No sec. 68 additions towards deposit of money in bank account which was withdrawn for purchase of property

Baljit Singh v. ITO – [2019] 108 taxmann.com 123 (Chandigarh – Trib.)

During the course of assessment, AO noticed that assessee had deposited certain amount in his bank account. He asked assessee to explain the source of said funds deposited in bank account.

The assessee explained that he had withdrawn said funds from his bank account four months ago and since a transaction relating to purchase of property did not materialse, he re-deposited funds in question in his bank account.

AO rejected assessee’s explanation and added amount deposited in bank account to his taxable income. CIT(A) confirmed said addition. Aggrieved-assessee filed the instant appeal before the Tribunal.

The Tribunal held that there was no such instance, reference, argument or evidence to suggest that the funds were not available with the assessee could not be available to the assessee. It was for the department to bring out some evidence in support of its claim, suspicion or allegation on record.

Admittedly, there is no law that funds withdrawn from the banks cannot be held/retained in cash by the parties. There can also be no blanket period which can be judicially considered to be a reasonable time. The fact that there was a gap of about four months by itself couldn’t lead to any conclusion which would detract from the merits of the claims made.

Since no evidence had been made available by the AO to support the possibly unarticulated suspicion that the funds had been utilised elsewhere and considering the peculiar facts and circumstances of the case, the ground by the assessee was allowed.