Failure to prove source of cash deposit in Canara Bank by assessee and Income Tax department:  ITAT directs AO to Reduce Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai bench, directed the Assessing Officer to reduce the addition due to the failure to prove the source of the cash deposit made in Canara Bank by the assessee and the income tax department.

The assessee, Senniappan Muthulakshmi, had not filed her return of income for the assessment year 2012-13. It was observed that during the financial year 2011-12, relevant to the assessment year 2012-13, the assessee had made a cash deposit of Rs. 24,00,000/- into her savings bank account with M/s. Canara Bank Ltd.

Accordingly, the assessment has been reopened under Section 147 of the Income-Tax Act, and a notice under Section 148 of the Income Tax Act was issued. Subsequently, the assessee filed her return of income in response to the notice under Section 148 of the Act.

During the assessment proceedings, the AO called upon the assessee to explain the source of the deposit in Canara Bank. After considering pertinent comments and recording the total cash deposit, the Assessing Officer added Rs. 3,00,000/- to the cash deposit as unexplained income.

Aggrieved by the order, the assessee filed an appeal before the CIT(A), who confirmed the addition. Thus, the assessee filed a second appeal before the tribunal.

During the proceedings, Neelesh Kumar Jain, Counsel for the assessee, argued that the assessee received a gift from her husband of Rs. 4,50,000, and this gift is the source of the monetary deposit.

AR V. Sreenivasan, Counsel for Revenue, argued that the assessee could not provide any evidence for a balance cash deposit during the assessment proceedings. Although the appellant has filed a gift deed from her husband, the said gift deed and affidavit were filed during the appellate proceedings, without any other evidence.

After reviewing the facts and records, the two-member bench of Manjunatha. G (Accountant Member) and V. Durga Rao (Judicial Member) observed that the CIT(A) did not provide any persuasive justification for rejecting the assessee’s submitted evidence. Additionally, the assessee was unable to provide other proof to support the alleged gift deed, such as her husband’s source.

Therefore, it was concluded that neither the Assessing Officer nor the assessee has proven their case. Thus, the bench directed the Assessing Officer to make additions towards the source for the cash deposit to the extent of Rs. 1,50,000/- only.

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