GOURANGA CHANDRA DAS,KOLKATA vs. I.T.O., WARD - 44(2), KOLKATA

ITA 668/KOL/2026Status: DisposedITAT Kolkata30 September 2026AY 2017-20187 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal of the assessee. Regarding the addition of ₹ 13,84,000 under Section 69A, the Tribunal noted that the assessee had provided documents including a sale agreement dated 13.09.2015, which was cancelled on 06.12.2016 by mutual consent with 'M/s. Maa Tara Constructions'. The Tribunal found that the amount was received by the assessee as per the money receipt and cancellation agreement, and it was not disputed that the assessee obtained a loan of ₹ 15 lakhs from the bank, which was transferred to 'M/s Maa Tara Construction' and later returned. The Tribunal concluded that the amount deposited in the bank was explained, and therefore, the addition made by the AO under Section 69A was not warranted. Consequently, the Tribunal directed the deletion of the addition. The Tribunal did not specifically address the grounds related to Section 115BBE, penalty proceedings under Section 271AAC(1), or the procedural aspect of the CIT(A) not conducting a remand inquiry, as the primary issue of the addition under Section 69A was decided in favour of the assessee, rendering these subsequent issues moot in this context. The ratio decidendi is that where the source of cash deposits can be demonstrably traced to a refund of a prior legitimate transaction, supported by documentary evidence, and the transaction itself is not disputed, the addition under Section 69A is not sustainable.

What were the facts?

The assessee, Gouranga Chandra Das, filed an appeal against the order of the NFAC, Delhi, dated 20.01.2026, which upheld an addition of ₹ 13,84,000 made by the Assessing Officer (AO) under Section 69A of the Income Tax Act, 1961. The addition pertained to cash deposits made during the demonetization period. The AO had passed an assessment order under Section 143(3) on 24.12.2019. The assessee had initially declared a total income of ₹ 2,99,300 for Assessment Year 2017-18. The AO observed significant cash deposits totaling ₹ 18,06,908 in two UCO Bank accounts, with ₹ 13,84,000 deposited during the demonetization period. The assessee claimed the deposited amount was a refund from 'M/s. Maa Tara Constructions' for a cancelled flat purchase, with the original payment being a bank loan. Despite documentary evidence, the lower authorities sustained the addition.

What were the issues?

1. Whether the addition of ₹ 13,84,000 under Section 69A of the Income Tax Act, 1961, is sustainable when the assessee is not required to maintain books of account, and Section 69A can only be invoked where books of account are maintained? - Assessee's contention: Section 69A cannot be invoked if the assessee is not required to maintain books of account. - Revenue's contention: Not recorded. 2. Whether the addition of ₹ 13,84,000 under Section 69A read with Section 115BBE of the Act is based on conjecture and suspicion, without rebutting the documentary evidence and explanation provided by the assessee? - Assessee's contention: The addition is based on mere conjecture, suspicion, and surmises, and the documentary evidence and explanation were not rebutted. The cash deposit was a refund of a prior advance paid through formal banking channels for a flat purchase, sourced from a House Building Loan from UCO Bank, and the cancellation of the sale agreement was not disputed. The original payment was recorded in bank statements, and the subsequent refund does not satisfy the pre-conditions of Section 69A. - Revenue's contention: Not recorded. 3. Whether the learned CIT(A) erred in failing to exercise powers to independently verify the authenticity of the cancellation of the agreement and should have directed a remand inquiry instead of dismissing the appeal on suspicion? - Assessee's contention: The CIT(A) should have issued summons under Section 131 or directed a remand inquiry, given the details of the developer and bank transactions provided. - Revenue's contention: Not recorded. 4. Whether the enhanced tax rate of 60% under Section 115BBE was justified, considering the amendment's effective date? - Assessee's contention: The Madras High Court in S.M.I.L.E Microfinance Ltd. observed that charging provisions cannot be applied retrospectively unless explicitly stated. The 2016 amendment's effective date of April 1, 2017, indicates application to AY 2018-19, not AY 2017-18. - Revenue's contention: Not recorded. 5. Whether penalty proceedings under Section 271AAC(1) are sustainable if the underlying addition is based on misappreciation of facts and evidence? - Assessee's contention: Since the addition is unsustainable, the penalty for alleged concealment is also unsustainable. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 143(3),Section 250,Section 271AAC(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI LAXMI PRASAD SAHU

For Appellant: Adv. प्रत्यर्थी के ओर से/

PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER:

This is an appeal filed by the assessee against the order passed by the NFAC, Delhi [hereinafter referred to as Ld. ‘CIT(A)’] dated 20.01.2026 DIN & Order No: ITBA/NFAC/S/250/2025- 26/1084945779(1) u/s 250 of the Act arising out of the assessment order passed by the Assessing Officer [hereinafter referred to as Ld. 'AO'] u/s 143(3) of the Act dated

The order continues below.

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