KAVITA,MUZAFFARNAGAR vs. ITO, WARD-1(3), MUZAFFARNAGAR, MUZAFFARNAGAR

ITA 4477/DEL/2026Status: DisposedITAT Delhi29 September 2026AY 2009-103 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the assessee had provided a cash summary, it did not account for monthly drawings for household expenses, which would reduce the available cash balance. Therefore, the Tribunal made an ad-hoc and reasonable estimate of Rs. 2 lakhs per annum for household expenses for the year under consideration, deeming it to meet the ends of justice. Consequently, out of the sustained addition of Rs. 5,47,165, a sum of Rs. 2 lakhs was upheld, and the remaining Rs. 3,47,165 was deleted. The Tribunal found that the grounds raised by the assessee were partly allowed. The operative direction was to delete Rs. 3,47,165 from the addition.

What were the facts?

The assessee, Kavita, is challenging an order of the learned Joint Commissioner of Income Tax (Appeals) dated February 27, 2026, which upheld an addition made by the Assessing Officer (AO) for Assessment Year 2009-10. The AO had made an addition of Rs. 5,47,165 on account of cash deposits in the assessee's bank account. The assessee had declared a total income of Rs. 1,44,000 from her boutique and Rs. 6,120 as interest. During the year, she deposited Rs. 25,38,900 in cash. She explained these deposits as arising from earlier cash withdrawals, current year withdrawals, and Rs. 3 lakhs from the sale of eucalyptus trees. The AO initially allowed credit for Rs. 16,91,735 and added the balance. This was confirmed by the CIT(A). The matter was remanded by the ITAT, and in the second round, the AO allowed Rs. 3 lakhs for tree sales but confirmed the addition of Rs. 5,47,165, which was again upheld by the CIT(A).

What were the issues?

1. Whether the National Faceless Assessment Centre (NFAC) was justified in confirming the addition of Rs. 5,47,165 on account of cash deposits in the bank account in the facts and circumstances of the case? (Question of law and fact, turning on Section 68 of the Income-tax Act, 1961). Assessee's contentions: The assessee argued that she had provided a complete cash summary for FYs 2007-08 and 2008-09, showing cash withdrawals and a closing balance of Rs. 6,40,000 as of March 31, 2008. This balance, along with withdrawals during FY 2008-09, was intended to explain the cash deposits. The assessee also relied on the explanation of Rs. 3 lakhs from the sale of eucalyptus trees. Revenue's contentions: The revenue, through the Senior Departmental Representative (Sr. DR), did not present specific arguments but supported the order of the lower authorities which confirmed the addition.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 139(1),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI M. BALAGANESH

The appeal in ITA No.4477/Del/2026 for AY 2009-10, arises out of the 1. order of the ld. Jt. Commissioner of Income Tax (Appeals)-3, Mumbai [hereinafter referred to as ‘ld. JCIT(A)’, in short] dated 27.02.2026 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.08.2018 by the Assessing Officer, ITO, Ward-1(3), Muzaffarnagar (hereinafter referred to as ‘ld. AO’).

The only effect

The order continues below.

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