The Income Tax Appellate Tribunal (ITAT) Bangalore, has ruled that unexplained deposit into bank account are taxable as “other income” under section 68 of the Income Tax Act, 1961.
The assessee, Karan Sharma had filed return of Income for declaring an income of Rs.3,53,740. The Assessing Officer (AO) noticed that the assessee has made huge cash deposits in his bank account totaling to Rs.1,17,52,762. The AO had asked the assessee to furnish the names and addresses of the persons from whom funds/cheques were received but no details were submitted. It is alleged that several opportunities were given but the assessee failed to produce evidences to prove the genuineness of the claim of transactions. The assessee stated that they were mere redeposits of cash withdrawals made on various dates. However, the AO noticed that cash deposits were made from various places of the country such as Raipur, Ernakulam, Calicut, Pune, Lucknow, Kolkata, Bellary, Ahmedabad, Jaipur, etc. hence an addition under section 68 to the extent of Rs.1,17,52,762 was made. When gone for appeal, the Commissioner of Income Tax (CIT) (Appeals) observed that the assessee was not able to explain the same with the earlier withdrawals. The CIT observed that no reasonable person will do such kind of things and that too so often.
Judicial member George George K and accountant member Chandra Poojari, “The assessee has not furnished any evidence to establish the nexus between the earlier withdrawals and deposits into various bank accounts. In such circumstances, we are not in agreement with the assessee’s counsel that it is from the earlier withdrawals. In our opinion, these receipts are to be considered as from unknown sources to bring into taxation. Therefore these deposits of Rs.92,54,462 to be considered as unexplained deposits from ‘income from other sources’. It is ordered accordingly.”
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