The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) deleted Rs.9.84 Lakh addition made under Section 69A of the Income Tax Act, 1961 after verifying that the cash deposits were from Rs. 10 Lakhs which was withdrawn earlier by the assessee.
Bharat Kumar Chetri, the assessee filed his income tax return declaring Rs. 4,24,800 as total income for the assessment year 2017-18. The assessee’s assessment was selected for limited scrutiny due to cash deposits and withdrawals.
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The assessing officer found that the assessee made a cash deposit of Rs. 21,24,600 in 11 instances and assessed the income under Section 69A of the Income Tax Act, 1961 as an unexplained investment.
The AO noted that the assessee was an employee at the Canara Bank and a national Hockey Player. The AO gave the assessee the opportunity to explain the cash deposits. However, there was no response from the assessee so the AO completed the assessment by adding Rs.21,24,600 to the total income.
On appeal, the CIT(A) accepted the assessee’s explanations for part of the cash deposit, leaving Rs. 10,41,999 as unexplained. Aggrieved by the CIT(A) order, the assessee approached the Bangalore Bench of ITAT with a 56-day delay.
The tribunal condoned the delay due to the assessee’s profession which requires travelling a lot. Before the tribunal, the petitioner submitted that the CIT(A) failed to consider Rs. 10 lakhs in cash withdrawals made on August 2 and 3, 2016, supported by bank statements.
The petitioner’s counsel argued that there was no legal restriction on holding cash and clarified that these transactions occurred before the demonetization period, contrary to the Assessing Officer‘s (AO) conclusion.
On the contrary, the revenue’s counsel highlighted that the dates between withdrawals and deposits were mismatched so the revenue’s conclusion was correct.
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The two-member bench comprising Laxmi Prasad Sahu (Accountant Member) and Prakash Chand Yadav (Judicial Member) noted that the assessee made three specific cash deposits Rs. 4,50,000 on August 26, 2016, Rs. 6,00,000 on October 1, 2016, and Rs. 15,800 on September 14, 2016.
The tribunal noted that the assessee’s withdrawal of Rs. 10 lakhs in August 2016 was verified through bank statements, and there was no legal bar on keeping cash on hand. It was also noted that there were no significant material investments made by the appellant, and he had no other sources of income apart from his salary.
The tribunal emphasized that the cash deposits, Rs. 9,84,200 could be traced back to the earlier withdrawals. Therefore, the tribunal deleted the addition of Rs. 9,84,200. The appeal of the assessee were partly allowed.
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