2021 (4) TMI 394 - AT - Income Tax

Tribunal partially allows appeal on unexplained cash deposits for A.Y 2015-16

Sri Venkatesh Soutoor Tirupati Versus Income Tax Officer Ward 2 (2) Tirupati

The Appellate Tribunal partially allowed the appeal of the individual assessee regarding unexplained cash deposits in the bank account for A.Y 2015-16. ... Unexplained cash credits - additions made by the Assessing Officer disbelieving the sources of the cash deposits made into the assessee’s Bank A/c with Andhra Bank, Main Branch, Tirupati - assessee is a goldsmith and also that he has never filed any return of income in the earlier years - assessee is stated to have procured old gold through auction sales from Andhra Bank and other customers as well - HELD THAT:- The entire procurement of gold ornaments is not only through auction from Bank, but they are from other customers as well. The learned Counsel for the assessee has filed before this Tribunal, the copy of the Bank A/c of the assessee as well as the customers from whom the assessee has allegedly purchased the gold and also the confirmation letters stating that the assessee has paid the loan amount and after release of gold, the said gold was sold and the sale consideration was given to the assessee in cash. None of these letters were considered and verified by the Assessing Officer and he has accordingly disallowed the entire sum . Thus if the assessee is able to prove the transfer of money from the assessee’s bank a/c to the bank a/c of the customers and if the said gold loan is repaid on the same date, then taking the confirmation from the parties into consideration, the sale consideration of those transactions should be accepted as source for cash deposits. We deem it fit and proper to remand this issue to the file of the Assessing Officer with a direction to verify the Bank A/c of the assessee and also of the other parties and reconsider the issue in accordance with law. Cash withdrawals and the marriage gifts from others and gift from his brother as sources for the balance of cash deposit - Assessing Officer has held the ATM withdrawals and also 2/3rd of the gifts at the time of marriage as sources for redeposits into the Bank A/c as unbelievable. In my opinion, the entire ATM withdrawals may not have been used for day to day expenses and some of them might have been utilized for making the deposits into his Bank A/c. Therefore, we are inclined to accept 50% of the same as source for cash deposits. The assessee gets relief accordingly. Marriage gifts from others also we are inclined to accept 50% of the same as against 1/3rd of the cash gifts accepted by the Assessing Officer. Therefore, 50% of the total amount is accepted as source for cash deposits. As regards gift on account of marriage from his brother, transaction has been done through banking channel and therefore, it cannot be considered as a source for cash deposits - Ground relating to this addition is rejected. Issues:Assessment of unexplained cash deposits in the bank account for A.Y 2015-16.Analysis:The case involved an individual assessee who deposited cash in his bank account during the financial year 2014-15. The Assessing Officer issued a notice under section 148 as the assessee had not filed his return of income. The assessee explained the sources of cash deposits as sale proceeds, old gold purchases, past savings, loans, and gifts. However, the Assessing Officer found discrepancies in the explanations provided and initiated further inquiries.The Assessing Officer disallowed the claim of procuring old gold ornaments through auction sales from Andhra Bank as the bank denied conducting any such auctions. Consequently, the claimed income under section 44AD was not accepted, leading to unexplained cash credit being brought to tax. The Assessing Officer also scrutinized cash withdrawals and gifts received, rejecting a portion of them as sources for cash deposits.The assessee appealed to the CIT (A) against the Assessing Officer's order, but the CIT (A) upheld the decision. The assessee then appealed to the Appellate Tribunal, challenging various additions made by the Assessing Officer. During the hearing, the Tribunal considered the evidence provided by the assessee, including bank statements and confirmation letters, to support the sources of cash deposits.The Tribunal found merit in the assessee's explanations regarding the sources of cash deposits. It directed the Assessing Officer to verify the bank accounts of the assessee and other parties to reconsider the issue. The Tribunal partially allowed the appeal, accepting 50% of ATM withdrawals and marriage gifts as legitimate sources for cash deposits. The gift received from the brother through a banking channel was not considered as a source for cash deposits.In conclusion, the Tribunal granted partial relief to the assessee by accepting some sources of cash deposits and rejecting others. The appeal was treated as partly allowed for statistical purposes, providing a detailed analysis of each issue raised by the assessee in the appeal.