Loading judgment…
Facts
The assessee did not file a regular return for AY 2018-19. A notice under Section 148 was issued for income escaping assessment, to which the assessee filed a return declaring Rs. 91,010/-. During reassessment, cash deposits of Rs. 21,32,000/- were observed. The AO accepted Rs. 8,75,320/- as explained and added the remaining Rs. 12,56,680/- as unexplained.
Held
The Tribunal held that the assessee discharged the onus to explain cash deposits to the extent of cash withdrawals from bank accounts (Rs. 9,08,500/-). The remaining deficit of Rs. 3,48,180/- was partially explained by past savings and an earlier credit of Rs. 1,00,000/-, leaving Rs. 2,48,180/- as unexplained.
Key Issues
Whether the addition of Rs. 12,56,680/- on account of unexplained cash deposits was justified and whether initiation of penalty under section 271AAC was premature.
Sections Cited
147, 144B, 148, 69A, 115BBE, 234A, 234B, 234C, 271AAC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI M. BALAGANESH
O R D E R
The appeal in AY 2018-19 arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] in Appeal No. ITBA/NFAC/S/250/2024-25/1073745926(1) dated 26.02.2025 against the order of assessment passed u/s 147 r.w.s 144B of the Income-tax Act, 1961 dated 27.02.2024 (hereinafter referred to as „the Act‟) by ITO, Ward- 36 (1), Delhi (hereinafter referred to as „ld. AO‟).
I find that no arguments were advanced by the Learned AR with regard to the grounds raised by the assessee challenging the validity of assumption of Jurisdiction under Section 147 of the Act . Accordingly, the legal grounds raised by the assessee are hereby dismissed as not pressed.
The only surviving issue to be decided in this appeal is as to whether the Learned CITA was justified in confirming the addition of Rs 12,56,680/- made on account of cash deposits in the bank account of the assessee in the facts and circumstances of the instant case.
I have heard the rival submissions and perused the materials available on record. The assessee has not filed his regular return of income for the assessment year 2018-19. Notice under section 148 of the Act stood issued to the assessee on the ground of income escaping assessment. In response to the said notice, the assessee filed his return of income on 13-07-2023 declaring taxable income of Rs. 91,010/-. During the course of reassessment proceedings, it was observed that there were certain cash deposits made by the assessee in his bank account for which he was directed to explain the sources. It was submitted that assessee is engaged in the wholesale and retail trade of glue, adhesive and other materials business under the name and style of “Sai Chemicals” (a proprietary concern) and had maintained a Current Account with the bank. Apart from this, the assessee was also having a savings bank account. The source of cash deposits were explained to be met out of withdrawals from the Current and Savings Bank Account, out of monies received from family members, out of recoveries made from sundry debtors of the assessee and out of past savings. The Learned AO observed that out of the total cash deposits of Rs. 21,32,000/- made by the assessee in the bank account, a sum of Rs. 8,75,320/- stood properly explained by the assessee and accordingly accepted the same and proceeded to add the remaining sum of Rs. 12,56,680/- as unexplained money under section 69A read with section 115 BBE of the Act.
I find that assessee had indeed withdrawn a sum of Rs 7,60,000/- from his HDFC Current account in the same year. Further a sum of Rs 1,48,500/- has been withdrawn from the savings bank account. It is not the case of the revenue that the sums withdrawn by the assessee from his bank account were utilized for business purposes or for some personal purposes. Since the said onus has not been discharged by the revenue and the assessee had indeed withdrawn cash from the bank account, in my considered opinion, I hold that the assessee had certainly discharged his onus to explain the source of cash deposits to the extent of cash withdrawals made from his bank accounts. Accordingly, a sum of Rs 9,08,500/- (760000+148500) stood properly explained. The remaining deficit figure of Rs 3,48,180/- (1256680 – 908500) was explained by the learned AR to be met out of past savings. However, the learned AR could not prove on record the income declared by the assessee in the earlier years with supporting documentary evidences. Considering the same and also considering the fact that assessee being engaged in the adhesive business in earlier years also, a sum of Rs 1,00,000/- is given credit to the assessee as available cash source and the remaining sum of Rs 2,48,180/- is treated as unexplained. Accordingly, I direct the learned AO to sustain the addition of Rs 2,48,180/- as unexplained money in the facts and circumstances of the instant case. The ground raised by the assessee in this regard is partly allowed.
With regard to chargeability of interest under Section 234A of the Act, I find that the same is to be decided based on the due date given by the Learned AO to the assessee to file the return in response to notice under section 148 of the Act and the actual date of filing the return. The levy of interest under section 234B of the Act is consequential in nature. With regard to interest under section 234C of the Act, the law is well settled that the same shall be charged only on the returned income and not on the assessed income. The ground raised by the assessee on the chargeability of interest is disposed of accordingly.
With regard to initiation of penalty under section 271AAC of the Act, the same is premature and hence dismissed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 20/08/2025.