Assessee must substantiate real estate cash deposits to avoid income additions

The Income Tax Appellate Tribunal (ITAT) allowed the department's appeal, emphasizing the need for the assessee to substantiate the source of cash deposits from real estate transactions with supporting evidence to avoid additions to income. The ITAT found that the CIT(A) erred in accepting the explanation without adequate evidence and remanded the case to the Assessing Officer for verification of the source of deposits with proper evidence, directing a re-examination of the issue.

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Issues:
- Deletion of an amount treated as unexplained cash deposits by AO

Analysis:
- The department's appeal was against the CIT(A)'s order deleting an amount of Rs. 1,59,35,000 treated as unexplained cash deposits by the AO.
- The assessee, an individual, did not file an income tax return initially for the AY in question but later declared income of Rs. 86,230 in response to a notice u/s 148.
- The AO observed cash deposits of Rs. 2,67,35,000 in the assessee's bank account and sought explanations, which the assessee attributed to real estate brokerage transactions without providing substantial evidence.
- The CIT(A) initially dismissed the assessee's appeal ex-parte but upon ITAT's direction, reheard the case and accepted the explanation that the deposits were from real estate transactions, setting the income at Rs. 69,610.
- The department argued that the assessee failed to provide evidence supporting the claim of deposits from buyers, shifting the burden of proof to the assessee.
- The assessee contended that the cash deposits were temporary and related to real estate transactions, as evidenced by the nil closing balance in the bank account.
- The ITAT found the CIT(A) erred in accepting the explanation without adequate evidence and remanded the case to the AO to verify the source of deposits with proper evidence, directing a re-examination of the issue.

Conclusion:
- The ITAT allowed the department's appeal for statistical purposes, emphasizing the need for the assessee to substantiate the source of cash deposits from real estate transactions with supporting evidence to avoid additions to income.

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