Bangalore Nagaraj Vishwanath Vs ITO (ITAT Bangalore)
Bangalore ITAT: Addition Cannot Be Based on Gross Cash Deposits Alone Without Examining Cash Withdrawals, Cash Flow and Explanation
Bangalore ITAT deleted an addition of ₹60 lakh made towards unexplained cash deposits after holding that the assessee had satisfactorily explained the source of the deposits through documentary evidence.
Assessing Officer had treated ₹60 lakh out of total cash deposits as unexplained, observing that the assessee had deposited ₹99.28 lakh in cash during the year. The assessee explained that ₹13 lakh represented sale proceeds of two vehicles and ₹46 lakh belonged to his uncle, which was temporarily deposited in the assessee’s account due to technical issues in the uncle’s bank account and immediately remitted back through RTGS.
Before the Tribunal, the assessee produced additional documentary evidence, including:
- A Chartered Accountant’s certificate showing that the AO had incorrectly computed the total cash deposits, which were actually ₹80.37 lakh and not ₹99.28 lakh.
- Sale documents of the two vehicles establishing receipt of sale consideration.
- A notarised confirmation from the uncle, along with the bank trail showing that the ₹46 lakh belonged to him and was transferred back on the same day after deposit.
Tribunal observed that:
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