Cash deposited in bank after kept in hand for two years out of FDR maturity accepted

Cash deposited in bank after kept in hand for two years out of FDR maturity accepted as Revenue could not prove that such amount was spent elsewhere

ABCAUS Case Law Citation:
ABCAUS 2957 (2019) (05) ITAT

Important Case Laws Cited/relied upon by the parties:
CIT Vs. K. Sreedharan (1993) 201 ITR 1010

The only issue raised in this appeal on merits was against the confirmation of addition in respect of cash deposited by the assessee in Savings Bank account.

On being called upon, the assessee explained to the Assessing Officer (AO) that the cash of Rs. approx 15 lacs was deposited out of closing cash in hand of the preceding year which was made out from premature encashment of Fixed Deposits two years back. The assessee furnished copies of balance sheetsfor last five years and claimed that cash balance was available in the balance sheet for the preceding year.

The AO refused to accept the explanation tendered by the assessee on the ground that the claim of the assessee that she encashed FDRs and kept the amount in her home to be deposited in the bank after 24 months could not be accepted.

He, therefore, made an addition for the cash deposited in the bank which got confirmed in the first appeal.

The Tribunal expressed dissatisfaction on the addition made when the assessee had already filed returns for the preceding years accompanied by balance sheets in which cash in hand was admittedly available.

The Tribunal opined that the explanation of the assessee that she deposited cash in her bank account out of cash in hand, could not be faulted with as the source of cash in the balance sheet was not without any foundation.

It was observed that the assessee was investing in FDRs from time to time in earlier years and also regularly showing the interest income thereon in her income-tax returns. It was because of encashment of such FDRs that she realized the amount and kept the same with her in the form of cash and then deposited it in the bank account.

The Tribunal opined that the view point of the AO in not accepting the genuineness of the source of deposits in the bank account on the ground that the cash was allegedly kept in hand for a long period of two years, was not tenable.

The Tribunal stated that once a particular amount has seen the light of the day, its later utilization has to be accepted unless it is proved by the Revenue that such amount was spent elsewhere. The Hon’ble High Court in a similar case had held that the period of four years was not so long a period as to rebut the presumption regarding the continued availability of the amount.

The Tribunal opined that rhe availability of cash in hand from maturity of FDRs in past and re-depositing of proceeds in the bank account in the instant year, could not be doubted as the factum of maturity of FDRs had not been disputed by the AO.

The Tribunal opined that as stated above, when the Hon’ble High Court had accepted the availability of unutilized cash for four years as reasonable, there was no reason to doubt such availability for two years in the instant case.

Accordingly, the Tribunal ordered to delete the addition.

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