Facts of the Case

During scrutiny assessment, the Assessing Officer observed substantial cash deposits in the assessee’s bank account. The assessee was required to explain the source of these deposits.

Not being satisfied with the explanation and supporting evidence furnished, the Assessing Officer treated the deposits as unexplained and made additions to income under the relevant provisions of the Income-tax Act.

The assessee challenged the addition before appellate authorities.

Issues Involved

  1. Whether the cash deposits in the bank account were satisfactorily explained.
  2. Whether the Assessing Officer was justified in treating the deposits as unexplained income under Sections 68/69A.
  3. Whether the burden of proof placed on the assessee was properly discharged.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that the deposits represented explained funds and not undisclosed income.
  • It was argued that the Assessing Officer failed to properly consider the explanation provided.
  • The assessee sought deletion of the additions on the ground that the deposits were not taxable as unexplained income.

 

Respondent’s (Revenue’s) Arguments

  • The Revenue argued that the assessee did not furnish reliable documentary evidence to substantiate the claimed sources of cash deposits.
  • Mere explanations without supporting proof were insufficient under law.
  • Therefore, the Assessing Officer was justified in making additions treating the deposits as unexplained income.

Court Order / Findings (ITAT)

  • The primary burden lies on the assessee to establish the nature and source of cash deposits.
  • In the absence of credible evidence, the explanation cannot be accepted.
  • The Assessing Officer was justified in drawing adverse inference where the assessee failed to substantiate the source of funds satisfactorily.

Important Clarification

Unexplained cash deposits in bank accounts can be treated as income unless the assessee proves the source with cogent evidence.

  • Individuals facing scrutiny over cash deposits
  • Cases involving unaccounted money
  • Burden of proof in unexplained income matters
  • Documentation requirements during assessment proceedings

Link to download the order –https://itat.gov.in/public/files/upload/1606471381-Ramapati%20Gupta%20pdf.pdf

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