No addition for time gap between withdrawals and deposits of cash – ITAT

No addition could be made only on the ground that there was time gap between the withdrawals and the corresponding cash deposits.

In a recent judgment, the ITAT Jaipur has held that no addition can be made only on the ground that there was time gap between the withdrawals and the corresponding cash deposits in the bank.

ABCAUS Case Law Citation:
ABCAUS 4106 (2024) (06) ITAT

Important Case Laws relied upon:
Shri M. Prabhakar
CIT vs K Sreedharan, 201 ITR 2010
Sunil Mathur vs ITO
Smt. Krishna Agarwal vs ITO
R. K. Dave vs ITO

In the instant case, the Assessee had challenged the order passed by the CIT(A) NFAC in sustaining an addition u/s 69A of the Income Tax Act, 1961 (the Act) treating cash deposits in bank account as unexplained.

The Tribunal noted that the additions were made on account of the fact that the assessee had deposited cash in his bank account. However, the case of the assessee was that cash was withdrawn from his bank and he redeposited back the same after around three month. According to the assessee since the purpose for which the cash was withdrawn was not met, therefore the same cash was redeposited back in the same bank account.

The Tribunal opined that once the assessee has discharged his onus by explaining the source of cash deposits, as cash withdrawals from the same bank account three months earlier then in that eventuality the onus shifts upon the revenue authorities to prove that the cash was utilised somewhere else and in this case the revenue authorities failed to discharge their onus, rather they acted merely on surmises and conjunctures while making the additions.

The Tribunal pointed out that as held by Hon’ble Supreme Court a suspicion remains a suspicion unless the same is established and can never take placed of reality. Therefore, in my considered view, the assessment cannot be made on guesswork without any reference to any material on record. Withdrawal/ deposit of cash from his bank account are exclusive prerogative of the assessee. On the contrary, the Revenue had not brought any material on record to prove any other source of income from which cash was deposited in the bank account by the assessee.

The Tribunal held that there being no material with Income Tax Authorities to show that the amounts of cash deposits in question, admittedly withdrawn from bank were utilized for any other purpose, no addition could be made only on the ground that there was time gap between the withdrawals and the corresponding cash deposits. Consequently, the CIT(A) is not justified in confirming the addition.

Accordingly, the addition was deleted.

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