Harassing assessee in the pretext of verifying documents futile exercise – ITAT deleted additions u/s 68 made for cash deposits in bank
ABCAUS Case Law Citation:
ABCAUS 2764 (2019) (01) ITAT
The appeal of the assessee was directed against the order passed by the learned Commissioner of Income Tax (Appeals) in confirming the addition made by the Assessing Officer (AO) towards unexplained cash credit U/s 68 of the Income Tax Act, 1961 (the Act).
The assessee was a retired professor who had e-filed his return of income. The case was selected for scrutiny under CASS and notice U/s 143(2) of the Act was issued.
During the course of scrutiny assessment proceedings, it was observed by the AO that the assessee had deposited cash in his bank account on various dates. The assessee explained that he had given loan to his relatives which was subsequently returned back by cash in piece meal and the same was deposited in the bank account.
However the AO rejected the submission of the assessee and was of the view that the cash withdrawal made within a period of one month before the date of deposit of cash can only be considered as the source for the subsequent cash deposits and the balance amount of ought to be treated as unexplained cash credit U/s 68 of the Act.
Accordingly the AO passed the assessment order u/s 143(3) of the Act by making addition towards unexplained cash credit U/s 68 of the Act.
The CIT(A) declined to admit addition evidences under Rule 46A and confirmed the order of the Assessing Officer (AO). The CIT(A) was of the view that the assessee could not satisfactorily explain the reasons for withdrawal from his bank account and depositing the same in another bank account when there was facility to transfer electronically or by way of cheque / pay order. Also according to the CIT(A) the dates of withdrawal and the dates of deposit did not match in several transactions and there was considerable delay in depositing the same in the appellant’s bank account.
Before the Tribunal the assessee submitted that he was a retired professor from Government College and had received funds from sources such as GPF, Commuted value of Pension, DCRG, Leave encashment, Arrears of Pension including gift from his son.
It was further submitted that the assessee had disburse the same to help his relatives and friends which was subsequently returned by cash and the same was deposited in the bank account. Therefore it was pleaded that the source of the cash deposited in the bank was thus explained and hence the addition made by the AO be deleted.
The Tribunal noted that the assessee submitted evidence for having received finds after the retirement in the form of copies of various documents issued by District Treasury, Principal Accountant General, Principal of Govt. College etc.
Considering the above factsthe Tribunal opined that it could be safely presumed that the sources of funds of the assessee were his retirement benefits. Further it was not shown that the assessee was carrying out any other activity earning income. There was no finding by the Revenue Authorities that the assessee had made any other investments from the source of fund.
The Tribunal opined that it would be weird to presume that the assessee would have squandered away his hard earned retirement benefits leaving no trace of it and the subsequent deposit in the bank account is his undisclosed income.
Also, the Tribunal noted that the persons examined by the AO had confirmed that the assessee had extended loan by way of cheque which was subsequently returned by cash in piece meal.
The Tribunal opined that it would be too harsh on the part of the Revenue to make addition in the hands of the assessee towards unexplained income invoking the provisions of Section 68 of the Act.
Accordingly, the Tribunal directed the AO to delete the addition made.
The Tribunal also added that because there was no reason to disbelieve the documents furnished by the assessee, who was a retired professor from Govt. College and further harassing the assessee in the pretext of verifying the documents will only lead to futile exercise.