The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the upheld income addition on failure to explain the source of cash deposit in bank account.
The assessee, Mohan was engaged in the business of sale of software consultancy services and manpower consultancy. The assessee belatedly e-filed return of income on 04- 04-2013 and same was processed under Section 143(1) of the Income Tax Act. Subsequently, the case was selected for scrutiny and statutory notice under Section 143(2) of the Income Tax Act was issued on 02-09-2014 and was served upon the assessee on 11-09-2014.
Notice under Section 142(1) read with Section 129 of the Income Tax Act was also issued to the assessee on 16-01-2015 asking for various details. The AO noticed that cash was deposited in the bank account of the assessee from 18-10-2011 to 07-12-2011. The assessee in reply submitted that he had drawn money for purchase of land in June 2011 and re-deposited the same in the bank account as the purpose was not materialised.
The AO thoroughly verified the books of accounts of the assessee and noticed that there was either ‘very less cash balance’ or ‘negative cash balance’ in the cash book. The AO also noticed that the assessee did not submit any agreement for purchase of land. Name, address, PAN of parties to whom cash advances were given was also not furnished. Reason for non-fulfilment of the purpose for which amount was withdrawn from the bank was not submitted by the assessee. The AO, therefore, added the cash deposit to the total income of the assessee.
V. Shreekumar, on behalf of the assessee submitted that the assessee withdrew cash from his bank account for purchasing a plot of land but the purpose was not accomplished. Therefore, the amount was re-deposited in the bank account.
D. Hema Bhupal, on behalf of the revenue submitted that there was negative cash balance in the cash book of the assessee.
The two-member Bench of Manjunatha G, (Accountant Member) and Manmohan Das, (Judicial Member) observed that the assessee failed to furnish any agreement to purchase of land so as to prove that cash was withdrawn from bank account for purchasing of land. Why the land could not be purchased was also not explained. Further, the cash book of the assessee told a different fact. The assessee’s cash book was either ‘very less cash balance’ or ‘negative cash balance’ during the relevant period. The Bench dismissed the appeal filed by the assessee holding that assessee did not furnish any reason why land could not be purchased. Even there was no agreement to purchase land and the cash book showed a negative cash balance.
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