Cash redeposits claimed out of withdrawals unlikely if deposited in remote bank branches

Cash redeposits claimed out of withdrawals unlikely if deposited in remote bank branches not near to the assessee’s office or residence. No person will go to a branch to deposit extra cash leaving another bank branch near to his office/residence-ITAT

ABCAUS Case Law Citation:
ABCAUS 2255 (2018) (03) ITAT

The appellant assessee was aggrieved by the order of the Commissioner of Income Tax (Appeals) in sustaining the addition made for cash deposits in the bank by not accepting that cash was re-deposited from one bank to another by making withdrawal.

The Tribunal observed that the assessee, before the Assessing Officer (AO) and the CIT(A) tried to explain the reasons for cash withdrawal and redeposit in banks. As per the order of CIT(A), the assessee had not answered this question as to why the cash was withdrawn and why it was deposited again.

The Tribunal opined that even if reply of assessee was not acceptable to the CIT (A) then also, he had to give reasons as to why the reply was not acceptable but he could not have said that the assessee had not given reply.

The ITAT set aside the order of CIT (A) and restored the matter back to the file of CIT (A) for fresh decision after considering the reply filed by the assessee regarding reasons for cash withdrawal and redeposit in bank.

The Tribunal directed that CIT(A) to examine as to what was the amount of cash deposit out of earlier withdrawal and which are those banks and branches in which as per the assessee, the amount of deposit in cash was out of earlier withdrawal.

The Tribunal ordered that what is to be seen is as to whether such bank branches are nearest to the assessee’s office / residence or not because if those bank branches are not nearest to the assessee’s office / residence then it has to be accepted that the deposits in all those branches are by the customers against the sale only and not by the assessee out of earlier cash withdrawal because no person will go to a branch to deposit extra cash leaving another bank branch near to his office/residence.

Also, the ITAT directed that it shall also be examined that cash was available or not for redeposit on such date after deducting the purchase/expenses till that date from cash withdrawal till that date, which may be worked out @ 97.5% of sales till that date accepting that the closing stock was equal to opening stock.