2023 (11) TMI 990 - AT - Income Tax

ITAT dismisses appeal over unexplained cash deposits due to insufficient evidence and unsubstantiated borrowing claims

Helan Mary Soba Versus The Income Tax Officer, Ward-1 (2), Tiruchirapalli.

The ITAT Chennai dismissed the appeal concerning unexplained cash deposits in the assessee's bank account. Despite the assessee's claim that her husband ... Unexplained cash deposits in bank account - as submitted appellant has been just the name holder and the bank account has been operated by her husband which was also accepted by the AO - husband of the assessee claimed that he borrowed funds from the known customers of the bank and deposited that borrowed fund in his wife’s account in order to meet the targets of the Bank - HELD THAT:- Assessee has failed to prove her claim. We observe that the assessee failed to produce the persons who deposited cash into her bank account. No evidence regarding the loan given to the husband of the assessee by the known customers of the bank so as to achieve the target of the bank were furnished by the husband of the assessee. The identity of such persons, their capacity to give loan, their sources of income etc. were not proved by the husband of the assessee before the lower authorities. The confirmation letters were also not furnished by the persons by whom cash deposit were made in the account of the assessee. The claim of the assessee remained as a bald claim only followed by no evidence. Why the depositors will deposit their funds in an account of other person for increasing the deposits of a bank. The depositors can make deposit in their names by themselves. There is no necessity to increase the bank deposit by depositing funds in other’s bank account. If the depositor deposits funds in his account, then also, deposit of a bank will increase. Therefore, the claim of the assessee is totally unbelievable. The Ld. CIT(A) rightly observed that the claim of the assessee is her afterthought.Appeal of the assessee is dismissed. Issues Involved:The judgment involves the following Issues:1. Justification of sustaining addition made by the Assessing Officer.2. Whether the appellant was just the name holder and the bank account was operated by her husband.3. Source of income for the appellant.4. Consideration of truth about the source of deposit made by the husband.5. Reliance on cash deposited in the appellant's bank account.6. Appreciation of husband's statement regarding the rightful owner of the money.7. Conclusion on claim that deposits were advanced by known customers.8. Adoption of Peak Credit to remove the cascading effect of unexplained credit entries.Issue 1: Justification of Addition:The appeal challenged the order sustaining the addition made by the Assessing Officer. The appellant contended that the addition was not justified within the parameters of the Income Tax Act, emphasizing that the appellant could not possibly have any source of income.Issue 2: Account Operation by Husband:The appellant argued that she was just the name holder of the bank account, which was actually operated by her husband. The appellant's husband, a bank manager, mobilized funds from customers, friends, and relatives to meet fixed deposit targets.Issue 3: Source of Income:The case revolved around the appellant's source of income, with the appellant claiming ignorance about the large cash deposits in her account. The appellant's husband explained that he borrowed funds from bank customers and deposited them in the appellant's account to meet bank targets.Issue 4: Truth of Deposit Source:The authorities questioned the truth about the source of the deposits made by the husband. Despite the husband's claims, the Assessing Officer added the cash deposit amount to the appellant's total income as unexplained investment.Issue 5: Reliance on Cash Deposits:The Commissioner relied on the cash deposits in the appellant's account, overlooking the source of the deposit as claimed by the husband. The husband's inability to provide evidence led to the addition of the cash deposit amount to the appellant's income.Issue 6: Husband's Statement:The Commissioner's decision was based on the husband's statement regarding the funds deposited in the appellant's account. However, the husband's failure to furnish evidence to support his claims resulted in the addition to the appellant's income.Issue 7: Deposits by Known Customers:The claim that deposits were advanced by known customers was deemed unbelievable by the authorities. Lack of evidence regarding the identity and capacity of the depositors led to the confirmation of the addition to the appellant's income.Issue 8: Peak Credit Adoption:The appellant argued for the adoption of Peak Credit to address unexplained credit entries in the bank account. However, the authorities found no merit in this argument, leading to the dismissal of the appeal.The judgment highlighted the appellant's failure to prove the source of income, the lack of evidence supporting claims made by the husband, and the incredibility of deposits being advanced by known customers. Ultimately, the appeal was dismissed based on these findings.