Facts of the Case

The assessee, Shri Rakesh Kumar Dubey, was subjected to scrutiny assessment under Section 143(3) of the Income-tax Act. During the assessment proceedings, the Assessing Officer observed substantial cash deposits in the bank account of the assessee. The assessee was asked to explain the nature and source of these deposits. As the explanation was found unsatisfactory and not supported by adequate evidence, the Assessing Officer treated the amount as unexplained income under the relevant provisions of the Act. The CIT(A) confirmed the addition, leading the assessee to file an appeal before the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether the addition for unexplained cash deposits was justified.
  2. Whether the assessee had satisfactorily explained the nature and source of the deposits.
  3. Whether the findings of the lower authorities required interference by the Tribunal.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that the deposits were made from explained sources.
  • It was argued that the Assessing Officer did not properly consider the explanations furnished.
  • The addition was claimed to be arbitrary and excessive.
  • The assessee sought deletion of the addition sustained by the CIT(A).

Respondent’s (Revenue’s) Arguments

  • The Revenue submitted that the assessee failed to produce credible evidence to substantiate the source of cash deposits.
  • The explanation offered was not supported by documentary proof.
  • Therefore, the Assessing Officer rightly treated the deposits as unexplained income.
  • The order of the CIT(A) was justified and required no interference.

Court Order / Findings (ITAT Allahabad)

The Tribunal observed that where substantial cash deposits are found in a bank account and the assessee fails to provide a satisfactory explanation supported by evidence, the provisions relating to unexplained money are attracted. The burden of proof lies on the assessee.

In the present case, the assessee failed to establish the source of funds with credible material. Accordingly, the Tribunal upheld the findings of the Assessing Officer and the CIT(A), sustaining the addition.

Important Clarification

The Tribunal reiterated that mere statements or general explanations cannot discharge the statutory burden. Documentary evidence demonstrating availability of funds and genuineness of the source is essential. In the absence of such proof, the deposits may be treated as undisclosed income.

Link to download the order –https://itat.gov.in/public/files/upload/1604570537-ITA%2019%20smc%20Rakesh%20Kumar%20Dubey.pdf

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