Cash deposits from earlier deposits cannot be disbelieved: ITAT Bangalore
Facts:
1. During the course of assessment proceedings, assessee was asked to show cause as to why cash deposited amounting to Rs.12,40,000/- during the demonetization period ought not to be brought to tax.
2. The AO only accepted the explanation regarding Rs.1 lakh, out of the rental income of Rs.2,41,000/- and Rs.2,74,000/- out of the past savings. AO held that the assessee’s explanation was unsatisfactory regarding the source of other cash deposited and brought to tax Rs.8,66,000/- under section 69A of the Act.
3. The AO, had accepted that assessee was in receipt of Rs.5,50,000/- as lease deposit on 12.04.2016, the same ought to have been accepted as a source of cash deposit.
4. The assessee had also disclosed income from other sources amounting to Rs.2,64,804/- comprising of bank interest of Rs.14,804/- and sundry receipts and gifts of Rs.2,50,000/- for which the assessee has duly paid the taxes. So, he contended that, for a sum of Rs.2,50,000/- also, the credit should be given while calculating the addition under section 69A of the Act.
ITAT Bangalore held as below:
1. Once the petitioner assessee disclosed the source as having come from the withdrawn made on a given date from a given bank, it was not for respondents Nos. 1 and 2 to concern themselves with what the assessee did with that money.
2. The ITO had only two choice before him. One was to reject the explanation as not believable for the reason that on his investigation on such pigmy deposit was ever made in the bank. In the alternative he ought to have called upon the assessee-petitioner to substantiate his claim by documentary evidence.
3. Having exercised neither of the choice, it was not open to the ITO to merely surmise that it would not be probable for the assessee to keep Rs. 15,000 unutilised for a period of two years.
4. Since the fact that receipt of Rs.5,50,000/- has not been doubted by the AO, I am of the view that some amount would be available with the assessee for making the impugned cash deposits. On facts of the instant case, I reasonably estimate a sum of Rs.4,00,000/- as available for making the impugned cash deposits.
5. I am of the view that a further reduction of Rs.2,50,000/- is also required while determining the source of cash deposit. Therefore, I grant a deduction of Rs.6,50,000/- (Rs.4,00,000/- + Rs.2,50,000/-) and balance amount of Rs.2,16,000/- alone shall be brought to tax under section 69A of the Act.
6. In the result, appeal filed by the assessee is partly allowed.
The Copy of the order……..
1686313434-ITA No.251-Bang-2023 Smt. Hemavathi Ramesh,Bengaluru
