Case Law Details

Case Name : ITO Vs Mrs. Deepali Sehgal (ITAT Delhi)
Appeal Number : ITA No. 5660/Del/2012
Date of Judgement/Order : 05/09/2014
Related Assessment Year :

Assessing Officer (AO) noted that the assessee has withdrawn huge cash from bank account and the same amount has been deposited to the same account after lapse of substantial time. On query from the AO the assessee replied that the cash was deposited out of cash withdrawn. The AO rejected the explanation and held that the assessee has cash deposit of Rs.24,38,000/- as unexplained money and he assessee found to be the owner of the money and the assessee has not offered any acceptable and cogent explanation therefore, the AO concluded that the entire cash deposit of Rs.24,38,000/- was deemed to the income of the assessee from undisclosed sources and the AO made an addition of Rs.24,38,000/- u/s 69 of the Income Tax Act, 1961 (for short the Act) for A.Y. 2009-10.  AO made addition on account of amount deposited in bank account u/s 69 of Act on the basis that “it was hard to believe that cash withdrawn from bank was kept by the assessee for deposit and same was deposit back in the bank after a  long period”.

In reply to above assessee submitted cash flow statement, which shows that there is cash withdrawal from her SB A/c and also withdrew capital balance from her capital account her partnership firms on different dates and there is no negative cash balance at any point of time.

AO, in his remand report could not bring out any fact that the cash withdrawn from Saving Bank Account and partnership overdraft account was used for other purpose anywhere else then, merely because there was a time gap between withdrawal of cash and its further deposit to the bank account, the amount can not be treated as income from undisclosed sources u/s 69 of the Act in the hands of the assessee. The AO rejected the explanation of the assessee on hyper technical basis which is not acceptable. On careful perusal of the decisions relied by the Ld. D.R. we are of the view that the facts of the present case are clearly distinguishable as in the present case the explanation offered by the assessee is reliable and acceptable on the touchstone of the prudence of an ordinary man but merely on the ground that the act of assessee created huge interest liability on partnership firm does not enable revenue authorities to consider the cash withdrawn and it deposit to same bank account after a substantial gap of time, as unexplained income u/s 69 A of the Act. Hence, we reach to a conclusion that the AO made addition without any legal and justified reason which was rightly deleted by the CIT(A).

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