Frequent Withdrawal and Deposit of Own Money not Prohibited by Law: ITAT Deletes Addition [Read Order]

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The Lucknow bench of the Income Tax Appellate Tribunal (ITAT) held that the Assessing Officer cannot make an addition merely on the ground of the assessee made frequent withdrawal and deposit of his own money, which is not prohibited under any law.

The Assessing Officer made addition against the assessee by relying on the fact that he the cash amounting to Rs.1,35,61,000/- was deposited on different dates in assessee’s bank accounts with Union Bank of India, Unnao. As the amount was deposited in cash in her bank accounts, the onus lies upon the assessee to prove the source of the same.

On the first appeal, the appellate authority granted relief to the assessee.

On appeal by the department, the Tribunal noted that the addition has been made by the Assessing Officer, on the ground that cash deposits were from some other source of income which is not disclosed to the Revenue.

The Tribunal noted the fact that the Assessing Officer nowhere in his order has brought out any material on record to show that assessee is having an additional source of income other than that disclosed in the return nor Assessing Officer could spell out in his order that cash deposits made by the assessee were from some undisclosed source.

Upholding the first appellate authority order granting relief to the assessee, the Tribunal observed that “All throughout Assessing Officer has raised suspicion on the behavioral pattern of frequent withdrawal and deposits by the assessee. There is no law in the country which prevents citizens to frequently withdraw and deposit his own money. Documentary evidence furnished before the Revenue clearly clarifies that on each occasion at the time of deposit in her bank account, the assessee had sufficient availability of cash which is also not disputed by the Revenue. Entire transaction of withdrawals and deposits are duly reflected in the bank account of the assessee and are verifiable from relevant records. Assessing Officer himself admitted that assessee had sufficient cash balance on each occasion at the time of deposit in her bank account on different dates during the assessment year under consideration.”

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