ACIT, KOLKATA vs. SUBHAS KUMAR KEDIA, KOLKATA

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ITA 1648/KOL/2024Status: DisposedITAT Kolkata24 April 2025AY 2017-185 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(A), dismissing the Revenue's appeal. The Tribunal found that the assessee had indeed explained the source of the cash deposits. It noted that ₹80,00,000 was cash held on behalf of M/s Dadi Griha Nirmal Private Limited, which was duly reflected in the company's balance sheet and accepted by the Settlement Commission in its order under Section 245D(4). The Tribunal agreed with the CIT(A) that denying the assessee's claim would lead to double taxation, as the source of this cash had already been settled. Furthermore, the Tribunal observed that the AO had not commented on the explanation provided by the assessee for the balance deposit of ₹7,36,000, which was supported by the opening cash balance and cash withdrawn from the bank, and the assessee had demonstrated sufficient cash available in hand. The Tribunal concluded that since the source of the entire cash deposits was explained, no addition was warranted under Section 68. The addition of ₹85,71,000 was deleted.

What were the facts?

The Revenue has appealed the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2017-18. The appeal challenges the deletion of an addition of ₹85,71,000 made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, on account of cash deposited in the assessee's bank accounts. The AO had noted that the assessee disclosed ₹24,50,00,000 under the Income Declaration Scheme (IDS)-2016. The assessee explained that ₹80,00,000 of the cash deposit was on behalf of M/s Dadi Griha Nirmal Private Limited, which was disclosed before the Settlement Commission and reflected in the company's balance sheet. The AO, however, concluded that the assessee had no source for such cash deposits based on his income from salary, interest, and director's remuneration.

What were the issues?

1. Whether the deletion of the addition of ₹85,71,000 made by the AO under Section 68 of the Income Tax Act, 1961, on account of cash deposits in the bank accounts by the assessee, is justified? (Question of law and fact) Assessee's Contention: The assessee argued that the cash deposited in the bank accounts was adequately explained. Specifically, ₹80,00,000 was cash held on behalf of M/s Dadi Griha Nirmal Private Limited, which was recorded in the company's balance sheet and accepted by the Settlement Commission. The assessee also relied on the ITAT Ahmedabad decision in JCIT v. Sanjay H Thakkar (ITA No.490/Ahd/2018) to argue against double taxation. For the remaining amount of ₹7,36,000, the assessee claimed it was from available cash in hand as per its regular books of accounts, supported by opening cash balance and cash withdrawn from the bank, and that the AO failed to find discrepancies in the submitted evidence. Revenue's Contention: The Revenue's appeal is based on the AO's finding that the assessee had no source for the cash deposits, as his income from salary, interest, and director's remuneration did not support such cash holdings. The AO treated the entire amount as unexplained income.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(1),Section 245D(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Ms. Shreya Loyalka, AR
For Respondent: Shri Arup Chatterjee, DR
Hearing: 11.03.2025Pronounced: 24.04.2025

This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 04.08.2023 for the AY 2017-18.

2.

The only issue raised by the Revenue is against the deletion of addition of ₹85,71,100/- as made by the ld. AO u/s 68 of the Act on account of cash deposited in the bank accounts by the assessee.

3.

The facts in brief are that the assessee filed the return of income on 29.10.2017, declaring total income at ₹1,21,90,090/-, which was duly processed u/s 143(1) of the Act. The case of the assessee was selected for limited scrutiny to examine the cash deposit into the bank account during the year. Accordingly, the statutory notices along with questionnaire were issued and served upon the assessee. The assessee

4.

The ld. CIT (A) in the appellate proceedings, allowed the appeal of the assessee after taking into consideration, contention and submission raised by the counsel of the assessee by holding that assessee has duly

“5.3.4 I agree with the contention of the appellant that since M/s Dadi Griha Nirman Pvt Ltd had given cash of Rs 80 lakh to its Director Subhas Kedia, the same has been recorded as such in its balance sheet, which has been filed before the Settlement Commission and accepted as well. The order u/s 245D(4) of the Act was passed by Settlement Commission after considering the manner in which the income was derived and also the manner in which the income earned has been retained by the appellant. The said income was earned in cash and was lying in the custody of its director, Subhas Kumar Kedia. The Settlement Commission after duly accepting the explanations given by Dadi Griha Nirman Pvt Ltd, has settled the application and passed order under sec 245D(4). Further, this order has also attained finality. 5.3.5 Further, the appellant has relied upon the decision of Ahmedabad ITAT in the case of JCIT v. Sanjay H Thakkar dated 20.4.2022, wherein on similar facts, Hon'ble ITAT has granted the benefit of the cash deposited by assessee in his bank account, which was nothing but cash balance of the society and was utilized by the assessee. The relevant extract of the same is given hereunder: However, the order of the settlement commission has reached to the finality wherein the opening cash balance of 50 lakhs was shown by the assessee. Thus, if we deny the claim of the assessee for having received the money from the society, it would lead to the double addition of the same item of the cash receipt which is unwanted under the provisions of law. Firstly, the amount of cash receipt from the society will suffer from the tax in the year under consideration and secondly, the assessee failed to claim the benefit of the higher amount of available cash in hand as on 1st April 2006 before the settlement commission which eventually has already suffered the tax again. Thus, to avoid the double taxation, we are inclined to admit the contention of the assessee that he has received cash from the society which was utilized to deposit the bank accounts. In the case of the appellant also, the fact that cash declared by M/s Dadi Griha Nirman Pvt Ltd, which was lying with the appellant, has attained finality. Thus, I agree with the appellant that there is no reason of not treating the same being deposited by appellant in its bank as a source of deposit as that will result in double taxation of the same money. 5.3.6 Further, the AO has not commented on the explanation of the appellant with regard to the balance deposit of Rs. 7,36,000. The appellant had cash available with him as per its regular books of accounts and out of the same, the cash of Rs. 7,36,000 was deposited. The same was explained to the AO during the assessment proceedings (see table below). The onus was on the AO to find lacuna or discrepancies in the evidences submitted before him, by the appellant. Nothing to that effect has been brought on record by the AO in this regard.

5.3.7 Considering overall factual and legal aspects of the case; considering order u/s 245D(4) of the Act of Hon'ble Settlement Commission in the case of M/s Dadi Griha Nirman Pvt. Ltdand respectfully following decision of Hon'ble ITAT, Ahmedabad in the case of JCIT v. Sanjay H Thakkar dated 20.4.2022, it is held that since the source of the entire cash deposits made by the appellant in its bank account stand explained, no addition is warranted u/s 68 of the Act. Hence, the addition of Rs. 85,71,000/-is deleted and grounds no. 2 to 4 are allowed.”

5.

After hearing the rival contentions and perusing the materials available on record, we find that the assessee was having cash of ₹80 lacs as a director of M/s Dadi Griha Nirmal Private Limited, which was duly shown in the balance sheet of the said company in the name of the assessee. We note that this has also been filed before the settlement commission and was also accepted by the said authority. The settlement commission has passed an order u/s 245D(4) of the Act, after considering the manner in which the income was derived by the assessee. We note that the assessee has duly explained the sources of cash deposited before the ld. AO as well as before the ld. CIT (A) and the ld. CIT (A) after taking into consideration of these facts and circumstances and including the order of settlement commission passed u/s 245D(4) of the Act has

6.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 24.04.2025.

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