Facts of the Case

During assessment proceedings, the Assessing Officer noticed substantial cash deposits in the bank account of the assessee. The assessee was required to explain the source of such deposits. Not being satisfied with the explanation furnished and supporting evidence produced, the Assessing Officer treated the deposits as unexplained money and added the same to the taxable income. The Commissioner (Appeals) affirmed the addition. Aggrieved by the appellate order, the assessee filed an appeal before the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether the cash deposits in the bank account were properly explained by the assessee.
  2. Whether the addition as unexplained money under the Act was justified.
  3. Whether the lower authorities correctly appreciated the evidence on record.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that the cash deposits represented legitimate funds from known sources.
  • It was argued that relevant explanations and documents had been submitted during assessment.
  • The assessee maintained that the addition was made on conjectures without proper inquiry.

Respondent’s (Revenue’s) Arguments

  • The Revenue supported the findings of the Assessing Officer and Commissioner (Appeals).
  • It was submitted that the assessee failed to provide credible evidence establishing the source of the deposits.
  • The Department argued that unexplained cash deposits rightly attract addition under the statutory provisions.

Court Order / Findings (ITAT)

  • The burden of proof lies on the assessee to satisfactorily explain the nature and source of cash deposits.
  • In the absence of convincing evidence, the Assessing Officer is justified in treating such amounts as unexplained money.
  • The findings of the lower authorities were supported by facts and applicable law.

Important Clarification

The Tribunal reiterated that mere assertions without documentary support cannot discharge the burden of proof in cases involving unexplained cash deposits. Proper evidence demonstrating the source and genuineness of funds is essential to avoid addition under the Act.

Link to download the order –

https://itat.gov.in/public/files/upload/162580944

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