ITAT deletes Addition made on Cash out of Income leaving aside Amount of Huge Cash Withdrawals from SBI to UCO Bank [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the additions made on the cash out of income leaving aside the amount of huge cash withdrawals from State Bank of India to United Commercial Bank.

Poonam Garg, the taxpayer, maintains two bank accounts, one with UCO Bank and the other with State Bank of India (SBI). Based on the passbook obtained from SBI, it was evident that Poonam Garg withdrew a total of Rs. 24 lakhs during the financial year 2014-15, spanning from May 29, 2014, to March 21, 2015.

Additionally, the cash deposits made to the UCO Bank amounted to Rs. 9,99,000/-, which was lower than the total cash withdrawals made by the taxpayer during the same financial period.

Hence, the Assessing Officer (AO) made an addition on account of cash deposit to the bank account of the assessee which was contrary to the facts of the case.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)] who dismissed the appeal of the assessee. Therefore, the assessee filed a second appeal before the tribunal.

During the hearing of the appeal, K. Sampath, Counsel for the assessee submitted that assessee was earning cash income from tuition for a very long time and has been filing her return of income for 20 to 25 years and also paid a housing loan.

Further submitted that the assessee had deposited total cash of Rs. 9,99,000/- in her UCO Bank account out of cash in hand from cash withdrawals made by the assessee from another bank account maintained with State Bank of India (SBI) and a copy of both the bank account was submitted before the authorities.

Moreover, during the financial year 2014-15, the assessee deposited Rs. 9,99,000/- with UCO Bank out of total withdrawals of Rs. 24 lakhs from her SBI account and balance cash in hands of Rs. 14,01,000/- was cash flow to the next year as opening balance.

In such a situation when the withdrawals are much higher than the amount of cash deposited to the bank account then the balance amount of Rs. 6,74,500/- could not be treated as cash deposited out of income from undisclosed sources.

The sum of Rs. 6,74,500/- was correctly categorized as income from an undisclosed source because the taxpayer did not provide any convincing explanation or supporting documents to substantiate their claim that the amount was derived from cash withdrawals made from the SBI.

V. Rajakumar, the counsel for the revenue, supported the decision of the lower authorities.

The tribunal noted that the Assessing Officer (AO) made an error by disregarding the significant cash withdrawals from the assessee's bank account with the SBI. The AO's decision to solely consider the cash in hand amount of Rs. 3,24,500/- for the purpose of resolving the matter was deemed incorrect by the tribunal.

Hence, a bench consisting of a single member, C.M. Garg (Judicial Member), carefully reviewed the arguments presented by both parties. The ITAT bench concluded that the AO made an incorrect decision by solely focusing on the cash derived from income while disregarding the substantial cash withdrawals from the assessee's State Bank of India account. The amount of these cash withdrawals surpassed the impugned cash deposit made to the UCO Bank account of the assessee.

Thus , the bench  deleted the addition made by the assessing officer

To Read the full text of the Order CLICK HERE

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