Facts of the Case

The assessee, an individual, was subjected to scrutiny assessment during which the Assessing Officer noticed substantial cash deposits in her bank account during the relevant financial year. The Assessing Officer treated these deposits as unexplained money under Section 69A on the ground that the assessee failed to establish the source to the satisfaction of the Department.

The assessee explained that the deposits represented explained funds and not undisclosed income. However, the Assessing Officer rejected the explanation and made an addition. The CIT(A) confirmed the addition, leading the assessee to file an appeal before the ITAT.

Issues Involved

  1. Whether cash deposits in bank accounts can be treated as unexplained money under Section 69A without disproving the assessee’s explanation.
  2. Whether addition can be sustained merely due to absence of documentary evidence or perceived inadequacy of explanation.
  3. Scope of burden of proof in unexplained money cases.

Petitioner’s Arguments (Assessee)

  • The deposits had identifiable and legitimate sources.
  • The Assessing Officer did not bring any material evidence to establish that the deposits represented undisclosed income.
  • The explanation furnished was reasonable and consistent with surrounding facts.
  • Addition was made on conjectures rather than concrete findings.

 Respondent’s Arguments (Revenue)

  • The assessee failed to conclusively prove the source of cash deposits.
  • In absence of satisfactory documentary evidence, the deposits were rightly treated as unexplained money.
  • The orders of the Assessing Officer and CIT(A) were justified.

Court Order / Findings (ITAT Allahabad)

  • Section 69A requires clear evidence that the money represents unexplained income of the assessee.
  • Mere disbelief of the explanation is insufficient to justify addition.
  • The Revenue failed to bring any material on record to show that the deposits were from undisclosed sources.

Important Clarification

  • Section 69A is a strict deeming provision requiring proper evidentiary foundation.
  • Once the assessee provides a reasonable explanation, the burden shifts to the Revenue to disprove it.
  • Additions cannot be made on conjectures or subjective dissatisfaction.
  • Evidence-based assessment is essential in cases involving alleged unexplained income.

 Link to download the order –

https://itat.gov.in/public/files/upload/1633605970-ita%20no.%20156%20of%202019%20Kusum%20Singh.pdf

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