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Facts
The assessee, an 81-year-old individual, filed an ITR for AY 2017-18, which was selected for scrutiny. The AO made an addition of Rs.49,35,000/- on account of cash deposits, treating it as undisclosed income under Section 69A. The Ld. CIT(A) partly allowed the appeal, deleting Rs.7,11,344/- but confirming the remaining addition, which led the assessee to appeal to the ITAT.
Held
The Tribunal found that out of the confirmed addition of Rs.49,35,000/-, Rs.30,00,000/- had already been offered to tax as agricultural income over different assessment years, and the assessee's cash book clearly evidenced sufficient cash balance for the deposits. Noting that the revenue did not raise specific objections to these factual submissions, the Tribunal deleted the entire addition of Rs.49,35,000/- sustained by the CIT(A).
Key Issues
Whether cash deposits in bank accounts, claimed as agricultural income and from accumulated cash balance, should be treated as undisclosed income under Section 69A of the Income Tax Act.
Sections Cited
250, 143(3), 69A, 234A, 234B, 234C, 234D, 274, 271(1)AAC, 143(2), 142(1), 115BBE
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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI ANIKESH BANERJEE & MISS. PADMAVATHY S
Instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi *in short, ‘Ld.CIT(A)+ passed under section 250 of the Income Tax Act, 1961 (in short, ‘the Act’) date of order 01/12/2013 for A.Y. 2017-18. The impugned order was emanated from the order of the Learned Assistant Commissioner of Income-tax, Circle 27(1),Mumbai [in short, “Ld. AO”+passed under section 143(3) of the Act, date of order 17/12/2019.
2 ITA 4495/Mum/2023 Govind Kabra Bhadricha 2. The assessee has raised the following grounds of appeal:-
1. The Ld CIT(A) erred in confirming the adding the genuine cash deposits Rs.49,35,000/- as the income of the assessee in view of section 69A of the IT Act 1961 and thereby treated the same as undisclosed income of the assessee.
2. The Ld AO erred in charging the interest undersection 234A 234B 234C and 234D of the Income Tax Act 1961.
3. The Ld AO erred in initiating Penalty proceeding under section 274 r w s 271 (1) AAC of the Income Tax Act 1961
4. The appellant craves leave to add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing.”
3. The brief facts of the case are that the assessee is an individual and a respected senior citizen of 81 years of age and was regular in filing its return of income.The assessee has filed the return of income for A.Y. 2017-18 on 31/10/2017 declaring total income of Rs.30,57,560/-. The assessee’s source of income is share from the partnership firm and income from other sources. The case was selected for scrutiny under CASS Notice under section 143(2) and 142(1) were issued.In response to that assessee made submission on 05/12/2019 and 11/12/2019.The assessee in the return of income had declared receipt of Rs.35,33,656/- which includes receipt of Rs.5,00,000/- and Rs.30,15,045/-under the head business income and income from other sources respectively.The Ld. A.O. confirmed the addition of cash deposits amount to Rs.49,35,000/- in bank as the income of the assessee in view of section 69A of the Act and thereby treated the same as undisclosed income of the assessee even though assessee has considered such income under the head Income from other sources as other income amounting to Rs.30,15,045/-. The Ld. AO confirmed addition of the cash 3 ITA 4495/Mum/2023 Govind Kabra Bhadricha depositsamount to Rs.7,11,344/-as the income of the assessee in view of section 69A of the Act and thereby treated the same as undisclosed income of the assessee. Aggrieved by the said assessment order the assessee preferred an appeal before Ld. CIT (A). In the appellate proceeding the Ld. CIT(A) had considered the assessee’s submission and deleted the addition amount to Rs. 7,11,344/- but rest of the addition was confirmed. The appeal of the assessee is partly allowed. Being aggrieved the assessee filed an appeal before us by challenging the appellate order.
The Ld. AR filed a Paper Book comprising pages 1 to 39, which has been taken on record. The Ld. AR submitted that the addition of Rs.49,35,000/- was confirmed by the Ld. CIT(A). Out of the said amount, Rs.30,00,000/- had already been disclosed by the assessee at the time of filing the return of income, which represented agricultural income earned by the assessee over different assessment years. A copy of the computation of income evidencing this disclosure is placed at pages 2 to 4 of APB.The Ld. AR further submitted that the assessee had disclosed additional income of Rs.30,15,045/- in the return of income and discharged the corresponding tax liability thereon. The remaining sum of Rs.19,35,000/- was stated to have been deposited out of the assessee’s accumulated cash balance derived from his regular income. In support of this claim, the assessee has submitted a date-wise cash book along with copies of current and savings bank account statements, which are enclosed at pages 5 to 16 of the APB. Accordingly, it was contended that the impugned addition lacks justification.
4 ITA 4495/Mum/2023 Govind Kabra Bhadricha 5. The Ld. DR also placed reliance on the orders of the revenue authorities. In response, the Ld. DR drew our attention to the relevant portion of the assessment order, which reads as under:— “As regards, cash deposited in the bank accounts, the assessee in his reply to the show cause notice has submitted the details of withdrawals aggregating to Rs. 17,93,826 The assessee has not provided the details of his personal & household expenses and also of the business shown in the return of income incurred in cash. As discussed herein above, the assessee is a land owner who has entered into transaction of redevelopment of his building. The usage of cash withdrawals submitted by the assessee for the purpose of redevelopment undertaken by him cannot be ruled out. The assessee has not furnished satisfactory explanation with respect to cash deposited of Rs. 49,35,000/- during the demonetization period and also of the cash deposit aggregating to Rs. 10,59,000/- made in the bank account prior to demonetization period. In absence of any satisfactory submission, the cash deposits aggregating to Rs. 59,94,000/- is taxed as income u/s 69A r.w.s. 11588E of the IT Act, 1961 under the head income from other sources as unexplained money. Penalty proceedings under section 271AAC of the Income Tax Act for under reporting the income is initiated separately for income of Rs. 59.94,000/-.”
We have heard the rival submissions and perused the material available on record. During the proceedings before the revenue authorities, the assessee had, on multiple occasions, submitted that a sum of Rs.30,15,045/- had already been disclosed as agricultural income and the corresponding tax liability had been duly discharged. Hence, the cash deposits in the bank account stood explained and were not liable to further tax.The Ld. CIT(A), upon examining the bank statements, identified the following cash deposits (as referred to in paragraph 5.3 of the impugned appellate order):
5 ITA 4495/Mum/2023 Govind Kabra Bhadricha 17/04/2016 — Rs. 7,95,000/- 16/09/2016 — Rs. 2,64,000/- 11/11/2016 — Rs. 7,00,000/- 20/11/2016 — Rs. 42,00,000/- 09/12/2016 — Rs. 35,000/- The Ld. CIT(A) accepted the assessee’s explanation in respect of the deposits of Rs.7,95,000/- and Rs.2,64,000/-, and accordingly deleted the addition to that extent. However, with respect to the remaining cash deposits aggregating to Rs.49,35,000/- (comprising Rs.42,00,000/- and Rs.7,35,000/-), the Ld. CIT(A) sustained the addition. It is pertinent to note that in the appellate order, no cognizance was taken of the assessee’s cash book and the disclosure of Rs.30,00,000/- as agricultural income in the return of income. Upon examination, we find that out of the total cash deposit of Rs.49,35,000/-, the assessee had already offered Rs.30,00,000/- to tax in the return of income. Further, the cash book clearly evidences that the assessee had adequate cash balance to support the bank deposits. While the Ld. DRadvanced arguments, no specific objection was raised against the factual submissions made by the assessee. In view of the foregoing, we find merit in the contentions of the assessee. Accordingly, the addition of Rs.49,35,000/- sustained by the Ld. CIT(A) is hereby deleted.
6 ITA 4495/Mum/2023 Govind Kabra Bhadricha It is further noted that the revenue has not preferred any appeal against the portion of the addition deleted by the Ld. CIT(A). In view thereof, the grounds raised by the assessee in the present appeal stand allowed.
7. In the result, the appeal of the assessee bearing