PREM SINGH,FARIDABAD vs. INCOME TAX OFFICER, WARD-2(1), FARIDABAD

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ITA 4043/DEL/2024Status: DisposedITAT Delhi09 May 2025AY 2011-12Bench: SHRIS.RIFAUR RAHMAN (Accountant Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the cash withdrawals were traceable to the cash deposited within a month, indicating sufficient withdrawals to support the assessee's submissions. The addition made by the AO was therefore not sustainable.

What were the facts?

The assessee's case was reopened based on cash deposits aggregating to Rs. 19,87,000/- in their bank account. The assessee claimed these deposits were out of cash withdrawals made during the year. The Assessing Officer (AO) added this amount as income from undisclosed sources, which was upheld by the CIT(A).

What were the issues?

Whether the cash deposits made by the assessee were sufficiently explained by their cash withdrawals during the same period, and if the addition made by the AO on account of unexplained cash credits was justified.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(2),Section 142(1),Section 69A,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’: NEW DELHI

For Appellant: Shri Bhupinderjit, Advocate
For Respondent: Shri B.S. Anand, Sr. DR
Hearing: 05.03.2025

(Assessment Year: 2011-12) Prem Singh, vs. ITO, Ward 2 (1), H.No.225, Sector 45, Faridabad. Faridabad – 121 010 (Haryana). (PAN : AEZPS5030F) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Bhupinderjit, Advocate REVENUE BY : Shri B.S. Anand, Sr. DR Date of Hearing : 05.03.2025 Date of Order : 09.05.2025 O R D E R

1.

The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 03.07.2024 for the Assessment Year 2011-12.

2.

Brief facts of the case are, the case of the assessee was reopened on the basis of Individual Transaction Statement available on the Action Management System of the ITD that assessee has deposited cash aggregating to Rs.19,87,000/- in his bank account maintained with ICICI Bank Ltd. bearing account no.004601009337. Accordingly, notices were issued to the assessee under section 148 of the Income-tax Act, 1961 (for short ‘the Act’). In response, assessee submitted that the return filed on 30.07.2011 may be treated as return filed. Subsequently, notices u/s 143(2) and 142(1) along with questionnaire were issued and served on the assessee. In response, the assessee filed written submissions along with copy of ITR, statement of bank account in response to the queries raised. Further, Assessing Officer issued notice u/s 142(1) along with show cause, however assessee only stated that the reply has already been filed on 21.03.2018 with regard to source of cash deposited. The AO observed that the assessee has filed original return on 30.07.2011 declaring income of Rs.4,95,000/- under the head ‘business and profession’ but the assessee has not specified anything about his nature of business and source of cash deposited in his account nor any evident information or documentary evidence has been supplied. Further Assessing Officer observed that the assessee was asked to explain the source of cash deposit in his bank account of major entries but he found that the assessee has completely failed to explain precise source of cash deposits in his bank account. Assessing Officer further observed that the assessee has not disclosed the purpose of withdrawal and redeposit of such entries. Therefore, Assessing Officer observed that huge deposits in cash remained unexplained and the assessee could not substantiate the source of cash deposit to the extent of Rs.19,87,000/-. After considering the submissions of the assessee, the Assessing Officer observed that the assessee has filed to prove the source of cash deposit in the bank account and the cash deposits to the extent of Rs.19,87,000/- remained unexplained and accordingly, he added the aforesaid amount to the total income of the assessee as income from undisclosed sources.

3. Aggrieved with the above order, assessee preferred an appeal before the NFAC, Delhi. Ld. CIT(A) rejected the same by observing that in the absence of any plausible explanation and proper records, sources of cash deposited cannot be accepted. Accordingly, he sustained the addition made by the AO. 4. Aggrieved assessee filed an appeal before us raising following grounds of appeal :-

“1. That under the facts and circumstances of the case, the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as "CIT(A)") has erred in passing the impugned order dated 03.07.2024 confirming the assessment order dated 29.12.2018 passed by the Income-tax Officer, Ward-2(l), Faridabad (hereinafter referred to as "AO") in the case of the Appellant for Assessment Year (hereinafter referred to as "A.Y.") 2011-12, wherein an addition of Rs. 19,87,000/- was made by the AO under section 69A of the Income-tax Act, 1961 (hereinafter referred to as the "Act") on account of alleged unexplained cash deposits.

2. That under the facts and circumstances of the case, the impugned order dated 03.07.2024 passed by the Ld. CIT(A) is in violation of the settled principles of natural justice, because the same has been passed without providing reasonable and sufficient opportunity to the Appellant.

3.

That under the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming the assessment order dated 29.12.2018 passed by the AO, wherein an addition of Rs.19,87,000/- was made by the AO under section 69A of the Act on account of alleged unexplained cash deposits, because the assumption of jurisdiction by the AO under section 147 of the Act was invalid and bad in law and therefore, the assessment order is vitiated by lack of jurisdiction.

4.

That under the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming the addition of Rs.19,87,000/- was made by the AO under section 69A of the Act on account of alleged unexplained cash deposits, because the deposits are not unexplained and the AO has made the addition on surmises and conjectures.”

5. At the time of hearing, ld. AR of the assessee brought to our notice above facts on record and submitted that assessee has deposited the cash out of cash withdrawals made by the assessee and he brought to our notice page 14 of the paper book wherein assessee has withdrawn cash to the extent of Rs.13,30,000/-. For the sake of clarity, the chart given at page 14 of the paper book is reproduced below :- Date of Amount Date of Amount Balance cash withdrawal withdrawn deposit deposited available Opening 5,17,545 07.04.2010 10,000 5,07,545 Balance 13.05.2010 9,00,000 16.06.2010 9,00,000 5,07,545 01.07.2010 30,000 4,77,545 07.07.2010 10,000 4,67,545 03.08.2010 10,000 4,57,545 10.08.2010 1,00,000 06.09.2010 50,000 5,07,545 27.09.2010 1,00,000 6,07,545 09.10.2010 15,000 6,22,545 21.10.2010 1,15,000 04.11.2010 12,000 7,25,545 22.11.2010 1,00,000 6,25,545 25.11.2010 1,00,000 10.12.2010 5,000 7,20,545 20.12.2010 90,000 6,30,545 30.12.2010 20,000 6,10,545 31.12.2010 2,50,000 3,60,545 28.01.2011 5,00,000 (-)1,39,455 Total of OB 5,17,545 Total 19,87,000 Plus +13,30,000 deposits withdrawals =18,47,545

6.

He also submitted that there is several high value of withdrawals and the same were re-deposited during the year and he prayed that the sources were already declared by the assessee. Therefore, the same addition cannot be made.

7.

On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities.

8. Considered the rival submissions and material placed on record. We observed that assessee was working as an estate agent earning commission income from brokering deals in real estate and declared gross receipts of RS.7,87,000/- and after claiming expenses of Rs.2,92,000/-, he declared net profit of Rs.4,95,000/-. We observed that the case of the assessee was reopened on the basis of cash deposits in its bank account and assessee has explained the sources of cash deposits. The AO has accepted the same, however rejected the cash deposits out of cash withdrawals. Before us, ld. AR of the assessee brought to our notice that during the year, assessee has withdrawn cash of Rs.13,30,000/- and re-deposited out of withdrawals. We observed that the cash withdrawals are traceable to the respective cash deposited within the intervals of one month. In our considered view, there are enough cash withdrawals made by the assessee during the year and there are re-deposits traceable like cash withdrawn on 13.05.2010 and re-deposited the same on 16.06.2010 of Rs.9,00,000/- and similarly other deposits. Therefore, there are sufficient cash withdrawals to support the submissions of the assessee. Accordingly, we are inclined to allow the grounds raised by the assessee.

9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 9th day of May, 2025.

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