Addition made for cash deposits in undisclosed bank account do not hold any force as withdrawals and deposits do not constitute income in itself – ITAT
ABCAUS Case Law Citation:
ABCAUS 2559 (2018) (10) ITAT
The appellant asssessee was aggriebed by the order of CIT(A) in confirming inter alia the addition made by the Assessing Officer (AO) as unexplained cash deposit in the bank accounts.
The assessee had not disclosed few bank accounts and interest income therefrom in the original return of income and had only declared the interest income from these bank accounts in the revised return when he was questioned during the course of assessment proceedings.
The assessee during the assessment proceedings furnished a cash flow statement explaining that the deposits were made from cash in hand and cash withdrawals from other bank accounts .
However, the AO doubted that assessee was unnecessarily withdrawing cash from bank and again depositing the fund in banks and then again withdrawing and again depositing in banks. Therefore, the AO rejected the explanation of the assessee for cash and made the impugned addition as unexplained cash deposits.
The assessee contended that it was true that the interest from these bank accounts was declared in the revised return which was filed during assessment proceedings but it was also correct that the cash deposit in these banks were earlier withdrawn from these bank accounts only and assessee was having sufficient cash in hand before depositing in the bank accounts. Therefore, there was no justification in making the addition as unexplained cash deposit when they were backed by sufficient cash in hand which was apparent from the cash flow statement furnished.
The Tribunal observed that considering the opening cash in hand and the withdrawals of cash made earlier to the cash deposited in various bank, the cash deposits stood explained. Therefore, the addition as unexplained cash deposit was not justified.
The Tribunal observed that the authorities below had not questioned the entries of withdrawals before the deposits and had not questioned the withdrawal from bank. The, only objection was with the action of first withdrawing the cash from bank and then depositing the same.
The Assessing Officer had held that mere furnishing the details of availability of funds with the assessee was not enough to prove the source of cash deposit whereas. However, the Tribunal opined that the onus of the assessee was discharged when he explained the availability of funds with him and Assessing Officer did not find anything wrong in the cash position.
The Tribunal observed that in a similar case, the Coordinate Bench of the Tribunal had dismissed the appeal of the Revenue by holding that once the appellant had submitted proper cash flow statement the onus was shifted on the Assessing Officer to pin point any defect or mistake for rejecting the same. Rejecting the same on suspicion above is not permitted in law.
The Tribunal found that there was no doubt about the withdrawals from the bank. Only the simultaneous cash deposit in the bank and withdrawals from the bank created doubt in the mind of the authorities below and they held that it is not understood as to why the cash amounts were required to be withdrawn when the cash from earlier withdrawals were available. However, this is not sufficient to make the addition as unexplained cash as the cash was fully explained.
The Tribunal opined that the argument of that since assessee had not disclosed these bank accounts in the original return therefore, cash in hand should not be accepted, do not hold any force as the withdrawls and deposits do not constitute income in itself. The assessee was required to disclose only interest from these accounts which he disclosed in the form of revised return and Assessing Officer has taxed that income accordingly.
The ITAT allowed the ground raised by the assessee.