INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Alleged unexplained bank deposits in cash -

Case of the assessee was reopened on the basis of the AIR information. Since there was no representation on behalf of the assessee, the AO made assessment under section 144 read with section. 147. The AO made addition of Rs. 29,96,000 in respect of the amount deposited in the bank account of the assessee. Aggrieved by this, the assessee preferred an appeal before CIT(A). The CIT(A) partly allowed the appeal. Out of addition of Rs. 29,96,000 a sum of Rs. 13,92,000 was deleted and rest of the addition was confirmed. Assessee submitted that before the CIT(A), it was demonstrated that the assessee had withdrawn from his bank accounts of certain sums from 4-7-2005 to 15-7-2005 before depositing the same on 18-7-2005. Hence, CIT(A) failed to appreciate this fact and proceeded to reject the claim of the assessee. It was further contended that the actual consideration received on sale of land was at Rs. 18,37,800, against a sum of Rs. 11,92,000 as recorded in the sale of deed. Further, the assessee submited that the CIT(A) had accepted the source of income but did not accept the opening cash balance as on 1-4-2005. He contended that under these facts CIT(A) ought to have deleted the entire addition. Assessee submitted that the bank statement demonstrates deposit and withdrawal. Further, there was a sale deed demonstrating the sale of agricultural land, and other evidence suggesting thed earning of agricultural income it was not the case where the assessee had failed to provide any evidence.Held: CIT(A) did not accept opening cash balance on the ground that the assessee was not maintaining books of accounts, however, accepted the factum of sale of land earning of agricultural income and did not accept the contention that the amount so withdrawn was deposited in the bank account. The undisputed fact was that the CIT(A) accepted the fact that assessee was having agricultural income and also sold a piece of agricultural land proceeds whereof was deposited in the bank account of the assessee. It was also not rebutted by the revenue that before making deposits of sum of Rs. 10,65,000 on 18-7-2005. The assessee had withdrawn sum of Rs. 40,000, Rs. 5,000, Rs. 7,000 and Rs. 11,00,000 on 4-7-2005, 9-7-2005, 12-7-2005 and 15-7-2005 from the same bank account. Hence, the cash available with the assessee was higher than the cash deposited on 18-7-2005. The revenue had not placed on record demonstrating that these sums were utilized for any other purpose. Therefore Tribunal was unable to affirm the finding of the Commissioner (Appeals) for sustaining this addition as made on the basis that purpose of withdrawal of specific sums was not given. Revenue should have brought some material suggesting that the money as withdrawn from the bank account was used somewhere else and it was not available with the assessee for making deposits. In absence of such facts CIT(A) ought to have accepted the source of deposit of Rs. 10,65,000 on 18-7-2005. Hence, the AO was directed to delete this addition. In respect of the remaining addition it is noticed that the CIT(A) has not accepted the opening cash balance of Rs. 5,27,432. Looking to the fact that the assessee was having agricultural income and other source of income even if the opening balance is considered to be higher at least the assessee would be having cash on hand a sum of Rs. 3,00,000 which appears to be reasonable. Hence, the assessing officer was directed to delete the addition of Rs. 3,00,000 being available as cash in hand. Hence, out of addition of Rs. 16,04,000 sustained by the Commissioner (Appeals) the assessing officer was therefore, directed to delete the addition of Rs. 13,65,000, and remaining addition of Rs. 2,39,000 was sustained.

REFERRED :

FAVOUR : In assessee's favour (Partly).

A.Y. : 2006-07

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