Cash deposit in bank – AO duty bound to show cash earlier withdrawn was spent – ITAT
In a recent judgment, the ITAT has deleted addition u/s 69A for cash deposit in bank holding that AO is duty bound to conduct enquiry to show that cash earlier withdrawn was spent away
ABCAUS Case Law Citation:
ABCAUS 4047 (2024) (05) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding an addition made u/s section 69A of the Income Tax Act, 1961 (the Act) representing cash deposited in the bank account of appellant.
The case of the assessee was selected through CASS on the issue of large cash deposit in the bank account of the assessee and purchase/sale of property. During the year under consideration, the assessee had derived income from house property, capital gains and other sources.
During the assessment proceedings when the assessee was asked to furnish the details regarding source of cash deposit along with documentary proof. The assessee submitted that the cash deposited was out of cash in hand from withdrawal made by the assessee in preceding four Assessment Years. Further the Assessee also contended that sister of the assessee had also made cash withdrawals from bank which were deposited in the bank account of the assessee.
The assessment order came to be passed by making addition u/s 69 of the act on account of unexplained money and also addition u/s 50C of the Act on account of capital gain.
As against the assessment order, the assessee preferred an appeal before the CIT(A) who remanded the issue in respect of the addition made u/s 50C of the Act on account of capital gain to the file of the A.O. with a direction to recompute capital gains in the hands of the assessee. The CIT(A) confirmed the addition on account of cash deposit in the bank account of the assessee by invoking the provision of 69A of the Act.
Before the Tribunal, the assessee submitted it is not disputed that in the preceding four years she and her sister made cash withdrawal from bank of amount which was more than the cash deposited in the relevant assessment year. Therefore, relying on the Judgment of the Jurisdictional High Court, it was contended that the burden lies on the Revenue to bring the material to suggest that the money withdrawn by the assessee had been utilized elsewhere for the personal purposes or money so withdrawn was not available with the assessee.
Whereas, the Income Tax Department submitted that the assessee had made withdrawals in different years and made cash deposit in the year under consideration on multiple times and no prudent person will keep the withdrawn cash for such a long gap and deposit the same in various times. Further no explanation for the purpose of cash withdrawals had been furnished by the Assessee and also no justification has been furnished as why would a person withdraw money from bank and keep it as cash in hand for 3-4 years.
The Tribunal observed that the explanation of the assessee was not believed by the A.O. on the ground that no person in normal course would withdraw cash from bank and will keep the same amount at whom for years and then start depositing the same in piecemeal manners in more than sixty times during the year, which was beyond the realm of human probability and possibility, the Assessee has not produced the cash book to explain the version. Accordingly, the A.O. made the addition.
The Tribunal observed that it was not in dispute that the withdrawals were made by the Assessee and her sister and the cash deposited are lesser than the said amount. It was also not in dispute that the Assessee had claimed that she kept the huge cash with her for years and deposited in sixty installments in the year consideration.
The Tribunal opined that though it agreed with contention of the Department that no prudent person will keep the withdrawn cash for three to four years and deposit after four years in sixty installments. It is true that the burden to give explanation for the purpose of cash withdrawals lies on the Assessee on the other hand, the A.O. is also duty bound to conduct enquiry to show that money so withdrawn by the Assessee has been spent away for personal purpose. In the present case, the A.O. being an investigator and also the adjudicator has not made any enquiry on the said count.
The Tribunal noted that in an identical case, the Co-ordinate Bench had held that The burden lies on the revenue to bring material on record to suggest that the money withdrawn by the assessee was utilized elsewhere for personal purposes or the money so withdrawn was not available with the assessee as per the mandate of Hon’ble Delhi High Court
Following the ratio laid down by the Coordinate Bench the Tribunal deleted the addition made by the A.O. u/s 69A of the Act which was confirmed by the CIT(A).
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