2023 (2) TMI 416 - AT - Income Tax

Addition u/s 69A - addition on account of peak cash shortage - cash deposits made during the year under consideration - benefit of amount received from family members and opening cash in hand - HELD THAT:- Where the assessee being a regular income tax assessee in the earlier years has disclosed sources of income and where there are savings from the earlier years and which are available at the beginning of the year, we find merit in the contention of assessee be allowed an opportunity to demonstrate the availability of savings in form of cash and bank deposits at the beginning of the year through appropriate documentation in support of cash deposits made during the year under consideration.

Such availability of cash in hand at the beginning of the year should be from assessee’s own past income and savings and should not include any transactions with the relatives and family members. Where there are deposits in her bank account, the onus is on the assessee to provide explanation and substantiate the same through appropriate documentation. Where the assessee claims that the deposits during the year are out of opening cash in hand from her past savings and income, the assessee cannot be denied an opportunity to put forth her explanation.

It is only the real income in the hands of the assessee which can be brought to tax and it is incumbent on part of the Revenue to allow such an opportunity to the assessee and let’s the explanation so submitted and documentation in support so furnished be tested and examined and basis such examination, the AO can take an appropriate view in the matter as per law. In light of aforesaid, the contention of the ld DR regarding concession made by Assessee during the appellate proceedings cannot be accepted and the prayer of the assessee is allowed.

The matter is accordingly set-aside to the file of the AO for the limited purposes of examination the quantum and availability of opening cash-in-hand in the assessee and to consider the same for the purposes of drawing the cash flow statement and determining the peak cash balance in the hands of the assessee and decide the matter as per law after providing reasonable opportunity to the assessee. In the result, ground no. 1 and 2 are allowed for statistical purposes.