INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Cash deposits in bank account -

AO made addition treating cash deposits as unexplained sources. CIT(A) after considering submissions of assessee and finding of AO along with remand reports sought from AO, noticed that peak amount of unexplained deposits was Rs. 9,18,900 as against worked out by assessee at Rs. 7,12,500. CIT(A) further noticed that benefit of withdrawals from capital account of assessee could not be given as withdrawals from capital account appeared to have been made for household expenses and no benefit of opening cash in hand and cash available in books of accounts related to business could be allowed in absence of any evidence with regard to opening cash in hand and any entry in cash book. Accordingly, CIT(A) restricted addition to Rs. 9,18,900 out of total addition of Rs. 18,16,500. Assessee submitted that documents available before AO, proved identity as well as creditworthiness of parties and affidavits confirming land on lease with two of the persons. However, CIT(A) disbelieved amounts received by assessee whereas persons who had given affidavits had not been cross-examined before rejecting affidavits. Assessee further submitted that credits were in the bank account which was not a part of books of accounts and credits stood confirmed by the persons concerned and supporting documents to show creditworthiness were also filed. It was also averred that the cash balance in the books was also available, which could have been used for deposit in bank account and detail of the cash balance available in books on various dates on which there were deposits in bank account along with relevant pages of cash book were filed before CIT(A). Held: Considering the totality of facts and circumstances of the case and submissions of assessee, issue was restored for a limited purpose to AO to verify and examine as to whether assessee was entitled to benefit of opening cash in hand and cash available in books of account related to his business with regard to the amount of Rs. 9,18,900 after providing reasonable opportunity of being heard to assessee. Assessee was also directed to cooperate with AO for early disposal of case and substantiate his claim with regard to cash deposit into bank account and cash withdrawals therefrom.

REFERRED :

FAVOUR : Matter remanded

A.Y. :

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