The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the cash deposited in the bank account as a result of earlier withdrawal cannot be treated as unexplained/undisclosed income.
The Assessing Officer during the assessment proceedings found that the assessee had deposited cash in its bank account amounting to ₹16.19 lakhs, the source of which is not explained. Therefore, the Assessing Officer treated the same as undisclosed income and added to the total income of the assessee.
The assessee before the Commissioner of Income Tax (Appeal) [CIT(A)] submitted that there was a cash withdrawal from the bank which has been utilized for the purpose of the deposit in the bank. As such, there was sufficient cash balance available in the assessee which was withdrawn from the bank before depositing the same in the bank account. Therefore, it was contended by the assessee that the same cannot be treated as undisclosed/unexplained income of the assessee.
The CIT(A) disagreed with the contention of the assessee on the reasoning that there was no documentary evidence produced by the assessee suggesting that the cash deposited in the bank account was the same which was withdrawn from the bank on the earlier occasion. The CIT(A)also observed that the assessee has also not filed the cash book in support of his contention. Thus, the CIT(A) confirmed the order of the Assessing Officer.
The Two-member bench comprising of Waseem Ahmed (Accountant member) and T.R Senthil Kumar (Judicial member) held that the CIT(A) in his order has admitted that there was a cash withdrawal from the bank before depositing the same in the bank account of the assessee. None of the authorities below has pointed out that the cash withdrawn from the bank has been utilized by the assessee for any other purpose.
In the absence of such a finding, an inference can be drawn that the cash withdrawn from the bank was available with the assessee for the deposit in the bank account. Accordingly, the bench was of the view that the cash deposited by the assessee in the bank account cannot be treated as unexplained/undisclosed income of the assessee. Thus, the finding of CIT(A) was set aside and the Assessing Officer was directed to delete the addition made by him. Hence, the appeal of the assessee was allowed.
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