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Facts
The assessee, an individual working in a garment factory, deposited Rs. 26,79,000/- in cash into her bank account during the assessment year 2017-18. The source of this cash was claimed to be from relatives in the form of loans. The Assessing Officer (AO) doubted the genuineness and creditworthiness of these loan parties and treated the deposit as unexplained money.
Held
The Tribunal held that the assessee had provided primary documentary evidence, including names, addresses, PANs, and bank statements of the loan parties, to justify the source of cash. The AO, without conducting independent inquiries or presenting contrary material, rejected this evidence based on surmises and conjectures. Relying on Supreme Court precedent, the Tribunal stated that the onus shifts to the AO to disprove the evidence once primary evidence is provided.
Key Issues
Whether the cash deposit of Rs. 26,79,000/- can be treated as unexplained money under section 68/69 of the Income Tax Act when the assessee has provided documentary evidence of loans from relatives.
Sections Cited
68, 69
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Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K
PER WASEEM AHMED, ACCOUNTANT MEMBER :
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 30/11/2023 in DIN No. ITBA/NFAC/S/250/ 2023-24/1058347668(1) for the assessment year 2017-18.
The only issue raised by the assessee is that the ld. CIT(A) erred in confirming the addition of Rs. 26,79,000/- treating the same as unexplained money u/s 68 of the Act.
The necessary facts are that the assessee in the present case is an individual and working in the garment factory. The assessee in the year under consideration deposited a sum of Rs. 26,79,000/- only in cash in the bank. The source of cash deposit was explained by the assessee as detailed below:
The assessee has also submitted the complete address along with confirmation of the parties from whom the loan was taken. However, the AO disagreed with the contention of the assessee on the reasoning that the loan parties do not have sufficient credit worthiness to advance money to the assessee. Therefore, the AO treated the cash deposit as unexplained money u/s 69 of the Act and added the same to the total income of the assessee.
On appeal, the ld. CIT(A) confirmed the addition made by the AO and dismissed the appeal filed by the assessee.
Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us.
The ld. AR before us filed written submission running from pages 1 to 5, which was supported by the sale deed, bank statement of the parties. It was contended by the ld. AR that all the necessary details along with the confirmation were filed during the assessment proceedings to justify the source of cash deposits in the bank. But the AO, without pointing out any infirmity in the documents as well as without doing cross verification from the loan parties has treated the amount of cash deposits as unexplained investment, which is contrary to the provisions law. As such, the assessee has discharged the onus imposed us/ 68 of the Act by furnishing the details of the identify and the confirmation of the parties, which was not doubted by the authorities below. As such, the onus was shifted upon to the revenue to disprove the contention of the assessee based on cogent materials. Accordingly, it was prayed by the ld. AR that the addition made by the AO and subsequently confirmed by the ld. CIT(A) deserves to be deleted.
On the other hand, the ld. DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. The assessee in the year under dispute has made deposits in cash of Rs. 26,79,000/- only. The source of cash was justified by the assessee stating that it was received from the relatives discussed above. The assessee established the source of loan credit as required under the provision of section 68 of the .
Act, provided the name, address, and PAN confirmation letter and bank statement of the parties. However, the AO doubted the genuineness of loan and creditworthiness of the parties for reason that the parties were not filing the returns of income and there was meagre balance in their bank accounts. However, we note that the AO did conduct inquiries before rejecting the primary documentary evidence provided by the assessee. The AO in the present case without making an inquiry or bringing any contrary material held that the assessee has deposited own unexplained cash in her bank account. The Hon’ble Supreme Court in the case of CIT vs. P. Mohanakala reported in 291 ITR 278 while dealing with scope of provision of the section 68 of the Act held that “the opinion of the AO that the explanation furnished by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion.” In other words, once the assessee submits primary evidence regarding source of cash, the onus shifts on the AO to consider the material provided and make independent inquiry to find out genuineness of the evidence or bring material contrary to the facts explained by the assessee. The AO cannot reject the primary evidence furnished by the assessee without appreciating the facts available on record or without bringing contrary material to from the belief that primary documents or explanation furnished by the assessee are not satisfactory.
9.1 In the present case the assessee has provided all the necessary documentary evidence justifying the source of cash deposited in the bank. However, the AO merely based on surmises and conjecture held that the assessee has routed own unaccounted cash in the guise of . unsecured loan which is not justified. Therefore, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal filed by the assessee is hereby allowed.
In the result, the appeal filed by the assessee is allowed.