KALAI VANI RAJAN,SALEM vs. ITO, WARD-1(6), SALEM

This appeal filed by the assessee is directed against order dated 27.01.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2012-13.

The ld. AR Shri S. Sridhar, Advocate submits that the assessee is not interested to prosecute legal grounds raised in ground No. 4 & 5 and accordingly made endorsement on Form 36, hence, grounds No. 4 & 5 are dismissed as not pressed.

The assessee raised ground Nos. 6 to 9 challenging the action of the ld. CIT(A) in confirming the addition on account of unexplained money under section 69A of the Income Tax Act, 1961 [“Act” in short].

Brie facts relating to the case are that the assessee is an individual and no return of income filed. The Assessing Officer found cash deposits in the accounts of the assessee and accordingly assessment was reopened. According to the Assessing Officer, the entire cash deposit to an extent of ₹.22,60,000/- remains unexplained and added the same to the total income of the assessee vide assessment order dated 13.09.2021 under section 147 r.w.s. 144B of the Act. The ld. CIT(A) confirmed the same. Having aggrieved by the order of the ld. CIT(A), the assessee is in appeal before the Tribunal.

The ld. AR Shri S. Sridhar, Advocate submits that the ld. CIT(A) sought for remand report from the Assessing Officer and the said remand report is reproduced in page 6 of the impugned order. The ld. AR submits that the assessee deposited cash of ₹.11 lakhs on 29.12.2011 and ₹.11.60 lakhs on 12.01.2012 out of matured deposit of ₹.18,00,000/- withdrawn on 03.09.2011. He contends that the said cash was deposited in assessee Axis Bank account at Salem. Further, he submits that the assessee moved to Salem from Chennai after her marriage and the said cash was deposited in Salem. The Assessing Officer and the ld. CIT(A) doubted keeping the said cash from 03.09.2011 to 29.12.2011 and 12.01.2012, which is not justified. Further, he submits that the assessee explained in respect of total cash in hand, where out of marriage gifts and accumulation of salary for 8 months, which is also not found acceptable to the Assessing Officer and the ld. CIT(A). The ld. AR prayed to allow the grounds of appeal.

The ld. DR Ms. Gouthami Manivasagam, JCIT submits that the contentions of the ld. AR is not acceptable as to why huge amount of ₹.18 lakhs was withdrawn from the bank and deposited the same after 117 days carrying all risk associated with safety and security of the cash. Further, she submits that carrying cash from Chennai to Salem, which is approximately 345 kms and deposits the same, is not acceptable as the said amount could have been transferred through online from one bank to another bank account. The ld. DR relied on the order of the ld. CIT(A).

Heard both the parties and perused the material available on record. Admittedly, as it was brought to our notice that the year under consideration, the assessee was minor and some FDs were made. The said deposits were matured and withdrawn in cash on 03.09.2011 and deposited in two spells in Axis Bank, Salem. There is no dispute with regard to the assessee is from Chennai and moved to Salem after her marriage. As observed by the ld. CIT(A) that there was a gap of 117 days in depositing the said cash in another bank at Salem. However, admittedly, there is no dispute with regard to matured deposits and withdrawal of the said deposit to an extent of ₹.18 lakhs which were again deposited in Axis Bank in two spells, which clearly shows the nexus of withdrawal and deposits from one bank to another bank respectively. On examination of para 5.8 of the impugned order, the ld. CIT(A) only doubted risk and security of the cash being kept in the custody of the assessee and travelling from Chennai to Salem of long distance is not acceptable, in our opinion, is not justified. Further, the ld. CIT(A) did not accept the cash in hand as accumulation of salary and marriage gifts. Both the authorities below did not bring on record anything to show that the cash in hand are not out of marriage gifts and salary and when there being no contrary evidence to the explanation of the assessee, the addition made thereon is not justified. In this case, we find nexus between withdrawal and deposit to an extent of ₹.18 lakhs and having no contrary evidence to prove the cash in hand are not out of marriage gifts and salary, the addition made by the Assessing Officer, which was confirmed by the ld. CIT(A) are not maintainable. Therefore, the addition made by the Assessing Officer to an extent of ₹.22,60,000/- is deleted. Thus, the grounds raised by the assessee are allowed.

In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 20th August, 2025 at Chennai.