Tribunals
Summary and Review of Case Laws Decided by Income Tax Appellate Tribunals
Friday, 14 August 2015 12:14

Cash Deposits in Bank - Allowed if assessee proved the source. Addition on the basis of suspicion and surmises unjustified - Chandigarh Tribunal

Written by
  • font size decrease font size increase font size
  • Print
  • Email
  • 1 comment
Rate this item
(0 votes)

Gist

Any addition made on the basis of surmises is unjustified. Suspicion however strong cannot partake the character of the evidence/material on record. Suspicion should be a trigger point for further investigation but the A.O. failed to do so. The addition thus deleted.

Facts

1. Assessee an individual and case was selected under scrutiny through CASS
2. A.O. noticed that there were certain cash deposits on various dated totalling to Rs. 10,59,500/-
3. Assessee was asked to prove the source of the funds
4. Assessee explained that the deposit of Rs. 3,55,000/- was made by his relative for marriage of his two daughters
5. Assessee filed confirmation
6. During the course of assessment proceedings statement of Sh. Dalip Singh was recorded whereby he confirmed having deposited the said amount
7. A.O. rejected the explanation and added it as income of the assessee
8. Assessee filed appeal before the CIT(A) who partly allowed the appeal but confirmed the addition of Rs. 3,55,000/- deposited by Sh. Dalip Singh
9. Assessee moved to Tribunal against the order of CIT(A)
10. Tribunal decided in favour of assessee on the basis of available facts on record

Adjudication

On perusal of the above stated evidences and in the back ground of the fact that Shri Dalip Singh himself has confirmed before the Assessing Officer that he has deposited this amount of Rs.3,55,000/ -in assessee ’s bank account, this explanation cannot be rejected outrightly. These evidences filed by the assessee also prove that Shri Dalip Singh is a man of means and there is also a relation between him and the assessee, therefore, it cannot be denied that Shri Dalip Singh, in fact, has given this amount to the assessee. The explanation given by the assessee and Sh. Dalip Singh that the amount was deposited for making purchases for the marriage of daughter may sound weird and can raise suspicion in the mind of Assessing Officer. It can be a trigger point for further investigation by the Assessing Officer. However, in its order the Assessing Officer has not been able to bring on record any material or evidence to falsify this explanation and documentary evidences filed by the assessee. Even before me, the learned DR has not been able to do the same. The addition has solely been made on the basis of surmises. Suspicion howsoever strong cannot partake the character of the evidence/material, as held by the Apex Court in the land mark judgement in case of Umcharan Shaw & Bros. vs. CIT (1959) 37 ITR 271(SC). In view of this, I am not able to come to a conclusion other than that the deposit of Rs.3,55,000/ -has in fact been deposited by Shri Dalip Singh. Therefore, the addition made by the Assessing Officer is hereby deleted.

Cases referred to

Umacharan Shaw & Bros. vs. CIT (1959) 37 ITR 271(SC)

Additional Info

Read 14809 times Last modified on Saturday, 13 February 2016 16:35
Taxpundit

Founder & CEO with over 20 years of total professional experience spread across Internal Audit, IT Audit, Enterprise Risk Management, Financial statement audit & Business Finance Management.

https://www.linkedin.com/in/taxpundit | This email address is being protected from spambots. You need JavaScript enabled to view it.

1 comment

  • Comment Link Super User Friday, 14 August 2015 14:35 posted by Super User

    In this case the additions were made on the basis of assumptions and suspicion without any evidence on record. The assessee on the other hand submitted confirmation of the person who deposited cash in the bank account and also his statement was recorded before the A.O. This clearly proves the source of the funds. If the A.O. was of the different opinion he should have carried out a detailed research and collected evidences before making the addition.

    The additions can not be made simply on the reason because the A.O. thought so. The evidences speaks of itself.

Leave a comment

Thank you for reading! We welcome and appreciate your comments, but at the same time, make sure you are adding something valuable to this article. If you have any serious queries, suggestions or anything related to this article, feel free to share them, we really appreciate that.

If you want to give us any feedback or report any errors, you can email your concerns on taxpundit@taxpundit.org and we'll revert back soon.

Recommended Articles

 

Have you done Analysis of any Case? Tell Us About It.

SITE INFORMATION

All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.

Newsletter

Subscribe to our newsletter and stay updated on the latest developments and special offers!

Create your own website as per ICAI guidelines. Plan starts at Rs. 15000/- with Free Premium Membership. Read more
Toggle Bar