Facts of the Case

The assessee, Ravindra Nath Singh, was subjected to scrutiny assessment during which substantial cash deposits were found in bank accounts. The Assessing Officer required the assessee to explain the nature and source of these deposits. Dissatisfied with the explanation and supporting evidence furnished, the Assessing Officer treated the deposits as unexplained income and made additions accordingly. The assessee challenged the additions in appeal.

Issues Involved

  1. Whether the cash deposits in the bank account were satisfactorily explained by the assessee.
  2. Whether the Assessing Officer was justified in treating the deposits as unexplained income.
  3. Whether the evidentiary burden cast upon the assessee under the Act was discharged.

Petitioner’s Arguments (Assessee’s Contentions)

  • The assessee contended that the deposits represented explained sources such as past savings, business receipts, or other legitimate funds.
  • It was argued that the Assessing Officer failed to properly appreciate the explanations and documents furnished.
  • The assessee submitted that additions were made on presumptions without conducting adequate verification.

Respondent’s Arguments (Department’s Contentions)

  • The Revenue contended that the assessee failed to provide credible evidence establishing the source of cash deposits.
  • It was argued that explanations were either unsupported or inconsistent with available records.
  • The Department maintained that the burden of proof lies on the assessee, which was not discharged.

Court Order / Findings (ITAT Decision)

The Tribunal examined the explanations furnished, documentary evidence on record, and the reasoning adopted by the lower authorities. It reiterated that the primary onus to establish the nature and source of cash deposits rests with the assessee. Where the explanation is not supported by reliable evidence or fails to inspire confidence, the Assessing Officer is justified in treating the amount as unexplained income.

The Tribunal accordingly upheld or modified the additions based on the adequacy of evidence and factual findings, emphasizing that tax liability must be determined on the basis of substantiated facts rather than unverified claims.

Important Clarification

  • Cash deposits in bank accounts attract strict scrutiny under the Income-tax Act.
  • The assessee must substantiate the source with credible documentary evidence.
  • Mere statements or general explanations are insufficient to rebut statutory presumption.
  • Failure to discharge the burden of proof can result in addition as unexplained income.

Link to download the order - https://itat.gov.in/public/files/upload/1610686985-74%20Alld%202018%20Ravindra%20Nath%20Singh.pdf

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