Tribunal upholds addition to income due to unsatisfactory explanation for cash deposit.

The Tribunal dismissed the assessee's appeal, upholding the addition of Rs. 2,47,000 to the assessee's income due to unsatisfactory and unevidenced explanation for the cash deposit during the Assessment Year 2017-18. The Tribunal found the explanation incredulous and inconsistent with human probabilities, noting various discrepancies and lack of substantiating evidence regarding the source of funds. The Tribunal emphasized the necessity for a credible explanation under relevant sections of the law, ultimately ruling against the assessee.

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Issues Involved:
1. Maintainability of the addition of Rs. 2,47,000 to the assessee's income due to unsatisfactory explanation of the cash deposit.

Detailed Analysis:

Maintainability of the Addition of Rs. 2,47,000:
The core issue in this appeal is the legitimacy of the addition of Rs. 2,47,000 to the assessee's income, which was deposited in her bank account during the Assessment Year (AY) 2017-18. The assessee's explanation for the cash deposit was deemed unsatisfactory by the Revenue.

The Law:
The law requires that the explanation for cash deposits must satisfy the parameters of identity, capacity, and genuineness of the transaction, as settled by the Apex Court. The explanation must be based on the factual background of the case.

The Assessee’s Case:
The assessee, a former student, claimed the cash deposit was sourced from:
- Cash available at the beginning of the year (Rs. 1,97,500)
- Cash withdrawn from the bank (Rs. 66,000)
- Tuition income (Rs. 98,830)
Aggregating to Rs. 3,62,330 as on 08.11.2016. The cash was accumulated for her impending marriage on 08.12.2016. The balance cash of Rs. 1,15,330 was not deposited as it was held in smaller denomination notes, which were not demonetized. The assessee also received Rs. 11.29 lacs as cash gifts on her marriage, explaining another deposit of Rs. 8 lacs in new currency.

The Revenue’s Case:
The Revenue disputed the explanation for the Rs. 2.47 lacs deposit, citing:
- Absence of cash deposits before or after the demonetization period.
- The tuition income was returned for the first time and was wholly un-evidenced.
- The initial explanation by the assessee was that deposits up to Rs. 2.50 lacs would not be questioned by the Government, which was later retracted.

Discussion/Findings:
The Tribunal noted that the demonetization period was marked by anxiety and frantic attempts to deposit old currency. The assessee's explanation was found incredulous and inconsistent with human probabilities. The Tribunal observed:
- The cash gifts received in new currency were not questioned, but the source and nature of the cash deposits needed satisfactory explanation under sections 69/69A.
- The assessee's explanation of cash accumulation for marriage expenses lacked credibility.
- There was no evidence to substantiate the source of cash available as on 31.3.2016.
- The tuition income was unsubstantiated, with no details provided about the students or the subjects taught.
- The timing of the cash deposit, forty days after the start of the demonetization period, and the extent of balance cash not deposited further discredited the explanation.

Legal Pleas:
The assessee raised two legal pleas:
1. Affidavit of Father: The affidavit by the assessee's father stating no old currency deposit was found false and retracted. The Tribunal held that the affidavit had no value as the fact of the cash deposit was undisputed.
2. Recording in Books of Account: The contention that the cash deposit recorded in the books of account should not attract addition under section 69A was dismissed. The Tribunal clarified that whether recorded in books or not, the assessee must explain the nature and source of the sum under sections 68 and 69A.

Conclusion:
The Tribunal dismissed the assessee’s appeal, concluding that the explanation for the cash deposit was unsatisfactory and unevidenced. The addition of Rs. 2,47,000 to the assessee's income was upheld.

Order pronounced in the Open Court on January 17, 2022.

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