Umesh Satyanarayan Shah Vs ITO (ITAT Ahmedabad)
Ahmedabad ITAT: Cash Deposits Cannot Be Examined in Isolation From Corresponding Withdrawals – ₹18.31 Lakh Addition Restored for Verification of Bank Statement
The assessee had not filed a return of income for AY 2013-14 despite cash deposits aggregating to ₹18,31,050 in his bank account. Even after issuance of notice under Section 148, no return or effective response was furnished. Consequently, the AO completed an ex-parte reassessment under Sections 144/147 read with Section 144B, treating the entire ₹18.31 lakh as unexplained cash credit under Section 68.
The assessee remained non-compliant before the CIT(A) as well. The CIT(A) therefore dismissed the appeal, holding that the assessee was not interested in prosecuting it and that the AO’s action was neither arbitrary nor unreasonable.
Before the ITAT, however, the assessee produced the bank statement for 02.04.2012 to 31.03.2013 as additional evidence. His crucial contention was that the cash deposits had come from cash earlier withdrawn from the very same bank account. According to him, the AO had looked only at the credit entries while ignoring the corresponding debit/withdrawal entries, thereby failing to appreciate the transactions as a whole.
The Revenue itself accepted that since this bank statement had not been available during assessment, the AO should be given an opportunity to examine it.
The Tribunal held that the additional bank statement was necessary for deciding whether the ₹18.31 lakh cash deposits actually represented unexplained income and therefore admitted it as additional evidence.
Accordingly, the ITAT set aside the assessment and restored the matter to the AO, directing him to examine the sources of all cash deposits in light of the assessee’s claim of earlier cash withdrawals and thereafter pass a fresh assessment in accordance with law. The assessee was specifically directed to cooperate in the proceedings.
Key takeaway: Cash deposits cannot be viewed merely as isolated credit entries. Where the assessee claims that deposits represent redeposit of earlier bank withdrawals, the corresponding debit entries and complete bank-account movement must be examined before treating the deposits as unexplained income.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
