The Two member bench of Income Tax Appellate Tribunal ( ITAT ) of Mumbai while deleting the addition made by the assessing officer the bench held that the source of cash deposit made in corporation bank is out of advance money received from the sale of property. The Assessee Aashish Luthra did not file any return of income for AY 2006-07. The Assessing Officer based on AIR information that the assessee has deposited cash of Rs. 25,98,250/- into the Savings Bank A/c with Corporation Bank during the Financial Year 2004-06 reopened the assessment under section 147 of the Income Tax Act, 1961. Accordingly the AO issues notice to assessee calling for details pertaining to cash deposited. stating that the Savings Bank A/c in Corporation Bank was a joint account held along with assessee’s father and that the account is operated by assessee’s father. The assessee before the AO explained that he was living in Mauritius and America and therefore, during the year under consideration the account was operated by the other coholders also submitted that the deposits made after his date of departure from India i.e. 07.07.2005 were not done by him and that the money deposited never belong to him.

The assessee submitted that since he did not have any income taxable in India during the year under consideration no return was filed. However the AO did not accept the submissions of the assessee and made an addition of the entire deposits of Rs. 25,98,250/- under section 68 of the Act Aggrieved the assessee filed appeal before the CIT(A). The CIT(A) after perusing the details furnished by the assessee gave partial relief to the assessee whereby he restricted the addition to 1/3rd of the deposits made i.e. 1/3rd of Rs. 25,98,250/- equal to Rs. 8,66,083/-. Subsequently the aggrieved order the Assessee filed another appeal before the bench comprising Narender Kumar Choudhry,( Judicial Member ) and Padmavathy S,( Accountant Member )

During the adjudication Shashank Mehta, the counsel for assessee submitted that assessee has deposited the sum of Rs. 4,02,250/- from 01.04.2005 to 07.07.2005 i.e. until he left India out of the opening cash balance as mentioned above. Further counsel for assessee submitted that from the affidavit filed by the father of the assessee wherein he has admitted that he has deposited Rs. 22,00,000/- into the bank account out of the advanced money received from sale of property and tenancy rights substantiates the fact that the impugned amount is not deposited by the assessee. Hence the assessee has clearly established the source for the cash deposited during his period of stay in India and also the evidence that the cash deposited after he left India was done by his father. Srinivas, Department representative, supported the order of the lower authorities.

It is observed by the tribunal that the assessee had an opening cash balance of Rs. 5,08,370.34 as per the financial for the year ended 31.03.2005. further noticed that the credits in the Corporation Bank up to 05.07.2005 ( before assessee leaving India ) total to Rs. 4,02,250/-. Therefore, there is merit in the contention that he assesses that the source for the amount deposited until the date of his leaving India is from the cash in hand which is declared in the return of income for the previous AY. Considering the facts and  documentary evidence submitted by both parties the  bench confirmed  that the assessee has explained the source for the cash deposited during his stay in India which is fact is not disputed by the Revenue and that the affidavit of the father not being rejected by the Revenue. Therefore the Banglore bench allowed the appeal filed by the assessee.