2012 (7) TMI 272 - AT - Income Tax

Successful Appeal: Burden of Proof Discharged with Documentary Evidence

Homi F. Patrawala Versus ITO 20(1) (3), Mumbai.

The ITAT allowed the appeal, deleting the addition of income from undisclosed sources. The appellant successfully discharged the burden of proof with ... Income from undisclosed sources - the assessee had deposited in cash in his savings account - AO denial that the cash deposited and withdrawn in question was the same - Held that:- Viewing the affidavit in question dated 16.4.2012 clearly proves that the cheques in question had been encashed by the assessee himself, thus to that extent CIT(A)'s finding that the cheques are issued to their party is not correct - there is also no evidence against the assessee that the money deposited in bank account was not drawn earlier - There is evidence on record that assessee owned property which had 33 tenants with the negotiations going on to vacate the property, but the sudden death of Counsel who was acting in this behalf, assessee had no option than to stop the negotiations and redeposit the cash. The cash withdrawal by company at the same time was also accepted, source of cash withdrawal cannot be doubted - accept the assessee’s plea that he had withdrawn the amount earlier also which was redeposited later on - in favour of assessee. Issues:Addition of income from undisclosed sources based on cash deposit explanation.Analysis:The appellant filed an appeal against an order confirming the addition of Rs. 59,70,000 as income from undisclosed sources by the Assessing Officer. The appellant, engaged in consultancy, brokerage, and construction in real estate, declared income of Rs. 2,17,575 in the return filed. The disputed amount was explained by the appellant as received from his company, Prime Property Managers Private Limited, and withdrawn for negotiations with tenants to obtain vacant possession of land. The appellant provided bank statements, company accounts, and other evidence to support the explanation.The Assessing Officer (AO) rejected the explanation, citing lack of proof for keeping a large amount as cash in hand, discrepancies in bank statements, and absence of business expediency. The AO concluded that the cash deposited and withdrawn were not the same, treating the amount as income from undisclosed sources. The Commissioner of Income Tax (Appeals) [CIT (A)] confirmed the AO's order, emphasizing the lack of established source for the cash in hand and analyzing the bank statements.In the appeal before the ITAT, the appellant argued that the burden of proof was discharged with documentary evidence and a sworn affidavit. The appellant relied on case law and contended that the revenue did not provide counter evidence. During the hearing, the ITAT requested an affidavit to confirm the encashment of cheques by the appellant, which was submitted and accepted as evidence.The ITAT found the cheques were encashed by the appellant, contradicting the CIT (A)'s finding. The ITAT concluded that the appellant had withdrawn and redeposited the amount, supported by the affidavit and lack of contrary evidence. The ITAT accepted the appeal, deleting the addition of income from undisclosed sources, as the appellant's contentions were deemed correct based on the evidence presented.In summary, the ITAT allowed the appeal, emphasizing the appellant's successful discharge of the burden of proof through documentary evidence and a sworn affidavit, leading to the deletion of the addition of income from undisclosed sources.