Addition u/s 69A for cash deposit in bank in excess of yearly salary income deleted

Addition u/s 69A for unexplained cash deposited in bank account of the assessee in excess of his yearly salary income deleted

In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the addition made by the Assessing Officer (AO) towards the difference between the total cash deposits in bank and salary income as unexplained money u/s 69A of the Income Tax Act, 1961 (the Act).  

ABCAUS Case Law Citation
ABCAUS 3508 (2021) (06) ITAT

There was a Search  and  Seizure  action  u/s  132 of the Act,  carried out at the residential premises of the assessee. In response to the notice u/s 153A of the Act, the assessee filed returns of income for five assessment yeas.

During the course of assessment proceedings AO noted that the salary income of the assessee for each of the year was much lower than the amount of cash deposited in the bank for respective years.

Accordingly, the AO treated the difference between the total cash deposits and salary income as the unexplained money u/s 69A of the Act and added to the income.

CIT(A) held that without borrowing or having opening cash balance, there is no way of the assessee explaining the difference between the deposits and his salary income and while considering the household expenses the Assessing Officer was justified in making the addition.

Before the Tribunal, the assessee contended that additions were made on the conjectures and surmises. Sufficient cash balances were available with the assessee and the unutilised portions thereof were deposited in the next year and therefore, in the absence of any evidence to show that no cash balance was available with the   assessee the authorities below were not justified in sustaining the additions.

The Tribunal further noted that it was not the case of the Revenue that the assessee had to spend the cash on hand available at the end of each year and the consistent plea taken by the Revenue was that the salary was the only source of income for the assessee.

The Tribunal observed that as per the Balance Sheets which were submitted before the authorities below also, there was sufficient cash in hand for the preceding financial year which was accepted by the AO and such cash on hand was unchallenged and attained finality.

The Tribunal stated that when huge cash is available at the end of financial year and such cash balance was accepted by the Assessing Officer, therefore, in the absence of any contrary material, it cannot say that no cash was available for deposits made in bank in subsequent assessment years.

The Tribunal opined that the explanation of the assessee was proper and satisfactory. When the Revenue wants to bring cash deposits to tax, the burden squarely rests with the Revenue and in the absence of any such material in support of such a premise, it was difficult to accept the reasoning of the learned AO to make the addition.

Accordingly, the Tribunal directed the AO to delete the impugned addition allowed the appeal in favour of the assessee.

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