ELIM R HMAR,SHILLONG MEGHALAYA vs. INCOME TAX OFFICER WARD-1, INCOME TAX DEPARTMENT

The Ld. Commissioner of Income Tax (Appeals) erred in law and on facts in sustaining the addition of Rs.49,86,000/- made by the AO to assessee's income u/s 69A of the Income Tax Act, 1961 as unexplained cash deposit for the A.Y. 2016-17. 2. The Ld. Commissioner of Income Tax (Appeals) erred in law and on facts in not considering the fact that the assessee has no taxable income during the year under consideration.

The Ld. Commissioner of Income Tax (Appeals) erred in law and on facts in not considering the fact that cash of Rs.49,86,000/- deposited into assessee's bank account belonged to Smt. Hmangaihzuali, Prop. M/s Jehova Jire Store, Venglai, Champhai, Mizoram who is running business under Trade License issued by the state government of Mizoram.

The Ld. Commissioner of Income Tax (Appeals) erred in law and on facts in sustaining the demand of Rs. 37,97,288/- raised by the Assessing Officer against the assessee without appreciating the fact that the amount of Rs. 49,86,000/-, which was added to the total income of the assessee and resulted in the said demand, actually belonged to Ms. Hmangaihzuali. She had duly submitted a written confirmation acknowledging ownership of the funds. Therefore, the tax liability, if any, ought to have been borne by the rightful owner of the funds and not by the assessee."

Brief facts of the case are that based on information that the assessee had made cash deposits of ₹1,90,04,000/- in the ICICI bank account during the financial year without filing the return of income, the Assessing Officer (hereinafter referred to as Ld. 'AO') initiated reassessment proceedings and issued a notice u/s 148 of the Act on 28.03.2023. In response thereof, the assessee filed the return of income declaring NIL income by claiming exemption of ₹2,16,000/- u/s 10(26) of the Act. During the assessment proceedings, the assessee explained that the deposit of ₹1,50,00,000/- dated 18.01.2016 was a wrong entry reversed by the bank on the same day, which the Ld. AO verified and accepted. However, regarding the remaining cash deposits totalling to ₹50,04,000/-, the assessee claimed the funds belonged to a licensed trader in Mizoram and furnished a confirmation letter from her. Due to the lack of corroborative documentary evidence and the absence of the logical reason as to why the trader's business receipts were deposited in the assessee's savings account instead of her own current account, the Ld. AO rejected the explanation and completed the assessment ex parte u/s 147 r.w.s. 144 r.w.s. 144B of the Act on 15.02.2024, treating the amount of ₹50,04,000/- as unexplained money u/s 69A of the Act Elim R Hmar. and added the same to the total income of the assessee. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who observed that the assessee's explanation regarding the remaining cash deposits was not supported by cogent or verifiable evidence and he also noted that a mere confirmation letter without corresponding books of account, cash flow statement, or bank statement from the alleged owner is insufficient to establish the source. The Ld. CIT(A) held that the onus lay squarely on the assessee, who failed to furnish contemporaneous evidence demonstrating that he acted merely as a facilitator or proving the capacity of the third party to generate such substantial cash. Furthermore, the Ld. CIT(A) held that the exemption u/s 10(26) of the Act applies only to specified income and does not legitimize unexplained money found credited in a bank account. Accordingly, the Ld. CIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. DR. The Ld. DR submitted that before the Ld. CIT(A), the assessee had filed the tribal certificate for belonging to the Scheduled Tribe and the trade license of Smt. Hmangaihzuali. However, the details are not filed before us and the supporting evidence that the cash deposited belong to Smt. Hmangaihzuali and not to the assessee was also not filed before the Ld. CIT(A). The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A).

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 3rd June, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 03.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order