Explanation for cash deposits in bank account accepted as there was no sign of business activity

ITAT accepted explanation for cash deposits in bank account as there were only cash deposits in bank account and no visible sign of any business transactions

ABCAUS Case Law Citation:
ABCAUS 2958 (2019) (05) ITAT

The only effective issue raised in the instant appeal was against the confirmation of addition made by the Assessing Officer (AO) on account of cash deposits in the bank account.

The AO received information about the assessee having made cash deposits in her bank account during the year under consideration. It was noticed that no return of income was filed for the year.

He issued notice u/s 148 of the Income-tax Act, 1961 (the Act). In the absence of the assessee participating in the assessment proceedings, the AO completed the assessment u/s 144 of the Act by making addition of the amount of cash deposited in the bank account.

The CIT(A) confirmed the assessment order against which the assessee approached the Tribunal.

The assessee explained that after the death of her husband, she decided to shift for which she purchased a small house. The cash was deposited in the bank account for making payment to the builder.

It was explained that the source of the cash was her personal savings, funds available from deceased husband, sale of Jewellery/Ornaments and gifts/assistance from her close relatives.

The Tribunal observed that the AO had recorded a categorical finding in the assessment completed u/s 144 of the Act, that it was seen that there were only cash deposits in the bank account and no visible sign of any business transactions.

The Tribunal opined it was evident that the assessee was not into engaged in any business activity whatsoever. After the death of her husband, she decided to shift for which she purchased a small house. Not only her paltry savings and also past savings of her expired husband were utilized, she also got financial assistance from her relatives in helping her to acquire the house.

The Tribunal, in the given circumstances, more particularly, when the assessee was not engaged into any business activity whatsoever, expressed satisfaction over that the assessee had successfully explained the source of deposits in the bank account, which amount was utilized for purchasing a flat.

The Tribunal, therefore, ordered to delete the addition.   

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