The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench while deleting the addition held that the marriage Gifts/Cash received through Banking Channel cannot be treated as a source for Cash Deposits.
The assessee, Venkatesh Soutoor Tirupati is an individual. On verification of the information available with the Department under NMS data, it was found that during the financial year 2014-15, the assessee has deposited cash aggregating to Rs.24,74,400/- in his account with Andhra Bank, Main Branch, Tirupati and that he has not filed his return of income for the said year. Therefore, the Assessing Officer issued a notice under section 148, in response to which the assessee e-filed his return of income admitting an income of Rs.1,92,050/-.
The assessee furnished information stating that he is a goldsmith procuring old gold ornaments through auction sales from Andhra Bank and other customers and also selling them (after melting) and that he is not a registered dealer under VAT. The assessee also explained that in addition to the above, the sources for the total credits were also out of his past savings, hand loans, marriage gifts, and business receipts admitted under section 44AD of the Act.
The assessee had also stated that he has received a gift of Rs.2,70,000/- from his brother on account of his marriage for which he has filed confirmation letter and the gift deed and the transaction was done through banking channel. The assessee has stated that he has received marriage gifts from others totaling to Rs.5,79,419. After enquiry conducted through ITI of the Office, it was found that the assessee stated to have received cash gifts from 105 persons and cash ranging from Rs.501/- to Rs.1,00,001/- for which the assessee has provided a list of donors and claimed that these are also the sources for the cash deposits during the year.
The Assessing Officer, however, did not accept the entire cash gifts and he has accepted only 1/3rd of the cash gifts and the balance of Rs.3,86279/- was treated as unexplained cash credit. As regards a gift of Rs.2,70,00/- from his brother, the Assessing Officer observed that the transaction was done through a Banking channel.
The AO therefore, did not accept it as a source for the cash deposits and accordingly brought it to tax. Thus, the total of the additions made towards unexplained cash credits was Rs.24,14,419/-.
The coram of Madhavi Devi observed that the Assessing Officer has held the ATM withdrawals and also 2/3rd of the gifts at the time of marriage as sources for redeposits into the Bank account as unbelievable.
The Tribunal opined that the entire ATM withdrawals may not have been used for day-to-day expenses and some of them might have been utilized for making the deposits into his Bank account. Therefore, the ITAT accepted 50% of the same as the source for cash deposits. The assessee gets relief accordingly.
“I am inclined to accept 50% of the same as against 1/3rd of the cash gifts accepted by the Assessing Officer. Therefore, 50% of the total amount of Rs.5,79,419/- is accepted as a source for cash deposits. As regards a gift on account of marriage from his brother, I find that the transaction has been done through a banking channel and therefore, it cannot be considered as a source for cash deposits,” the ITAT said.
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