AO cannot make addition/assessment of the alleged income purely based on suspicion

The Income Tax Appellate Tribunal has ruled that tax authorities cannot make additions or assessments based solely on suspicion. In this case, the assessee explained cash deposits in their bank accounts as being sourced from past savings and withdrawals. The Tribunal found that the Assessing Officer (AO) had incorrectly considered irrelevant opening balances and failed to prove that the available cash was utilised elsewhere, especially when the assessee's cash book and cash flow statement were not rejected.

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES ‘A’, JAIPUR

BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM

ITA No. 660/JP/2019

Assessment Year :2014-15

Shri Sunil Mathur
C-40, Triveni Awaas,
Bajrang Nagar, Kota

vs

ITO,
Ward-2(4),
Kota

Assessee by : Sh. Mahendra Gargieya (Adv.)

Revenue by : Smt. Monisha Choudhary (JCIT)

Date of Hearing : 02/08/2021

Date of Pronouncement: 01/11/2021

ORDER

This is an appeal filed by the assessee against the order of ld. CIT(A), Kota dated 06.03.2019.

2. During the course of hearing, the ld A/R submitted that the relevant facts in brief are that the assessee filled ROI on 05.07.2014 declaring total income of Rs. 2,05,080/-, consisting of income from Salary from Punjab Kesri, Rental Income from House Property, and Fee receipts and advertising commission and interest from S.B. A/c. During the assessment proceeding, the AO noticed that assessee has deposited cash of Rs.13,50,000/- in his saving account (i.e. Rs.10,00,000/- in SBI A/c and Rs.3,50,000/- in Punjab National Bank) as tabulated at Pg-2 of the impugned assessment order. When asked, the assessee submitted that the same was sourced out of the past savings of the preceding years` withdrawals from the same very accounts. In support, he submitted Bank Books i.e State Bank of India A/c No. 10927256219, State Bank of Bikaner & Jaipur A/c No. 6116128932 and Punjab National Bank A/c No. 07260000300264723. Similarly, the assessee submitted Cash Book / Cash Flow Statement (“CFS”) for three years i.e. A.Y. 2012-13 to 2014-15.

3. It was further submitted that the AO completely misdirected himself by considering the opening balance in the both bank accounts of Rs.1,56,000/- which is not at all relevant once the assessee prepared a cash book considering the cash deposits and cash withdrawal transactions from the banks and other cash withdrawal etc. Further, while cash book cash flow statement filed and was not rejected, there is no scope for the AO to deem some utilization elsewhere because the settled law is something contrary to approach of the authorities below. The AO was bound to establish the utilization of the available cash elsewhere. In this way, the availability of the sufficient cash on the different dates of deposits could not be disputed.

4. Ground no. 1.1 and 1.2 were not pressed by the ld A/R during the course of hearing and hence, the same are dismissed as not pressed. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open Court on 01/11/2021.

Please find attached the enclosed file for the full judgement