Loading judgment…
Facts
The assessee, an individual, had cash deposits totaling Rs. 46,03,500 in three bank accounts during the demonetization period. The Assessing Officer (AO) made additions for this amount as unexplained income under Section 69A of the Income Tax Act. The CIT(A) upheld the AO's order.
Held
The Tribunal held that a deposit of Rs. 33,60,000 in one account belonged to the assessee's mother and was duly declared in her ITR and was out of her business sales. The remaining deposits of Rs. 12,43,500 were explained as being out of the assessee's declared cash sales from their business. Therefore, the additions under Section 69A were deleted.
Key Issues
Whether cash deposits made during demonetization can be added as unexplained income, and whether deductions under Chapter VIA for medical insurance and LIC premium are admissible without proper evidence.
Sections Cited
250, 143(3), 69A, 115BBE, 44AD, 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
(ASSESSMENT YEAR 2017-18) Jatin Arora, Income Tax Officer, D-14, Second Floor, Ward-30(5), Kalkaji, Delhi-110019. Vs. New Delhi. PAN-AHFPA8050L (Appellant) (Respondent) Assessee by Ms. Rano Jain, Adv., Ms. Mansi Jain, CA, Pranshu Singhal, CA & Ms. Sakshi Rustagi, Adv. Department by Shri Om Prakash, Sr. DR Date of Hearing 22/07/2025 Date of Pronouncement 13/08/2025 O R D E R [ PER MANISH AGARWAL, AM: This appeal is filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)-24, New Delhi [CIT(A) in short], in Appeal No. CIT(A), Delhi-10/10486/2019-20 dated 18.04.2023 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) for Assessment Year 2017-18 arising out of the order of Assessing Officer dated 16.12.2019 passed u/s 143(3) of the Act.
Brief facts of the case are that the assessee is an individual and the case of the assessee was taken up for scrutiny for the sole reason Jatin Arora vs. ITO that there was cash deposit in SBN during demonetization period. The return of income was filed on 05.08.2017 u/s 139(1) declaring total income at Rs.8,35,640/- which was revised on 30.03.2019 at an income of Rs.8,35,640/-. The assessee has made cash deposit in three bank accounts totaling to Rs.46,03,500 maintained with HDFC Bank. It was claimed that one account bearing No. 02712560002500 wherein cash of Rs. 33,60,000/- was deposited in SBN during demonetization was of her mother. Due to sudden death of his father who was proprietor of two firms M/s Paras International and M/s Janta Crockery House and after the death of the father, M/s Janta Crockery House was inherited by the assessee and other firm was taken by the mother of the assessee, however, the PAN of the assessee was remained in the said account, therefore, the deposits made in the said account appeared in the name of the assessee. For the remaining accounts it was claimed that the cash was deposited out of the sales declared. After considering the submissions, the AO made the additions of cash deposited during demonetization of Rs. 46,03,500/- as unexplained u/s 69A of the Act and invoked the provisions of section 115BBE of the Act.
Against this the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal of the assessee, therefore, the assessee preferred the appeal before the Tribunal by taking following grounds of appeal: “On the facts and in the circumstances of the case and in law the ld. CIT(Appeals) erred in confirming the following actions of the Assessing Officer:-
Jatin Arora vs. ITO (i) Passing order u/s 143(3) of the Act determining taxable income at Rs.56,24,140/- against returned income of Rs.8,35,640/-; (ii) Making the following additions to the returned income- a. Rs.46,03,500/- being the amount of cash deposits in bank by invoking section 69A of the Act; b. Rs.1,85,000/- claimed under chapter VIA of the Act. The above actions are being arbitrary, fallacious, unwarranted and illegal must be quashed with directions for appropriate relief.” Ground of appeal No. 1 is general in nature and needs no adjudication.
Ground of appeal
No. ii(a) is with respect to the additions of Rs.46,03,500/- made towards the cash deposits in the bank u/s 69A of the Act. Before us, the Ld. AR of the assessee submits that out of the three bank accounts the Accounts, one account bearing No. No.02712560002500 relates to her mother Smt. Sudesh Arora proprietor of M/s Paras International wherein cash Rs.33,60,000/- was deposited during demonetization period in SBN, therefore, no addition should be made towards the cash deposit in the said bank account in the hands of the assessee as this cash pertained to the mother of the assessee. For this, the assessee filed a copy of ITR of Smt. Sudesh Arora in the PB wherein this bank account as owned and maintained by her is declared, necessary copy of the ITR is placed in the PB Pages 83 to 93. It is also submitted that the account was duly declared in subsequent years as owned by her in the returns of income filed on regular basis. Regarding the remaining cash deposit of Rs.10,15,000/- in account No. 02711000046663 and Rs.2,28,500/- in account No.5020001461742, both with HDFC Bank, it is submitted by ld. AR that these are deposits out of the Jatin Arora vs. ITO regular cash sales made which is part of the total cash sales made at Rs.27,28,942/- by the assessee as was declared in the return of income filed u/s 44AD of the Act. It was further submitted by the assessee that after the death of his father Sh. Prushottam Lal Arora, the assessee become the sole proprietor of M/s Janta Crockery House w.e.f. 01.06.2016 and necessary copy of the amendment in the VAT Act dated 06.09.2016 was also filed which is available at PB 72 to 73. It is submitted by the assessee that the assessee has also filed the VAT return with the VAT Authorities wherein the sales declared was never doubted including the cash sales declared by the assessee. The sales so declared was also accepted by the AO wherein the total income of Rs.8,70,014/- was declared on the gross sales of Rs.50,55,282/- which include cash sales of Rs.27,28,942/-. It is thus, submitted that the source of the cash deposited was duly explained and thus additions made deserves to be deleted.
5. On the other hand, Ld. Sr. DR vehemently supported the orders of the lower authorities. AS per ld. SR. DR, the assessee in the original return of income filed wherein the income was declared u/s 44AD has not declared the amount of cash in hand, sundry debtors and sundry creditors, nor the fact of cash deposits during demonetization in SBN was disclosed. It is only in the revised return filed after issuing of notice u/s 143(2), the assessee has declared all these details. Ld. Sr Dr submits that this clearly shows that it is after thought by the assessee to disclose them in the revised return and, therefore, he requested for confirmation of the additions made.
Jatin Arora vs. ITO 6. Heard both the parties and perused the materials available on record. The assessee had claimed that the bank account No.02712560002500 in which Rs.33,60,000/- were deposited in SBN during demonetization belonged to his mother Smt. Sudesh Arora who become proprietor of M/s Paras International after the death of his father. To establish this fact, assessee filed copy of ITR of her mother wherein this account is duly declared as belonging to her. From the perusal of the original return filed by Smt. Sudesh Arora for Assessment Year 2017-18 on 30.03.2018, it is seen that this bank account was duly declared as belonging to her and receipt thereof were also claimed as her business receipt and income of Rs.8,46,514 being 8% of the turnover of Rs.1,37,50,581/- was declared which includes the cash sales out of which this cash was deposited in the bank. Since the said account is established as owned by Smt. Sudesh Arora, therefore, no addition should be made in the hands of the assessee. Accordingly, the cash deposited in SBN during demonetization of Rs. 33,60,000/- is hereby deleted.
Regarding remaining amount of Rs. 12,43,500/- deposited in the two bank accounts of the assessee, it was the claim of the assessee that the same were deposited out of cash sales of Rs.27,28,942/- made during the year. The assessee had filed his return of income wherein the income under the head “Income from Business or profession” was declared u/s 44AD of the Act on the total turnover of Rs. 50,55,282/- out of cash sales was of Rs. 27,28,942/. Further, it was claimed that such cash receipt was from M/s Janta Jatin Arora vs. ITO Crockery House. It is further seen that the assessee has filed VAT returns of M/s Janta Crockery House for the quarter ending on 30.06.2016 wherein total sales for this quarter was declared at Rs.8,25,032/- and for the quarter ending on 30.09.2026 sales were declared at Rs. 12,43,500/-, therefore, it is established that the cash deposited is out of the cash sales of M/s Janta Crockery House. It is further seen that the assessee has filed month wise chart of cash sales which is available at PB Page 82, according to which cash sales upto the month of October, 2016 was of 25.00 lacs approx., therefore, the source of the cash deposited of Rs.12,45,500/- in SBN during demonetization in two bank accounts of the assessee stood explained. After considering these facts, we direct the Ao to delete the cash deposited in the bank accounts owned by assessee of Rs.12,43,500/- (10,15,000 + 2,28,500), we order accordingly.
In view of the discussion, the additions of Rs.46,03,500/- made in the hands of the assessee u/s 69A of the Act is hereby deleted. Accordingly, the ground No.ii(a) of the assessee is allowed.
Ground of Appeal No.ii(b) is with respect to disallowance of claim of deduction in Chapter VIA of the Act of Rs.1,85,000/-. From the perusal of the order of authorities below, it is seen that the assessee was not allowed deduction under Chapter VIA towards the medical insurance and LIC premium for want of necessary evidences. The Ld. CIT(A) further observed that from bank accounts of the assessee, payments towards LIC premium and medical insurance were not appearing. In view of these facts, we remand the matter back