Addition u/s 69 for unexplained investment on reasoning that no prudent person would keep huge amount of cash in house. ITAT deleted addition
ABCAUS Case Law Citation:
ABCAUS 3233 (2020) (01) ITAT
In the instant case, the appeal had been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals) arising in the assessment order passed u/s 143(3) of the Income Tax Act, 1961 (“the Act”).
The only issue raised by the assessee was the action of the CIT(A) confirming the order of the Assessing Officer by treating the amount of cash deposited in the bank as unexplained investments under section 69 of the Act.
The assessee was an individual and showing income under the head salary. The assessee in the year under consideration had made large cash deposits in his saving bank account.
On the question about the source of cash deposit by the AO, the assessee submitted that the deposits had been made out of opening cash in hand, FDRs enchased and by taking loan from staff co-operative society and brother through cheque.
The assessee also submitted that his son was planning to go to USA on student visa. Therefore, to get the visa clearance he was accumulating such cash in hand in advance so that he could deposit the same in the bank.
However, the AO did not believe the submission of the assessee by observing that it was impossible for a employee to hold such huge amount of cash in hand for such long period of time i.e. more than 10 months.
Accordingly, the AO held that the reply of the assessee was not convincing and held that there was no correlation between cash generated by the assessee and making deposit of the same in the saving bank account.
As per the AO no prudent person, especially assessee being bank employee will withdraw cash, hold the same for such long period and suffer interest income.
Accordingly, the AO treated the same as unexplained investment in bank u/s 69 of the Act.
The CIT(A) after considering the assessment order and submission of assessee confirmed the order of the AO by holding that the explanation submitted by assessee did not establish the nexus between cash deposit and its source.
The Tribunal observed that the assessee had explained the source of cash deposit. Thus, the primary onus of the assessee was discharged. Now the onus was on the revenue to hold the submission of the assessee is incorrect. But the revenue had not brought anything on record suggesting that the amount of cash withdrawn had either been incurred as an expenditure by the assessee or the same had been utilized for the purpose of the investment.
Thus, in the absence of any contrary information against the submission of the assessee, the Tribunal held that the assessee had deposited the amount in the saving bank account out of the cash withdrawal during the year under consideration and out of the opening cash balance.
The Tribunal noted that the primary reason for treating the cash deposit as unexplained investment under section 69 of the Act by the AO was that no prudent person would keep such huge amount of cash in his house.
The Tribunal opined that the reasoning furnished by the AO appeared to be logical but such inference could not be the basis for making the addition to the total income of the assessee by treating the deposit of cash as unexplained investment under section 69 of the Act.
The Tribunal was not convinced with the finding of the authorities below and stated that the onus was on the revenue to find out the details of the expenses incurred by the assessee vis-a-vis the investment made by him to prove that the so-called cash deposit was not made out of the cash withdrawn or out of the opening cash balance. But the revenue, failed to bring such information/evidence on record.
Accordingly, the Tribunal set aside the finding of the CIT-A and directed the AO to delete the addition made by him.
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