The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) upheld the tax addition against an assessee who failed to provide the source of his bank deposits. The tribunal dismissed the appeal after finding that the taxpayer did not offer credible proof to justify deposits of over ₹17 lakh, including unexplained cash deposits and accrued interest income.
The assessee, Bansi Lal, filed his income for the assessment year 2007-08 and accounted for a total revenue of ₹17 Lakhs. On further assessment, the Assessing Officer (AO) found large cash deposits in the taxpayer’s Bank of India, Kot, account.
The information showed that the assessee had deposited ₹8,70,000 on May 23, 2006, and ₹8,13,000 on another date but failed to provide a credible explanation for these amounts. It was shown that the bank credited ₹2,386 as interest income, but the assessee did not declare this in his Income Tax Return. Multiple notices were sent to the assessee, but they were met with non-compliance, and the assessee did not provide documentation to establish the source of the funds. On these grounds, the AO made additions to the assessee’s income.
Aggrieved by the additions made by the AO, the assessee appealed to the Commissioner of Income Tax (Appeals), who upheld the AO’s decision, citing the lack of proof as the reason for such an order. Further aggrieved by the order of the CIT(A), the assessee appealed to the ITAT, where the assessee claimed that his primary source of income was agriculture, and he had sold 18 bighas of agricultural land for ₹4.5 lakh in the financial year 2006-07. The Tribunal, however, observed that the assessee had failed to produce sale deeds or transaction proofs to substantiate the alleged land sale.
The ITAT observed that one of the taxpayer’s central arguments was that the cash deposits came from agricultural income over several years. The ITAT dismissed this claim, asserting that no agricultural income was reported in past tax returns, making it unlikely that the assessee made such savings. Similarly, the assessee could not prove whether he had enough land or crop yield to generate the claimed amount.
The tribunal asked why it was deposited in a lump sum instead of smaller periodic deposits and questioned the taxpayer’s loan transactions, which he claimed explained part of the deposits. The assessee claimed that he borrowed ₹5,50,000 from one Shri Fakhrudeen and used it to buy land denied by the person. Since independent third parties contradicted the assessee’s claims, the ITAT found no merit in his explanations.
The tribunal upheld the assessment under Section 147, read with Section 144 of the Income Tax Act, citing the taxpayer’s failure to respond to multiple tax notices. The AO also invoked Section 145(3) of the Income Tax Act, which allows the rejection of books of accounts when There are inconsistencies or unverifiable claims and when the assessee fails to disclose a credible source of income. The ITAT ruled that the AO rightly rejected the taxpayer’s books and upheld the tax addition.
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ITAT, consisting of Gagan Goyal (Accountant Member) and Narinder Kumar (Judicial Member), dismissed the assessee’s appeal, affirming the CIT(A)’s decision to uphold the assessment order. The ITAT asserted that when there is a question of unexplained income/ deposits, the burden of proof lies with the assessee to prove the details of such income/deposits.
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