INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Cash deposits into bank account - Earlier cash withdrawals remained uunutilised with assessee

AO required assessee to explain deposited of Rs. 25 lakhs into assessee's bank account. Assessee pleaded that assessee had withdrawn the money for admission of his son in a medical college, for which assessee also produced evidence like copies of admission letter, demand draft, etc. Since admission was not materialized, assessee redeposited the amount to the bank. AO held that explanation offered by assessee was not acceptable as assessee being a tech-savy person who was highly conversant in transferring money on-line was not expected to withdraw the monies in various denominations on different dates even prior to six months and keep it at home and subsequently deposit the lump sum on a single day. Accordinlgy, AO made addition of entire amount undr section 68. CIT(A) noticed that withdrawals were made in June 2012 and assessee had deposited the same into the bank account in November 2012 and hence there was a long time gap ranging from June to November accordingly CIT(A) granted relief only to the extent of Rs. 10.70 lakhs.Held: Department had no material to show that earlier withdrawals made by assessee had been spent for any specific purposes and not the concerned amount was available with assessee to redeposit into bank account. There was also no evidence that assessee had made withdrawals on various dates for any other purposes than the admission of assessee's son in a medical college. In such circumstances, it could not be said that withdrawals had not been utilized to redeposit with bank account. Therefore, it could be presumed that assessee had withdrawn cash and same remained to be unutilized for one reason or the other, and cash remained with assessee. In such circumstances, due credit had to be given for such withdrawal of cash by assessee and accordingly, addition could not be sustained.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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