Swamyraju Chandrashekar Vs ITO (ITAT Bangalore)
Summary: The appellate authority held that the addition of ₹11,00,000 under Section 69A of the Income-tax Act for AY 2016-17 was unjustified. The assessee had deposited ₹11,00,000 in cash on 25 January 2016, claiming it was part of the sale proceeds of a property sold on 17 April 2015, with the cash component totaling ₹13,30,000. The AO rejected this explanation, citing the ten-month delay and presuming the funds were likely used for house construction. The CIT(A) upheld this addition. On appeal, the authority noted that suspicion or assumption cannot substitute for evidence. The source of the cash was identifiable, verifiable, and undisputed, and there was no legal prohibition against temporarily keeping cash before depositing it. The department failed to disprove the explanation with evidence. Consequently, the addition under Section 69A was deleted, and the assessee’s appeal was allowed.
The issue before the Tribunal was the addition of ₹11,00,000 made u/s 69A on account of alleged unexplained cash deposit.
AO noticed that Assessee had deposited ₹11 lakh in cash on 25 January 2016. The explanation offered was that this represented part of ₹13.30 lakh cash component received on sale of property dated 17 April 2015. AO rejected the explanation, observing that no prudent person would retain such a large cash amount for ten months & presuming that the same must have been utilised for construction of a house. CIT(A) affirmed AO’s view holding that there was no direct link between sale proceeds & cash deposit.
Before Tribunal, Assessee argued that the source of deposit was fully explained through sale proceeds & that there is no legal bar against keeping cash at home for some time before depositing it. The Revenue, on the other hand, maintained that the long delay & lack of a cash flow statement rendered the explanation unreliable.
Tribunal observed that the sale of property & receipt of cash consideration were undisputed. AO had not produced any evidence to show that the Assessee had used the sale proceeds elsewhere. The finding of utilisation in house construction was merely an assumption without proof. It was held that suspicion or presumption cannot replace evidence. The Tribunal further noted that keeping cash in hand for a few months is not prohibited by law & mere delay in deposit cannot justify addition u/s 69A. Since the source was identifiable & verifiable, the explanation was held satisfactory.
Accordingly, the Tribunal deleted the addition of ₹11,00,000 sustained by the CIT(A) & allowed the appeal.
Held: Cash deposit found to be from explained source – addition u/s 69A deleted; mere delay in deposit cannot justify presumption of unexplained money.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
