The Jodhpur Bench of Income Tax Appellate Tribunal (ITAT) while deleting the addition ruled that mere time gap between Withdrawals and Deposits cannot be a sole basis for suspecting genuineness of Cash-in-hand.
The AO alleged that the assessee, Krishna Agarwal had already made the investment in property amounting to Rs. 1,27,20,200/- out of cash withdrawals from bank is factually & legally incorrect and also without application of mind as after the death of the husband of assessee, Shri Ram Prakash Agarwal on 24.01.2014, the property was legally transferred in the name of assessee as per provision of law and also value of such property had been determined at Rs 1,27,20,200/- which was disclosed by assessee in her return of income. The assessee had sold the property after the transfer took place in her name and received the sales consideration in installment during F.Y 2014-15 & 2015-16 directly in her bank account which has been withdrawn from bank time to time and the same was again re-deposited in bank account during the year under consideration. However the AO had made incorrect and wrong interpretation of information available on record and failed to analyzed the material facts that the property so transferred in the name of assessee after death of her husband had been sold and out of such sales transaction whatsoever sales consideration received by her directly in bank account which was withdrawal & re-deposited in same bank account.
The source of cash deposits in bank account had been explained with legal and valid documentary evidences by the assessee and the allegation made by AO is apparently false and incorrect as discussed hereinabove and as such only on the basis of such illegal observation the addition made by AO may kindly be deleted. Further also the AO had not brought on record any contrary material or evidence in respect of legal evidence as furnished by assessee.
The assessee urged that the addition made by AO without application of mind and also in causal manner as the facts narrated and observation made by AO in assessment order without analyzed the information in right perspective and sought to make addition by falsely & incorrect conceiving a fact that the assessee had made purchased the house and cash withdrawn are used for same which is not only incorrect but also contrary to facts on record.
The coram of Judicial Member Sandeep Gosain and Accountant Member Vikram Singh Yadav held that mere absence of supporting documentation cannot be a reason enough to allege any malafide in the explanation so submitted especially where the assessee has explained and duly disclosed the source of deposits in the bank account out of which the withdrawals have been made and has thus established the necessary linkage and availability of cash in hand.
“There is no justifiable basis to hold that the explanation so furnished by the assessee cannot be accepted and find the explanation so furnished is reasonable, appropriate and satisfactory in the facts and circumstances of the present case and hereby direct the addition so made be deleted,” the ITAT said.
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