2017 (7) TMI 136 - AT - Income Tax

Tribunal rules in favor of assessee, deletes addition for unexplained cash deposits

Sh. Arundeep Singh Prop Ekam Enterprises, Versus The JCIT (OSD), Circle-1, Ludhiana

Sh. Arundeep Singh Prop Ekam Enterprises, Versus The JCIT (OSD), Circle-1, Ludhiana - Tmi Issues:Addition of unexplained cash deposits in bank account.Analysis:1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 8,54,760 deposited in the bank account. The only issue was the addition made on account of unexplained cash deposited in the bank account.2. During the assessment proceedings, the assessing officer noticed cash deposits of Rs. 33,09,520 in the savings bank account of the assessee. The assessee explained the deposit through a cash flow statement, attributing it to withdrawals from another bank account. However, the AO added Rs. 25,09,520 to the income of the assessee, which was reduced by the CIT(A) to Rs. 8,54,960 due to lack of justification for the withdrawals and re-deposits.3. The Tribunal considered the source of the deposit of Rs. 8,54,760 in the bank account. The cash balance available with the assessee at the time of deposits was explained through withdrawals made earlier. The Tribunal found the explanations reasonable, noting that the cash was retained for a reasonable period and not utilized elsewhere, citing a precedent where the burden lay on the department to disprove the explanation.4. The Tribunal held that the deposits were adequately explained, and the addition was deleted. The appeal of the assessee was allowed, concluding that the deposits of Rs. 8,54,760 were justified and the addition should be removed.Conclusion:The Tribunal ruled in favor of the assessee, allowing the appeal and deleting the addition of Rs. 8,54,760 made on account of unexplained cash deposits in the bank account.