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2025 (5) TMI 1236 - AT - Income TaxUnexplained cash deposits in the Bank accounts - appellant had duly explained the fact that Bank accounts were in the joint names and the source of depositing the cash was earlier withdrawals from the same Bank accounts - as claimed that the cash was deposited out of earlier cash withdrawals made from the same bank account - HELD THAT - As per the cash flow statement there were sufficient cash in hand with the Assessee to deposit in her bank account. The Department has not brought anything on record to show that the cash so withdrawn from the bank accounts have been utilized by the Assessee for any other purpose. Apart from the same during the Remand proceedings the said Sh. Ashok Kumar admitted that there was a land deal agreement entered into and the money toRs. 40, 00, 000/- has been received and return to the Assessee in cash. As stated that the money was remained with Sh. Jeetu for approximately two to three months which is contradicts the claim of the Assessee that the money was with Jeetu/sellers for nineteen to twenty months. From the above it is found that the said Sh. Ashok Kumar has not denied the claim of the Assessee regarding land deal and payment made and received in cash. Considering the fact that as per the cash flow statement there was sufficient cash in hand with the Assessee to re-deposit in her bank account and also finding merit in the claim of the Assessee regarding the unsuccessful land deal and returning of money and re-depositing in the bank account we are of the opinion that the Ld. A.O. and the CIT(A) have committed error in making/confirming the impugned addition. Accordingly finding merit in the grounds of Appeal of the Assessee the Appeal of the Assessee is allowed and the impugned addition is hereby deleted. Appeal of the Assessee is allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Appellate Tribunal (AT) in this appeal include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Justification for addition of Rs. 56,20,900/- on account of cash deposits under section 147/143(3) of the Income Tax Act Relevant legal framework and precedents: The Assessing Officer invoked section 147 (income escaping assessment) and section 143(3) (assessment) of the Income Tax Act, 1961 to make the addition. The legal principle governing such additions is that unexplained cash deposits in a bank account can be treated as income if the Assessee fails to satisfactorily explain the source of such deposits. Court's interpretation and reasoning: The A.O. relied on information that the Assessee had deposited Rs. 52,80,000/- in cash during the financial year 2009-10 in a savings bank account. The Assessee did not file a return for the year under consideration and failed to respond to notices initially, prompting the A.O. to initiate reassessment proceedings. The A.O. rejected the Assessee's explanation that the deposits were made from earlier cash withdrawals, citing a significant time gap between withdrawal and deposit dates (withdrawals in February 2008; deposits in September 2008 and March 2010). The A.O. treated the entire amount as unaccounted income and made the addition accordingly. Key evidence and findings: The A.O. relied on bank statements showing cash deposits and withdrawals, the absence of timely return filing, and the inability of the Assessee to provide a continuous and credible cash flow explanation. The A.O. also noted contradictions in the Assessee's claim regarding the land deal. Application of law to facts: The A.O. applied the principle that unexplained cash deposits are presumed to be income unless satisfactorily explained. The time gap and lack of continuous cash flow documentation led to rejection of the Assessee's explanation and addition of the entire amount. Treatment of competing arguments: The Assessee argued that the deposits were from earlier withdrawals from the same joint bank accounts and related to a land purchase transaction that did not materialize, with the money returned and re-deposited. The A.O. rejected this on the basis of timing discrepancies and lack of corroboration. Conclusions: The A.O. concluded that the addition was justified and the Assessee had not satisfactorily explained the source of cash deposits. Issue 2: Appreciation of facts and evidence regarding source of cash deposits and joint account operation Relevant legal framework and precedents: The law recognizes that joint bank accounts may have transactions attributable to multiple holders and that cash deposits may be explained by prior withdrawals or legitimate sources. The burden lies on the Assessee to prove the source of deposits. Court's interpretation and reasoning: The Tribunal examined the claim that the bank accounts were jointly held by the Assessee, her mother, and brother, with the brother primarily operating the accounts. The Assessee submitted a cash flow statement showing the source of cash as earlier withdrawals and the return of amounts paid for an unsuccessful land deal. The Tribunal found that the Department did not produce evidence to contradict the cash flow statement or show that the withdrawn cash was used for other purposes. Key evidence and findings: The Assessee's cash flow statement and the statement of Sh. Ashok Kumar recorded under section 131 of the Act were crucial. Ashok Kumar admitted the land deal agreement and the receipt and return of Rs. 40,00,000/- in cash, though he differed on the duration for which the money remained with the seller's representative (two to three months vs. nineteen to twenty months claimed by the Assessee). Importantly, Ashok Kumar did not deny the fundamental claim of the land deal and cash transaction. Application of law to facts: The Tribunal applied the principle that credible explanation supported by evidence must be accepted unless disproved by the Department. The minor discrepancy in the duration for which the money remained with the seller was not sufficient to reject the overall explanation. Treatment of competing arguments: The Department emphasized the timing gap and contradictions in the Assessee's explanation to argue that the addition was justified. The Tribunal weighed these against the Assessee's documentary evidence and the lack of contradictory evidence from the Department. Conclusions: The Tribunal found merit in the Assessee's explanation and held that the addition was not justified. Issue 3: Condonation of delay in filing the appeal Relevant legal framework: The Tribunal has discretion to condone delay in filing appeals if sufficient cause is shown. Court's interpretation and reasoning: The Assessee filed an application for condonation of seven days' delay in filing the appeal. The Tribunal accepted the reasons stated and condoned the delay. Conclusions: Delay of seven days in filing the appeal was condoned. 3. SIGNIFICANT HOLDINGS The Tribunal held that the addition of Rs. 56,20,900/- made by the Assessing Officer and upheld by the CIT(A) was not justified in the facts and circumstances of the case. The Tribunal stated:
The core principles established include:
Final determinations:
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