ITAT reduced addition u/s 69A for cash deposits in bank by estimating the income assessee might have saved from the past incomes
ABCAUS Case Law Citation:
ABCAUS 2988 (2019) (06) ITAT
The appeal was filed by the assessee HUF against the order of Commissioner of Income Tax (Appeals) in upholding the addition made by the AO u/s 69A of the Income Tax Act, 1961 (the Act) for cash deposited in bank in assessment framed under section 143(3) read with section 147 of the Act.
The reason of reopening of assessment in this case was that during the relevant assessment year the assessee had made cash deposits in his saving bank account on various occasions.
The AO required the assessee to explain the source of cash deposit. The assessee explained that this deposits were out of the past savings, agricultural income etc. The assessee stated that the cash was deposited in the bank account as previously there was no bank account held in the name of assessee.
According to AO, the assessee could not prove the source of cash deposits in the bank account and hence, he treated this cash deposit as undisclosed income of the assessee.
Aggrieved, the assessee preferred the appeal before CIT(A) who confirmed the addition, Aggrieved, the assessee was in second appeal before the Tribunal.
It was claimed that the assessee was having substantial cash from savings but because being agriculturist and uneducated person, he was not having any bank account in rural area, where they were residing.
The Tribunal took note of the copies of acknowledgement of the return of income for previous years wherein the assessee had also declared agricultural income. All those returns were filed to prior to the issuance of notice under section 148 of the Act.
The Tribunal noted that the factual aspect and noted that the assessee might have saved from the past incomes, which he might kept in cash as claimed.
The Tribunal opined that a reasonable estimate could be made for making addition. Hence, the Tribunal assessed the net income on account of unexplained deposit because it was proved that the assessee might earned estimated amount from its returns of income for earlier years. Even, the agricultural income and rent received might have contributed to the part on household expenditure.
Thus, the Tribunal estimated the past savings and directed the AO to reduce the addition made to that extent.