Loading judgment…
Facts
The assessee declared a gross total income and the case was selected for scrutiny. During assessment, the AO accepted the loan taken for property purchase but did not accept the explanation for cash deposits in bank accounts, adding it to the total income under Section 69 of the Act and taxing it under Section 115BBE.
Held
The Tribunal held that the assessee's explanation for cash deposits out of savings and borrowings from friends/relatives, as well as his wife's earnings from tuition, was plausible, especially since the AO had accepted unsecured loans and the source of the property purchase. The Tribunal agreed with the assessee's arguments regarding the wife's contribution.
Key Issues
Whether the cash deposits in bank accounts made by the assessee were sufficiently explained as out of savings and borrowings, or if they constituted undisclosed income.
Sections Cited
250, 69, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI. LAXMI PRASAD SAHU & SHRI. KESHAV DUBEY
Per Laxmi Prasad Sahu, Accountant Member :
This appeal filed by the assessee against the ex-parte Order passed by NFAC vide DIN and Order No.ITBA/NFAC/S/250/2024-25/1069511594(1) dated 08.10.2024 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’).
Briefly stated the facts of the case are that assessee is an individual filed his return of income in ITR-1 on 04.11.2017 declaring gross total income of Rs.7,26,430/- which constituted salary income of Rs.8,93,342/-, loss from house property of Rs.166,912/- and claimed deduction under Chapter VIA resultantly total income was calculated at Rs.5,72,210/-. The case was selected Page 2 of 4 for scrutiny to verify the cash deposited and transaction in property. Accordingly, statutory notices were issued and duly served to the assessee. In response, the assessee has filed reply dated 21.09.2018 which is incorporated by the AO in his Order. The assessee has given detail of the source of purchase of property and stated that out of own savings and taken unsecured loan given earlier received back and taken unsecured loan from friends and relatives and assessee has also taken loan from DHFL totaling to Rs.82,85,807/-. The assessee has also furnished bank account statement of HDFC and Axis Bank. There was cash deposit in account No.50100008637412 in HDFC bank of Rs.2,51,000/- and in account No.052010100170802 in Axis Bank account of Rs.14,32,500/-. During the course of assessment proceedings, the AO accepted loan taken of Rs.82,85,807/- towards purchase of the property but explanation regarding cash deposit in HDFC and Axis Bank noted of Rs.16,83,500/- were not accepted. The assessee has submitted that the cash deposit is out of savings and loan taken and his wife’s savings. His wife is a teacher and she takes some private tuitions and her personal savings were deposited in the bank account. The AO did not accept the cash deposited into bank account and added into the total income of the assessee under section 69 of the Act and applied tax rate as per section1 115BBE of the Act.
Aggrieved from the above Order, assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel for the assessee reiterated the submissions made before the lower authorities and submitted that the cash deposited into bank account is out of loan taken from friends and relatives and out of past savings. His wife is a graduate and is taking tuitions. The AO at one side has accepted the purchase of property out of details given of Rs.82,85,807/-. The
On the other hand, learned DR relied on the Order of the lower authorities and submitted that the assessee was unable to provide with cogent material to substantiate the cash deposited as observed by the CIT(A) . Therefore, the Order of the CIT(A) should be confirmed.
Considering the rival submissions, we noted that the CIT(A) has partly allowed the appeal of the assessee and he has only disputed cash deposited of Rs.2 lakhs on 26.09.2016 and Rs.80,000/- on 16.01.2017 for want of explanation of cash deposited in Axis Bank account and cash deposited in HDFC bank account. On going through the Order of the lower authorities, we noted that the assessee has taken unsecured loan which is accepted by the AO. The CIT(A) has noted that on 26.09.2016 and 16.01.2017. The assessee was unable to explain the source which is not correct as observed by the revenue authorities. There is an explanations submitted by the assessee in this regard “deposit out of savings from withdrawals in earlier period and out of transfer borrowings from friends and relatives. The AO has accepted the unsecured loans and own savings and further in respect of deposit in HDFC Bank of Rs.2,51,000/- we are in agreement with the arguments advanced by the assessee that his wife is taking tuition and she has given money for depositing in bank. We also noted that the assessee has deposited cash in Axis Bank from 20.04.2016 to 16.01.2017 on different dates which is not disputed. Therefore, considering the totality of the facts and circumstances of the case, we allow appeal of the assessee.
Pronounced in the court on the date mentioned on the caption page.