Unexplained income-cash deposit in bank after 2-3 months held not probable as withdrawals made in small amounts mostly by employee – P&H High Court

Unexplained income-cash deposited in bank after 2-3 months gap held not probable as withdrawals made in small amounts mostly by employee – Punjab & Haryana High Court

Unexplained income-cash deposited in bank

ABCAUS Case Law Citation:
ABCAUS 1187 (2017) (03) HC

The Grievance:
The appellant-assessee had filed the present appeal under Section 260A of the Income Tax Act, 1961 (“the Act”) against the order of the Tribunal confirming the addition u/s 68/69A treating the cash deposits in bank as unexplained income.

Date/Month of Pronouncement: March, 2017

Important Case Laws Cited/relied upon:
Shiv Charan Dass vs. CIT, (1980) 126 ITR 263

Brief Facts of the Case:
There were cash deposits in the bank of the appellant assessee. The assessee explained them to be out of cash withdrawals made from the bank account. However, the The Assessing Officer (‘AO”) was not convinced with the explanation of the assessee and framed assessment under section 143(3) inter alia after making additions on account of undisclosed sources under section 68/69A of the Act.

On appeal, CIT(A) partly allowed the ground by accepting Rs. 27 lacs as deposited from cash available with the assessee. However, balance cash flow statement was rejected on the ground that balance Rs. 14,20,200/- had been claimed to have been deposited after a gap of 2-3 months so the same could not be available for redeposit.

Aggrieved by the order of the CIT(A), the assessee filed appeal before the Tribunal. However, the ITAT dismissed the appeal filed by the assessee.

Observations made by the High Court:
The Hon’ble High Court observed the following findings recorded by the Tribunal:

1. There were 14 instances of cash deposited in the banks while withdrawals from banks were in 33 instances.

2. Out of the 33 withdrawals, only two withdrawals of Rs. 2 lacs each was made in cash. The rest were all withdrawals in small amounts made mostly by employee of the assessee. Moreover, in many cases small amounts were withdrawn 2 or 3 times on a single day by different persons.

3. The deposits in Bank were made after a gap of 2-3 instances of withdrawals which is not probable.

4. Totality of facts of the case and the surrounding circumstances prove that the cash withdrawals were for the purpose of business and not available for redeposit.

5. In the absence of any detail of expenses incurred by the assessee in the relevant period, the cash flow statement had no relevance and the entire withdrawal could not be said to have been redeposited.

6. The assessee had not been able to link the cash withdrawn from the bank with cash deposit.

The Hon’ble High Court observed that the findings of facts recorded by the CIT(A) as well as the Tribunal had not been shown to be illegal or perverse by the appellant-assessee warranting interference by the Court.

The Hon’ble High Court also observed that the case law relied upon by the appellant being based on individual fact situation involved therein did not apply to the case in hand.

Appeal dismissed holding that no substantial question of law arises.

Unexplained income-cash deposited in bank

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