No addition can be made merely for time gap between withdrawals and redeposits into bank – ITAT
In a recent judgment, Hon’ble ITAT Kolkata deleted addition for cash deposit in bank due to time gap between the withdrawals and redeposits into same bank without any findings of fact that money withdrawn was used somewhere else leaving the cash deposit in the Bank as unexplained cash credit in the bank account.
ABCAUS Case Law Citation:
4329 (2024) (11) abcaus.in ITAT Kolkata
Case laws relied upon by the Parties:
In the instant case, the assessee had challenged the order passed by the CIT(A) NFAC in confirming addition u/s 69A of the Income Tax Act, 1961 (the Act) on account of cash deposit in to the savings bank account by the assessee during the year.
The case of the assessee was selected for limited scrutiny for examining cash deposit during the year. The AO found that the assessee had deposited cash into Bank. The assessee was deriving income from salary, income from house property, capital gain and other sources.
The assessee had called upon to explain the source of deposit. The assessee replied before the AO that the cash deposits during the year was out of withdrawals made during the year only.
The assessee filed statement of cash flow summary sheet. As apparent from the said statement the assessee has withdrawn cash from Bank on various dates and deposited cash back into bank on various dates. The only allegation of the AO was that the gap between the withdrawals and deposits range from nine days to three months. The AO, by disbelieving the contentions of the assessee, treated the deposits made into Bank as unexplained cash credit and added the same u/s 69A of the Act to the income of the vide order passed u/s 143(3) of the Act.
The Tribunal noted that only basis for making addition is the time gap between the withdrawals and redeposits into same bank and AO had not recorded any findings of fact that money withdrawn was used somewhere else leaving the cash deposit in the Bank as unexplained cash credit in the bank account.
The Tribunal opined that mere suspicion of the AO without corroborating the materials being brought on record is not enough for making the addition. The assessee had explained the sources to be out of withdrawals and the AO had even reproduced the tally of cash withdrawals and deposits.
The Tribunal noted that the case of the assessee was supported from the decision of Co-ordinate Bench wherein the similar issue of deposits in the bank after a gap of certain period was held to be genuine where the AO had not given any finding as the money withdrawn was used somewhere else and not available for redeposit into the bank account.
Similarly in another case there was a gap of 5 months between the withdrawal of the cash from the Bank account and re-deposit of the same in the Bank account. The Co-ordinate Bench held that an addition made u/s 68 of the Act, solely on this ground cannot be sustained.
The Tribunal opined that in the instant case the assessee had duly explained the deposits out of withdrawals of the assessee’s own bank account though there was lag between withdrawals and re-deposits and AO not bringing any materials on record that the money was used by the assessee somewhere else.
Therefore, in view of the facts of the case being substantially similar to the facts of the cases stated, the Tribunal following the same, set aside the order of CIT(A) and directed the AO to delete the addition.
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