Tax Tribunal Removes Undisclosed Income Addition After Assessee Proves Cash Deposits Were Redeployed for Property Purchase.

The ITAT Chandigarh allowed the appeal, deleting the addition of Rs.7,50,000/- as undisclosed income. The assessee successfully demonstrated that the cash deposits were sourced from a prior withdrawal intended for property purchase, which was later redeposited. The tribunal found the explanation plausible and noted the absence of evidence supporting any investment from the withdrawal amount. Consequently, the addition was removed, as the lower authorities failed to provide a valid rationale for treating the deposits as unexplained income.

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Issues involved: Appeal against addition of cash deposits in bank account as undisclosed income.

Summary:
The appeal was filed against the order of the CIT (Appeals) relating to assessment year 2007-08. The Assessing Officer made an addition of Rs.7,60,000/- as cash deposits in the bank account were considered as undisclosed income. The assessee explained that the cash deposits were from a withdrawal made for property purchase but later redeposited. The CIT (Appeals) confirmed the addition of Rs.7,50,000/- stating the explanation was not acceptable. The ITAT Chandigarh allowed the appeal, holding that the assessee satisfactorily proved the source of deposits and deleted the addition.

The Assessing Officer noticed cash deposits made by the assessee on various dates with different banks. The assessee explained that the cash deposits were from a withdrawal made for property purchase but later redeposited in the bank account. The Assessing Officer treated the amount as income from unexplained sources and added it to the total income.

The assessee argued that the cash deposits were explained by the withdrawal made for property purchase and subsequent redeposit in the bank account. The CIT (Appeals) allowed a relief for a minor discrepancy but confirmed the addition of Rs.7,50,000/- stating the explanation was not acceptable.

The ITAT Chandigarh held that the assessee satisfactorily proved the source of deposits made in the bank account. The explanation given by the assessee was considered plausible, and no adverse view could be taken. It was noted that there was no evidence of any investment made from the withdrawal amount. The addition was deleted as both lower authorities had not provided any cogent reason for the addition.

In conclusion, the ITAT Chandigarh allowed the appeal filed by the assessee, deleting the addition of Rs.7,50,000/- as undisclosed income.

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