Unexplained deposits deleted when assessee proves withdrawals from same bank account with proper evidence

ITAT Bangalore allowed the assessee's appeal, deleting all additions made for unexplained deposits. The Tribunal held that when assessee explained deposits as withdrawals from same bank account, revenue cannot examine reasons for withdrawals or disbelieve the explanation on mere surmises. For deposits claimed as refund from property advance, authorities failed to conduct necessary inquiry before making additions. Small demonetization deposits from savings and amounts received from parents were also deleted as revenue provided no contrary material evidence.

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Issues Involved:
1. Legality of the order passed u/s 250 of the Income Tax Act, 1961.
2. Confirmation of the total addition of Rs. 15,36,000/-.
3. Specific addition of Rs. 5,50,000/-.
4. Specific addition of Rs. 75,000/-.
5. Non-adjudication of additional ground relating to Notice u/s 143(2).
6. Confirmation of addition based on the alleged turnover of the transportation business.

Summary:

1. Legality of the Order Passed u/s 250 of the Income Tax Act, 1961:
The assessee challenged the legality of the order dated 20-09-2023 passed by the Ld. CIT(A), NFAC Delhi, under section 250 of the Income Tax Act, 1961, claiming it was opposed to law, facts, and circumstances of the case.

2. Confirmation of the Total Addition of Rs. 15,36,000/-:
The assessee argued that the total addition of Rs. 15,36,000/- was erroneous as it included a re-deposit of Rs. 9,00,000/- withdrawn on 08-07-2016 and other amounts explained through various sources. The Tribunal found that the explanation for the Rs. 9,00,000/- deposit was satisfactory, supported by bank statements showing the withdrawal and subsequent deposit. The Tribunal cited precedents from the Karnataka High Court and ITAT Bangalore to support the deletion of this addition.

3. Specific Addition of Rs. 5,50,000/-:
The assessee contended that Rs. 5,50,000/- was returned in cash from Sri. Maruthi Reddy, initially given as an advance for property purchase. The Tribunal noted that the lower authorities failed to verify this claim and emphasized the necessity of such verification. Consequently, the addition of Rs. 5,50,000/- was deleted.

4. Specific Addition of Rs. 75,000/-:
The Tribunal addressed the addition of Rs. 51,000/- and Rs. 24,000/-, which were claimed to be from household savings and given by the assessee's parents, respectively. Considering the nominal amounts and lack of contrary evidence, the Tribunal deleted these additions.

5. Non-adjudication of Additional Ground Relating to Notice u/s 143(2):
The assessee raised an additional ground regarding a Notice u/s 143(2) dated 12-09-2018, which was allegedly not digitally signed. This ground was not adjudicated by the Ld. CIT(A).

6. Confirmation of Addition Based on Alleged Turnover of Transportation Business:
The Tribunal found that the Ld. CIT(A) erred in confirming the addition based on the assumption of business turnover, despite the AO's clear statement that the assessee was not involved in any business. This addition was also deleted.

Conclusion:
The Tribunal allowed the appeal, deleting the total addition of Rs. 15,36,000/- and addressing each specific issue raised by the assessee. The order emphasized the importance of verifying claims and not making additions based on assumptions or without proper evidence.

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