits were sourced from prior cash withdrawals from the same bank account. There was also a 60-day delay in filing the appeal, which was condoned due to the assessee's medical illness.
Held
The Tribunal found that the assessee had sufficient cash balance from previous withdrawals in the same bank account. It noted that the Income Tax authorities failed to establish that these withdrawn funds were utilized for any other purpose. Citing judicial precedents, the Tribunal held that an addition cannot be sustained merely due to a time gap between cash withdrawals and subsequent re-deposits if the source is explained.
Key Issues
Whether cash deposits in a bank account, originating from prior withdrawals from the same account, can be treated as unexplained income under section 69A of the Income Tax Act solely based on a time gap between withdrawal and re-deposit.
Sections Cited
144, 147, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH(PHYSICAL
Before: DR. MITHA LALMEENA, HONBLE & SHRI UDAYAN DAS GUPTA, HONBLE
This appeal is preferred by the assessee against the order passed by Id.
Commissioner of Income Tax (Appeal), NFAC, Delhi, dated 03.06.2024 which has emanated from the order of the NFAC, Delhi u/s 144 r.w.s. 147 of the Act dated 10.11.2016 with respect to the Assessment Year 2009-10.
The assessee has raised following grounds:
l.That the order passed by the Hon'ble CIT(A) dated 03.06.2024 is against the law and facts of the case.----------------------------- ----------------------
2. That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 144/147 of the Act and without complying with the mandatory conditions u/s 147 as envisaged under the Income Tax Act, 1961.
3. That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing order without giving adequate opportunity of hearing.
4. That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs. 50,71,354/-, u/s 69A of the Act, on account of cash deposits in bank account, by treating the same as unexplained income of assessee without considering the facts of the case and without observing the principles of natural justice.
5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.
There was a delay of 60 days in filing this appeal before the tribunal. Ld. council for the assessee has explained that the delay has been occurred dua medical illness of the assessee. In support, He has filed on affidavit with the medical prescription and treatment. The relevant para of the affidavit reads as under:
"4. That I have been suffering from a massive bilateral stroke for the past several years. As a result, I have developed left homonymous hemianopia, which causes a tendency to collide with objects on the left side of my visual field. Additionally, I suffer from cognitive deterioration affecting my memory and intellectual functioning. During the relevant period, I was also undergoing medical check-ups due to brain issues which also resultant in memory loss and was unable to contact my counsel for the filing of the appeal. As soon as my health condition became relatively stable, I immediately contacted my counsel and preferred the present appeal, along with a request to condone the delay of 60 days in filing the same. My medical prescriptions are enclosed for your reference."
3.1 The DR has no objection to the bonafide explanation for the short delay in filing of this appeal. Accordingly, the short delay of 60 days in filing this appeal has been condoned and the appeal is admitted on merits.
The sole issue challenged by the assesse is related to treatment of cash deposits in bank account, as unexplained income of assessee amounting to Rs. 50,71,354/- u/s 69A of the Act, without considering the material evidence and appreciating the facts and merits of the case.
Having heard both the sides and perusal of record we find that assessee has deposited cash amounting to Rs. 50,69,835/- in his bank account no. 07182010025830 with Oriental Bank of Commerce, Begowal, Kapurthala, during the year under consideration. The Ld. AR explained before the LD. CIT (A) that the assessee was having sufficient funds available with him to deposit the disputed unexplained cash in its bank account. He has drawn our attention to the bank relevant bank statement and a chart of some major withdrawals and deposits made in the said bank account. The summary of the cash withdrawal and deposit is reproduced herein below:
Date Particulars Deposit Withdrawal 23.06.2008 Cash withdrawal 50,000.00 55,00,000700 29.07.2008 Cash withdrawal 1,00,440.00 23.08.2008 Cash deposit 38,00,000.00 03.09.2008 Cash deposit 15.09.2008 Cash deposit 950,000.00 2,00,000.00 Cash withdrawal 08.12.2008 16.12.2008 Cash withdrawal 25,000.00 Cash deposit 93,600.00 22.01.2019 49,44 040.00 57 75 000.00 Total
From the bank statement, it is abundantly clear that the assessee was having sufficient fund available with him in the bank account which was withdrawn and re-deposited within the gap of merely 2 months. Copy of bank
statement is filed on record (APB. Pg.15). Further Income Tax authorities failed to show that the amounts of cash deposits in question, admittedly withdrawn from bank and assessees' concern, were utilized for any other purpose. In our view, no addition could be made merely on the ground that there was time gap between the withdrawals and the corresponding cash deposits in the bank account. Out view gets support from the judgement delivered in the case of ASSISTANT
COMMISSIONER OF NCOME TAX vs. BALDEV RAJ CHARLA & ORS (2009) 121 TTJ
0366.
In another case of MOONGIPA INVESTMENT LIMITED vs. INCOME TAX
OFFICER (2012) 70 DTR 0132 it was held that Since the deposits are from the cash balance available to the assessee in its books of account, the addition cannot be made or sustained on the basis that there was time gap between withdrawal and deposits.
Following the judicial precedents on parity of facts, we hold that the assessee had sufficient cash balance out of the cash withdrawals and that the AO
has not brought on record that it was utilized for some other purpose.
Accordingly, we hold that the cash deposit Rs. 50,71,354/-, by the assessee stands explained and the said addition of Rs. 50,71,354/- made by the AO u/s 69 is deleted. issued rendered academic and not adjudicated.
In the result, the captioned appeal of the assessee is allowed. ] ll Order pronounced on.../....../...U...../2025 under Rules 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.