Withdrawal of Amount from Bank Account for Purchase of Property and Redeposit of same Bank as Purchase Deal not Fructified: ITAT deletes addition u/s 68 [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition under Section 68 of the Income Tax Act 1961 as the amount from bank account for property was deposited but redeposited in the same bank as purchase deal could not be fructified.

The appeal had been filed by assessee Inderjeet on the ground that the confirmation of the addition on the ground that the assessee had failed to explain the cash deposit, received from his grandfather out of sale of land, cash withdrawals from own bank account and other genuine sources was bad in law.

Somil Agarwal, on behalf of the assessee submitted that the amount of Rs. 2.25 crores deposited to the bank account of the assessee on 26.06.2008 was not cash deposit but was transfer of amount through saving bank withdrawals from of his grandfather amounting to Rs. 9 crores out of which Rs. 2.25 crores were deposited to the bank account of assessee through saving bank account pay in slip.

Gayasuddin Ansari, on behalf of the revenue supported the orders of the authorities below and submitted that when the assessee had failed to explain the source of cash deposited to his bank account then the AO was right in making addition in the hands of the assessee under Section 69 of the Income Tax Act.

The two-member Bench of Vikas Awasthy,(Judicial Member) and Amarjit Singh, (Accountant Member) observed that the source of amount to the bank account of the grandfather of the assessee Pritam Singh was also very much clear and unambiguous.

The Bench allowed the appeal filed by the assessee and deleted the addition referring to the decision of Delhi High Court in Jaya Agarwal which held that where the assessee withdrew an amount from bank account for purchase of a property but re-deposited a part of said sum in same bank account as purchase deal could not be fructified, additions under Section 68 of the Income Tax Act of amount re-deposited was unjustified.

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