TaxTMI 
TaxTMI 
2026 (9) TMI 982
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....declaring a total income of Rs. 40,20,930/-. The case was selected for scrutiny under CASS to verify the sources of cash deposits aggregating to Rs. 1,04,50,116/- in his bank accounts during the financial year 2015-16. Accordingly, the AO issued statutory notices to the assessee by calling for the details in support of the return of income filed. In response, the assessee filed the submissions explaining the sources for cash deposits as detailed below:- (i) Receipts from educational consultancy u/s. 44AD of the Act of Rs. 9,87,540/-. (ii) Receipts from finance advance to College Lecturer to the tune of Rs. 14,21,879/-. (iii) Gift from mother (Smt.T.Saraswati) in cash of Rs. 20,00,000/- (iv) Gift received from various people amounting to Rs. 22,15,000/-. 3. On perusal of the submissions made by the assessee along with supporting documents, the AO considered the following amounts as explained sources and the balance amount of Rs. 37,22,090/- out of total cash deposit of Rs. 1,04,50,116/- as unexplained cash deposits for want of evidence and brought to tax u/s. 69A of the Act, apart from Rs. 22,15,000/- as unexplained cash credit u/s. 68 of the A....
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....rsed by the family members for having remitted their advance tax payments through online, out of his available funds in the bank. (i) Mrs.Mala Leena (wife of the assessee) PAN - ACRPM9322N Rs. 2,00,000 x 3 = Rs. 6,00,000/-. (ii) M/s.Arangannal HUF (HUF of the assessee) PAN - AAEHA8170K Rs. 1,00,000 x 3 = Rs. 3,00,000/-. (iii) Mr.Aranga Thirumalai (father of the assessee) PAN - ADPPA4110K Rs. 35,000/-. (iv) Mr.Aranga Thirumalai (HUF of assessee's father) PAN -AAJHA3136I of Rs. 35,000/-. (v) Smt.T.Saraswati (mother of the assessee) PAN - ANWPS6758G of Rs. 35,000 x 3 = 1,05,000/-. 6. Apart from that, the assessee submitted that he had made a repayment of housing loan taken jointly with his wife to the tune of Rs. 9,54,975/-. Out of which Rs. 6.00 Lakhs belonging the share of the assessee's wife was reimbursed to the assessee by cash has been utilised for depositing to the bank account. In view of the above, the assessee prayed the ld.CIT(A) to delete the additions made by the AO. On perusal of the submissions made by the assessee, the ld.CIT(A) remitted the issue of Rs. 22,15,000/- gift from other persons to the files of the AO and direc....
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....gly relied upon the orders of the authorities below and submitted that the assessee had failed to satisfactorily substantiate the sources of the cash deposits with cogent and reliable documentary evidence. Accordingly, the Ld. DR supported the findings of the Ld.CIT(A) in sustaining the addition made by the AO and prayed that the impugned order be upheld. 10. We have heard the rival submissions and perused the materials available on record. The solitary issue that arises for our consideration is whether the Ld.CIT(A) was justified in sustaining the addition of Rs. 37,22,909/- made by the AO u/s. 69A of the Act towards unexplained cash deposits in the bank accounts of the assessee. It is an admitted position that during the relevant previous year, aggregate cash deposits of Rs. 1,04,50,116/- were found in the bank accounts of the assessee. Out of the said deposits, the AO accepted sources aggregating to Rs. 67,27,207/- and treated the balance amount of Rs. 37,22,909/- as unexplained money u/s. 69A of the Act. 11. Before us, the Ld.AR has reiterated that the balance cash deposits are substantially explained by three sources, namely: (i) cash gift of Rs. 20,00,000/- received fro....
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.... piece of evidence and could not have been brushed aside without examining the surrounding circumstances and the financial records of the deceased donor. 15. We further observe that the Ld.CIT(A), while sustaining the entire addition u/s. 69A of the Act, has not undertaken any meaningful examination of the donor's past income-tax returns, capital position, bank accounts, withdrawals, accumulated savings or other material which could demonstrate whether she possessed sufficient funds to make the impugned gift. Equally, there is no finding that the affidavit furnished by the assessee's sisters was false or that the persons affirming the affidavit were examined and their statements found to be unreliable. In our considered view, where the assessee has placed prima facie material explaining the source, the explanation is required to be tested with reference to the relevant evidence and surrounding circumstances and cannot be rejected merely on suspicion or on the ground that the transaction was in cash. 16. Therefore, considering the peculiar facts that the donor was the assessee's mother, was stated to be an income-tax assessee, had expired shortly after the relevant....
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....mbursement of precisely that liability, the AO ought to examine the underlying payment, the tax challans, the identity and financial capacity of the person concerned and the proximity between the original payment, reimbursement and subsequent cash deposit. These are matters capable of verification from the assessee's bank account and the income-tax records of the concerned family members. We notice that neither the AO nor the Ld. CIT(A) has recorded a categorical finding after undertaking such verification. The explanation has substantially been rejected on the ground that it was furnished at a later stage and was unsupported by confirmations. 20. We, therefore, consider it appropriate that the claim of reimbursement of Rs. 10,75,000/- be verified with reference to the assessee's bank statements, advance-tax challans, PAN-wise tax records and confirmations/financial capacity of the respective family members. To the extent that a clear nexus is established between the payments made by the assessee and the corresponding reimbursement received, such amount cannot be treated as unexplained money of the assessee. 21. The third explanation concerns Rs. 6,00,000/- allegedly ....
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....ash with the respective persons, the dates of reimbursement/gift, the proximity of such receipts with the cash deposits and the financial capacity of the persons concerned require factual verification. These matters have not been examined in their proper perspective by the authorities below. 25. We further notice that the three principal sources now relied upon by the assessee aggregate to Rs. 36,75,000/- [Rs.20,00,000 + Rs. 10,75,000 + Rs. 6,00,000], whereas the addition sustained u/s. 69A is Rs. 37,22,909/-, leaving a difference of Rs. 47,909/-. The assessee shall, therefore, also be required to explain the source of the said balance amount of Rs. 47,909/- with supporting evidence, and the AO shall adjudicate the same independently in accordance with law. 26. In view of the foregoing discussion and considering the totality of the facts and circumstances of the case, we deem it appropriate, in the interest of substantial justice, to set aside the finding of the Ld.CIT(A) sustaining the addition of Rs. 37,22,909/- u/s. 69A of the Act and restore the issue to the file of the Jurisdictional Assessing Officer (JAO) for limited verification of the sources explained by the assesse....