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Facts
The assessee filed her return of income for AY 2010-11. The AO noticed cash deposits of Rs.8,85,000/- and issued a notice u/s 148. The AO made an addition of Rs.8,85,000/- for unexplained cash deposits.
Held
The Tribunal held that the FAA had not considered the additional evidence filed by the assessee. On perusal of the evidence, it was clear that the assessee had adequate sources for the cash deposits, hence the addition sustained by the FAA was deleted.
Key Issues
Whether the addition for unexplained cash deposits is sustainable when the assessee has provided evidence of the source, which was not considered by the lower authorities?
Sections Cited
68, 148, 250, 271, 46A
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Income Tax Appellate Tribunal, ‘A’ (SMC
Before: SHRI GEORGE GEORGE K
आयकर अपील सं./ITA No.: 2240/CHNY/2025 िनधा�रण वष�/Assessment Year: 2010-11 Smt. Anuja Rajesh Bajaj, The Income Tax Officer, 4A, Stringers St., Vs. Non-Corporate Ward 1(2), Periamet, Chennai. Chennai – 600 007. PAN: AJGPB 0322H (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri Balasubramanian, Advocate ��यथ� क� ओर से/Respondent by : Shri Vijay Kumar, JCIT सुनवाई क� तारीख/Date of Hearing : 04.11.2025 घोषणा क� तारीख/Date of Pronouncement : 10.11.2025 आदेश/ O R D E R This appeal filed by the assessee is directed against the order of Addl/JCIT(A)-2, Chandigarh dated 17.07.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2010-11.
The grounds raised by the assessee reads as follows:- 1. Learned CIT (A) erred in confirming cash deposit in bank addition made u/s 68 to the tune of Rs.6,35,000 out of total addition of Rs.8,85,000.
2 -: 2 Inspite of evidence filed before CIT (A) on 10-8-2018 and earlier before AO, ie., cash sales from business and out of TO of Rs.21,35,000, authorities below erred in holding that appellant did not explain the source for cash deposit.
3 Authorities below failed to appreciate that for cash deposit in bank section 68 is not applicable and hence the addition made under sec, 68 is incorrect
Brief facts of the case are as follows:- The assessee, an individual had filed her return of income for assessment year 2010-11 on 31.03.2011 declaring total income of Rs.12,31,269/-. Subsequently, AO noticed that there were cash deposits to the extent of Rs.8,85,000/- and since the source of the same has not been examined, a notice u/s.148 of the Act was issued to the assessee. In response to the notice issued u/s.148 of the Act, assessee filed her return of income on 21.11.2016 disclosing income of Rs.12,31,269/-. After examining the documents furnished during the course of reassessment proceedings, AO made an addition of Rs.8,85,000/- being cash deposits u/s.68 of the Act. The observation of the AO in making addition of Rs.8,85,000/- reads as follows:- “Further, on 02.04.2009 an amount of Rs.1,00,000, on 26.10.2009 an amount of Rs.5,00,000, on 13.02.2010 an amount of Rs.1,00,000 and on 17/02/2010 an amount of Rs.2,00,000 were deposited in the HDFC Bank, Kilpauk Branch, PH Road, Chennai. It is also seen from the bank statement there is no cash withdrawals before that date. Hence the assessee's claim of having deposited from salary income and others cannot be accepted. The assessee did not furnish any evidence in respect of the cash deposit made in the bank account. The same is
Aggrieved by the order of the AO, assessee filed appeal before the First Appellate Authority (FAA). The FAA partly-allowed the appeal of the assessee. The FAA reduced the addition to Rs.6,35,000/- instead of Rs.8,85,000/- made by the AO. The relevant finding of the FAA reads as follows:- “5.2 During appellate proceedings, the appellant has submitted that the cash deposits of 8,85,000/- were out of her declared business income and receipts of cash gifts from family (parents and relatives) and that she had declared salary and agricultural income in her ITR for the year under consideration. However, she has failed to furnish any documentary evidence in support of her claim with regard to source of such cash receipts from her business. Further, w.r.t the cash gifts claimed by her, she has not specified the persons, occasions or the quantification of cash from such gifts etc. She has just made a claim without any substantiating evidence.
5.3 From the above, it is clear that the appellant has failed to explain the cash deposits made by her in bank account. However, keeping in view the quantum of income declared in the current year and earlier years by the appellant, the availability of cash with her to the extent of Rs.2,50,000/- is considered as reasonable. In this way, the sources of cash deposit of Rs.2,50,000/- is considered as explained and accordingly, addition to the extent of Rs.2.50.000/- is deleted. The balance addition Rs.6,35,000/- is confirmed. Accordingly, the Ground No.1 is partly allowed.”
Aggrieved by the order of the FAA, assessee has filed the present appeal before the Tribunal. The Ld.AR submitted that the assessee due to paucity of time during reassessment proceedings 4 -: had not filed complete evidence explaining the source of cash deposits. It was submitted that assessee had filed additional evidence before the FAA explaining the source of cash deposits. The Ld.AR submitted that the FAA had called for a remand report from the AO. It was stated that assessee had appeared and made submissions during the course of remand proceedings before the AO. It was submitted by the Ld.AR that in the impugned FAA’s order, there is no reference to the additional evidences filed, the remand report if any filed by the AO, etc. The Ld.AR after taking me through the additional evidences filed before the FAA submitted that assessee was running a proprietary concern which was essentially dealing with sale of garments and scrap. It was submitted that for the relevant assessment year, assessee had made sale of Rs.21,35,000/-. The assessee had filed the trading account along with cash book to prove the source of cash deposits made. It was contended that the addition sustained by the FAA to the extent of Rs.6,35,000/- is not warranted on the facts of the instant case, since cash deposits are out of income declared in the return of income filed on 31.03.2011.
The Ld.DR strongly supported the order of the AO and the FAA.
5 -: 7. I have heard rival submissions and perused the material available on record. The assessee before the FAA had furnished additional evidence. The FAA had called for a remand report from the AO. The assessee had made submissions before the AO during the course of remand proceedings. The petition for admission of additional evidence under Rule 46A of IT Rules, 1962, the details of additional evidence filed before FAA, the submission made before the AO during course of remand proceedings are placed on record. It is seen from the impugned order, the FAA has not considered the additional evidence filed before him. On perusal of the additional evidence such as trading account and the cash book, which depicts cash sales, it is clear that assessee had adequate source for making the cash deposits. Accordingly, I delete the addition of Rs.6,35,000/- sustained by the FAA. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.