2025 (7) TMI 1359 - AT - Income Tax

Unexplained cash deposits - effect of subsequent withdrawals - HELD THAT - It is already come on record that not only the assessee has withdrawn Rs. 9, 50, 000/- on 10.06.2010 which followed subsequent withdrawal but also the learned lower authorities have simply brushed aside his submissions of having opening cash of Rs. 6, 58, 000/- going by the cash flow statement without substantiating the impugned addition. That being the case find no merit in the learned lower authorities action treating the assessee s cash deposits of Rs. 5, 00, 000/- as unexplained which is directed to be deleted. Assessee s appeal is allowed.

Summary

The Appellate Tribunal (ITAT Delhi) in the appeal for AY 2012-13 against the CIT(A)/NFAC order under sections 143(3) r.w.s. 147 of the Income Tax Act, 1961, addressed the issue of unexplained cash deposits. The Assessing Officer (AO) had treated Rs. 4,00,000/- out of Rs. 14,58,000/- cash deposits as unexplained, upheld by the CIT(A), who noted the appellant failed to justify withdrawals totaling Rs. 9,50,000/- on 10.06.2010 and subsequent withdrawals, rejecting the claim of an opening cash balance of Rs. 6,58,000/-. The CIT(A) also upheld the validity of the reassessment under section 147, observing the appellant did not challenge the reopening or provide explanations for the cash deposits. The ITAT found the lower authorities erred by dismissing the appellant's cash flow statement without proper substantiation of the addition. The Tribunal held that the unexplained cash deposits of Rs. 5,00,000/- were not justified as addition and directed deletion of this amount. The appeal was allowed accordingly. Key holdings: - The AO and CIT(A) failed to substantiate the addition treating cash deposits as unexplained. - The reopening under section 147 was valid, but the onus to explain cash deposits lies with the assessee. - The Tribunal deleted Rs. 5,00,000/- addition due to lack of proper justification.