Loading judgment…
Facts
The assessee, an individual, did not file an income tax return for AY 2015-16. Based on information of rental income and significant cash deposits, a notice under Section 148 was issued. During reassessment, the AO added Rs. 8,00,000/- under Section 68 for alleged unexplained cash deposits.
Held
The Tribunal held that the AO had accepted the source of cash deposits made on later dates from the same donor, but disregarded deposits made on earlier dates from the same donor solely due to a mismatch in dates mentioned in a confirmation letter. The Tribunal found the explanation regarding the dates to be a clerical mistake and allowed the appeal.
Key Issues
Whether the addition under Section 68 for cash deposits is justified when the source (cash gifts) was accepted for later dates from the same donor, despite a clerical date mismatch in documentation?
Sections Cited
250, 148, 147, 144B, 68, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ (SMC
Before: SHRI GEORGE GEORGE K
आदेश/ O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 13.02.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2015-16.
The solitary issue that was argued is with regard to the addition made u/s.68 of the Act amounting to Rs.8,00,000/-.
Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2015-16, assessee did not file any return of income. Based on the information that assessee was in receipt of rental income of Rs.2,58,000/- and had made cash deposits in the bank account to the tune of Rs.35,08,000/-, a notice u/s.148 of the Act was issued on 31.05.2019. The assessee filed her return of income on 05.10.2020 declaring income of Rs.1,97,860/-. During the course of reassessment proceedings, assessee was directed to explain the source of cash deposit to the tune of Rs.35,08,000/-. In response, assessee filed details of cash deposits along with evidences in the form of confirmation letters, income tax returns filed, financials and affidavits from the respective parties from whom assessee had received the amounts. After considering the explanation and the documentary evidences furnished during the course of reassessment, the AO completed the assessment u/s.147 r.w.s.144B of the Act on 22.09.2021. In the said reassessment order, AO made addition of Rs.8,00,000/- u/s.68 3 -: of the Act being part of cash deposits made by the assessee during the relevant assessment year. The reason for the addition was explanation provided by the assessee regarding the source of such cash deposits to the extent of Rs.8,00,000/- out of the total cash deposit of Rs.35,08,000/- was not satisfactory.
Aggrieved by the assessment order, assessee filed appeal before the First Appellate Authority (FAA). The FAA dismissed the appeal of the assessee and confirmed the addition made by the AO.
Aggrieved by the order of the FAA, the assessee has filed the present appeal before the Tribunal. The assessee has filed a paper-book enclosing therein the bank statement of the assessee for the relevant assessment year, reply along with annexures filed before the AO, etc. The Ld.AR submitted that the cash deposits of Rs.8,00,000/- comprising of a sum of Rs.4,50,000/- and Rs.3,50,000/- were actually deposited on 03.02.2015 & 04.02.2015 and not on 13.01.2015 & 14.01.2015 as mentioned by the AO in the assessment order. The Ld.AR in support of his submissions had taken me through the bank account statement of the assessee which is placed from pages 2 4 -: to 7, to prove the fact that such sums were deposited on 03.02.2015 and 04.02.2015 and no cash was deposited on 13.01.2025 and 14.01.2015. Further, the Ld.AR stated that assessee had submitted a revised confirmation letter and affidavit to the extent of clarifying the credit dates of receipt of cash gifts from Smt. Kalaiselvi.M to the tune of Rs.15,00,000/- and the same is placed on record from pages 8 to 14 of the paper-book. The Ld.AR contented that the AO has not disregarded the identity, genuineness and creditworthiness of Smt.Kalaiselvi and having accepted the explanation regarding the source of cash deposits made on 12.02.2015 & 13.02.2015 ought to have accepted the cash deposits made on 03.02.0215 & 04.02.2015, which is nothing but cash gifts from Smt.Kalaiselvi.
The Ld.DR supported the orders of the AO and the FAA.
I have heard rival submissions and perused the material on record. The addition of Rs,8,00,000/- made u/s.68 of the Act by the AO comprises of two parts which are as under:
5 -: i) Sum of Rs.4,50,000/- being cash deposited on 03.02: 2015 (Wrongly mentioned as 13.01.2015 in table at Page 2 of the assessment order by the AO) ii) Sum of Rs.3,50,000/- being cash deposited on 04.02.2015 (Wrongly mentioned as 14.01.2015 in table at Page 2 of the assessment order by the AO)
Before adverting to the source for cash deposits to the tune of Rs,8,00,000/- which is the issue involved in this appeal, it is crucial to note that the AO added sums only to the tune of Rs.8,00,000/- out of the total cash deposits of Rs.35,08,000/-. The Assessing Officer has not disputed the explanation furnished by the assessee in respect of other cash deposits for which the source were in the form of cash gifts and jewel loans received from the assessee's mother-in-law (Kalaiselvi), father-in-law (A.Mahalingam) and Mr.A.M.Hariraja, details of which were extensively provided during the course of assessment proceedings.
As regards the source of cash deposits of Rs.8,00,000/-, the AO has only discredited the source for such cash deposits being cash gifts received from Kalaiselvi only on account of 6 -: mismatch in the dates mentioned in the confirmation letter vis- à-vis the dates on which such cash deposits were made by the assessee. It is the case of the AO that the assessee on one hand states to have received cash gifts from Kalaiselvi to the tune of Rs.15,00,000/- on 01.02.2015 and on the other hand states that the source for cash deposits made on 13.01.2015 and 14.01.2015 were out of the cash gifts received on 01.02.2015, which cannot be possible as the date of cash deposit cannot be before the date of receipt of the cash gifts out of which such deposits have been made by the assessee and thus added the sums to the tune of Rs.8,00,000/- u/s.68 of the Act. The cash deposits of Rs.8,00,000/- comprising of sums to the tune of Rs.4,50,000/- and Rs.3,50,000/- were actually deposited on 03.02.2015 and 04.02.2015 and not on 13.01.2015 and 14.01.2015 as mentioned by the AO in the assessment order. The bank statement of the assessee submitted as part of the paper book from Pages 2 to 7 which would clearly support the fact that the said sums were deposited only on 03.02.2015 and 04.02.2015 and that there are no cash deposits on 13.01.2015 and 14.01.2015 as stated by the AO in the assessment order. Further assessee had submitted a revised confirmation letter and affidavit to the extent of clarifying the correct dates of 7 -: receipt of cash gifts from Kalaiselvi to the tune of Rs.15,00,000/- and the same is enclosed as part of the paper book from Pages 8 to 14. In the revised confirmation letter, it was stated that there had been a clerical mistake in the mentioning of dates of receipt of cash gifts from Kalaiselvi and that the assessee had received the said cash gift to the tune of Rs.15,00,000/- during the months of January and February, 2015, details of which are as under: Date of cash Amount of cash Source for cash deposit Paper Book deposit deposit (in Rs.) – Gift from Kalaiselvi Reference 03.02.2015 4,50,000 Received on 13.01.2015 Page 5 – Dates of 04.02.2015 3,50,000 Received on 14.01.2015 cash deposits AND 12.02.2015 4,50,000 Received on 12.02.2015 Page 10 – 13.02.2015 2,50,000 (*) Received on 13.02.2015 Confirmation letter from Kalaiselvi Total 15,00,000 (*) Total cash deposited - Rs.4,50,000/- comprising of cash gift of Rs.2,50,000/- from Kalaiselvi and Rs. 2,00,000/- from A. Mahalingam.
The Assessing Officer had accepted the source for cash deposits made by the assessee on 12.02.2015 and 13.02.2015 but has only disregarded the source to the extent of cash deposits made on 03.02.2015 and 04.02.2015. When the Assessing Officer has not disregarded the identity, genuineness and creditworthiness of Kalaiselvi and having accepted the 8 -: explanation regarding the source of cash deposits made on 12.02.2015 and 13.02.2015, could not have rejected the explanation furnished regarding the source of cash deposits on 03.02.2015 and 04.02.2015 which was nothing but the cash gifts received from Kalaiselvi. Therefore, addition of Rs.8,00,000/- u/s.69 of the Act made by the AO and confirmed by the FAA is deleted. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 3rd July, 2025 at Chennai.