Cash withdrawal to be considered as source of bank deposits after deduction for household expenses

Cash withdrawal to be considered as source of cash deposited in bank after deduction for reasonable household expenses – ITAT

ABCAUS Case Law Citation:
ABCAUS 3346 (2020) (07) ITAT

In the instant appeal, the assessee had challenged the order of CIT(A) in confirming addition made by the Assessing Officer (AO) on account of cash deposits found to be made by the assessee in his bank accounts by treating the same as unexplained.

The assessee in the present case was an individual having salary income. No return of income for the year under consideration was filed by him either within the time specified u/s 139(1) or 139(4) of the Income Tax Act, 1961 (the Act).

On the basis of information received by him regarding the cash deposits found to be made by the assessee in his savings bank account during the year under consideration.

A notice u/s 148 was issued by the AO to the assessee. However, no return in response to the said notice was initially filed by the assessee.

The AO issued letters u/s 133(6) of the Act to his employer and the concerned banks where the assessee had maintained his accounts during the year under consideration and also to the assessee.

Thereafter, the assessee filed his return of income for the year under consideration declaring income from salary and from other sources.

The information received by the AO from the concerned banks revealed that the assessee had deposited huge amount of cash during the year under consideration in his bank accounts.

When the assessee was called upon by the AO to explain the source of the said deposits, it was submitted by the assessee inter alia that all the deposits were from his past savings from salary income and the same were circuitous in nature being transfers from one bank account to another.

It was also submitted that the assessee being a salaried employee his only source of income was salary and there was no question of any undisclosed source of income.

This explanation of the assessee was not found acceptable by the AO. According to him, there was no cogent and tangible explanation offered by the assessee as to why he had withdrawn cash from one of his bank accounts and deposited the same in another. The AO was also of the view that no person would make cash withdrawal from his bank account merely for the sake of accumulation and not for utilisation.

Therefore, the AO held that the explanation offered by the assesssee was neither valid nor logical and treating the cash deposits as unexplained, addition to that extent was made by him to the total income of the assessee and the assessment was completed u/s 143(3)/147 of the Act.

The CIT(A) confirmed the addition made by the AO.

The Tribunal noted that during the year under consideration the assessee had withdrawn cash from three bank accounts.

Cash withdrawal to be considered as source of cash deposited in bank after deduction for reasonable household expenses 

The Tribunal opined that since there was nothing to show that  the said cash withdrawals were utilised by the assessee somewhere else, the same could be treated as available to the assessee except to the extent that some of the said withdrawals were  required  to  be  used  by  the  assessee  for  his  personal  and households expense.

As a result, the Tribunal taking into account the cheque payments made by the assessee for household expenses, estimated the cash household expenses @ Rs. 25000/- p.m.

Thus, the Tribunal opined that the balance cash withdrawals made by the assessee during the year under consideration could reasonably be treated as available with the assessee to explain the cash deposits made by him in the bank accounts.

Accordingly, the appeal of the assessee was partly allowed.   

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