| The Tax Publishers2020 TaxPub(DT) 0070 (Asr-Trib) INCOME TAX ACT, 1961
Section 68
When AO was not certain under which head the addition on account of cash deposited in saving bank account of assessee should be made then that would clearly meant that he was somewhat agreed that cash deposits in said bank account were out of cash-in-hand available with the company in which assessee holds substantial interest. Hence, as source of cash deposits were duly explained, AO was not justified in making addition without establishing that no cash in hand balance was available with said company. Thus, the addition made by the AO and sustained by the CIT (A) was deleted.
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Income from undisclosed sources - Addition under section 68 - Cash deposited in assessee's bank account -
AO made addition under section 68 on account of cash deposits in saving bank account of assessee and interest thereon. Assessee contended that cash had been deposited out of cash in hand of the company in which he and his wife were majority shareholder. However, AO observed that the explanation of assessee was cooked up as he was unable to explain as to why the account claim to belonging to the company had not been reflected in its books of accounts. Thus, he treated said amount as unexplained cash credit under section 68. AO, further observed that if at any stage in the appellate proceedings, the higher judicial authorities hold the cash deposits as explained, then the payment need to be examined in light of provisions of section 2(22)(e) as deemed dividend in the hands of the assessee. CIT (A), however sustained the addition under section 69. Held: It was found that the cash book of the company was reflecting day-to-day cash receipts and out of said cash balance, the cash deposits were made in the impugned bank account. That view was also supported by the facts that the AO had also observed that the addition should be considered under section 2(22)(e) as assessee had received cash loan from the company in which he had substantial interest. Moreover, CIT (A) was not justified in sustaining the addition, when the AO was not certain under which head the addition should be made because that means the AO was somewhat agreed that cash deposits in said bank account were out of cash in hand available with the company. Hence, as source of cash deposits were duly explained, AO was not justified in making addition without establishing that no cash-in-hand balance was available with said company. Thus, the addition made by the AO and sustained by the CIT (A) was deleted.
REFERRED : Kalyankumar Ray v. CIT (1991) 191 ITR 634 (SC) : 1991 TaxPub(DT) 1526 (SC), Girish Bansal, GynendraBansal v. UOI & Ors. (2016) 384 ITR 161 (Del) : 2016 TaxPub(DT) 2180 (Del-HC), CIT v. Dalmia Cement (Bharat) Ltd. (2002) 254 ITR 377 (Del) : 2002 TaxPub(DT) 0625 (Del-HC), CIT v. Bhaichand H. Gandhi (1983) 141 ITR 67 (Bom) : 1983 TaxPub(DT) 0582 (Bom-HC), Vinesh Maheswari & Anr. v. ITO [ITA No. 7210/Del/2018, dt. 1-3-2019] : 2019 TaxPub(DT) 1870 (Del-Trib), Sanjeev Kumar & Anr. v. ITO [ITA No. 445 to 449/ASR/2015, dt. 17-6-2016]
FAVOUR : In assessee's favour.
A.Y. : 2011-12
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