Home > Recent Judgements > Unidentified Cash Credit In A Bank Account Would Be Considered Income: Chattisgarh High Court
Oct 09, 2024
BACKGROUND
In the case between Shri Dinesh Singh Chouhan vs. The Income Tax Officer, Ward Jagdalpur, the appellant had a cash deposit of ₹11,44,070 in his bank account, which he failed to explain despite multiple notices from the tax authorities. He demonstrated that the amount was received as collection from the recovery agency M/s. Shriram Transport Finance Company Limited, but failed to provide any reasonable genuine supporting document or summon the third party to substantiate his claim. The consequence from all the authorities including the Commissioner of Income Tax (CIT), Income Tax Appellate Tribunal (ITAT) and Assessing Officer was in favour of the Tax Department with a view that the unexplained deposit is income for the appellant under the provisions of Section 68 and 69A of the Income Tax Act, 1961 (IT Act). The High Court affirmed these findings and dismissed the appeal because the appellant has failed to support the given explanation with credible evidence.
ISSUES
- Whether the cash deposit of ₹11,44,070 in the appellant’s bank account could be treated as taxable income under Sections 68 and 69A of the IT Act, due to the lack of a satisfactory explanation for its source ?
- Whether the ex-parte assessment under Section 144 of the IT Act was justified when the appellant failed to respond to multiple notices and did not participate in the assessment proceedings ?
- Whether the appellant’s claim that the cash deposit belonged to a third party (for whom he acted as a collection agent) was credible, given the lack of supporting evidence or testimony from the third party ?
JUDGEMENT
The judgement of the case was such that the appeal of assessee (appellant) was dismissed by the Chhattisgarh High Court. The court accepted the ex-parte assessment order passed in accordance with the provisions of Section 144 of the IT Act, and the various contents and contention of the Officers, Income Tax, Appeals and ITAT. The appellant had failed to prepare an argument or furnish any materials that will support the reason behind the cash deposit of ₹11,44,070 into one of the two accounts owned by him, Depositing.
However, the court further opined that the appellant could not account for these deposits no matter how many notices were served to him, as to the presumptions the provisions of Section 68 and 69A of the IT Act, permitted the presuming of uncontrolled credit as income. Thus, the explanation that the deposit was of another person for who he was acting as a recovery agent was dismissed. The floor to that party was not provided as an explanation as to the source. Referring to the earlier judgement of the Supreme Court, the court ruled that in the absence of further rebuttal on the presumption that the amount of deposit is being income by the appellant the appeal has no merit and was required to be dismissed.
ANALYSIS
The case reasoning is that the Chhattisgarh High Court dismissed the appeal of appellant and sustained the ex-parte order passed under section 144 of the IT Act. The court observed that the amount of ₹11,44,070 cash deposited into Appellant’s bank was treated as income under Sections of 68 and 69A of the IT Act, since the appellant did not give satisfactory evidence to prove that the money deposited into the account was that of a third party. Similarly, since the appellant could not discharge the burden placed on him of rebutting that such deposits were taxable income, his appeal was rightly dismissed.
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