The two member bench of the Income Tax Appellate Tribunal ( ITAT ) in Delhi has directed the Assessing Officer to remove the addition, as the lower authorities failed to counter the assessee’s explanation regarding the maturity and redemption of term deposits. The bank statements showed sufficient cash withdrawals to account for the deposits.
The present appeal concerned an assessment where the assessee’s case was selected for scrutiny due to substantial cash deposits made during the demonetization period. The Assessing Officer (“AO”) issued a notice under Section 143(2) of the Income Tax Act, 1961 to the assessee, an individual with income from salary and other sources. The AO observed that the assessee had deposited INR 16,20,000 in his bank account during this period and requested an explanation for these deposits.
Get a Copy of Income Tax Refunds (Law & Procedure), Click here
The assessee’s explanation was deemed unsatisfactory by the Assessing Authority, leading to the addition of the entire cash deposit to the taxable income. Consequently, the income was assessed at INR 19,74,320/-.
Dissatisfied with this assessment, the assessee filed an appeal before the CIT (A). The CIT(A) partially granted relief to the assessee after considering the submissions.
Ms. Sherry Goel, representing the assessee, argued that the authorities had failed to appreciate the facts correctly. She explained that the cash deposited was withdrawn from the bank and was part of the maturity amount of term deposits. The bank account statements filed in the Paper Book supported this claim. Ms. Goel contended that the additions were based on suspicion rather than evidence and cited the decision of the Division Bench of the Tribunal in the case of Smt. Perminder Kaur Matharoo vs ITO dated 15.11.2022 as a precedent.
Get a Copy of Income Tax Refunds (Law & Procedure), Click here
Mr Om Parkash, representing the Revenue, opposed the appeal. He argued that the reason provided for withdrawing the amount was inconsistent and supported the orders of the lower authorities.
The bench, comprising Kul Bharat (Judicial Member), reviewed the material and orders of the lower authorities. It was noted that the lower authorities had not rebutted the assessee’s explanation regarding the term deposit maturity and its subsequent redemption. The bank statements showed sufficient cash withdrawals to account for the deposits.
Get a Copy of Income Tax Refunds (Law & Procedure), Click here
The ITAT found that the authorities had not provided evidence suggesting the withdrawn cash was used for other purposes. As a result, the ITAT directed the AO to delete the impugned addition. The grounds raised by the assessee were thus allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
