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Facts
The assessee appealed against a reassessment order for AY 2012-13, challenging its legality and the disallowance of indexed cost for capital gains. Additionally, the assessee contested additions made for unexplained cash deposits in the bank account, totaling Rs.18,18,000/-, arguing that substantial withdrawals preceded the deposits.
Held
The tribunal directed the Assessing Officer to allow the benefit of indexation for computing capital gains under Section 48. Regarding cash deposits, a significant portion of the addition was deleted by acknowledging corresponding withdrawals, but an addition of Rs.8,55,000/- was confirmed for deposits where no corresponding source or withdrawal was proven.
Key Issues
1) Whether the assessee is entitled to the benefit of indexation for computing long term capital gains. 2) Whether the addition for unexplained cash deposits in the bank account is justified when substantial withdrawals preceded the deposits.
Sections Cited
147, 148, 250, 48
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG
आदेश/O R D E R आदेश आदेश आदेश
The above appeal has been preferred by the assessee against order passed by the Ld.Commissioner of Income-Tax(Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “ld.CIT(A)] dated 14.05.2025 under section 250 of the Income Tax Act, 1961 ("the Act" for short) for the assessment year 2012-13.
The assessee has raised the following grounds of appeal:
1. The learned NATIONAL FACELESS APPEAL CENTRE [NFAC] /CIT(Appeals) has grievously erred both in law and on facts in upholding legality of Reassessment Order when it was pointed out that for verification , no reopening of assessment could be initiated. The Id NFAC/CIT(A) failed to properly consider appellants submission in this regard. It be so held now and order confirming legality of reassessment order be cancelled.
2. Without prejudice to the above ground, the Id NFAC/ CIT(A) also erred both in law and on facts in not adjudicating ground No: 2 & 3 so as to allow Indexed Cost in respect of property sold while computing long term capital gain .It be so held now and Indexation be directed to be allowed as per provisions of section 48 of IT Act.
3. Without prejudice to above grounds , the Id NFAC/ CIT(A) further grievously erred both in law and on facts in confirming the addition of Rs.18,18,000/- being amounts deposited in bank account ignoring the legal effect of the case of appellant and facts that there were withdrawals from very same bank account available for re-depositing the same. It be so held now and addition of Rs.18,18,000/- be deleted now.
4. The Id NFAC/CIT(A) further erred both in law and on facts in confirming addition of Rs.18,18,000/- on untenable grounds and not properly considering the binding judgments on the issue cited before him. It be so held now and addition of Rs.18,18,000/- be directed to be deleted.]
5. The Id NFAC/CIT(A) also erred in la wand on facts in not properly considering appellants submissions on the remand report of the Id AO and the evidences in the form of cash flow statement in which even withdrawals from very same bank account were shown for which , no specific defect was pointed out and no valid rebuttal made. The addition thus confirmed is unjustified and deserves to be deleted. It be deleted now.
6. The Id CIT(Appeals) erred in law and on facts in not properly considering the appellants grounds and detailed submissions in making erroneous conclusion and presumptions that cash deposited / credits in bank account was unexplained to be treated as deemed income It be so held now and addition made be deleted.
7. The Id NFAC/CIT(A) ought to have allowed the appeal of the appellant in toto and deleted the additions. It be deleted now.”
3. A perusal of the above grounds would reveal that there are only two effective grounds taken by the assessee raising the following two issues, in this appeal.
ISSUE NO.1: 4. The first issue raised by the ld.counsel for the assessee is that, though, the ld.CIT(A) has given substantial relief to the assessee directing to the AO to compute the capital gain, as per the report of the DVO, however, while holding so, he has not given direction to consider the cost of indexation to the assessee, while computing the capital gains.
The ld.DR has also fairly agreed that while the computing the capital gains, the AO should also consider the cost of indexation. Accordingly, the issue is decided in favour of the assessee, and the AO is directed to compute the capital gain as directed by the ld.CIT(A). However, while doing so, he will also give the benefit to the assessee of cost of indexation.
ISSUE NO.2
The second issue raised by the ld.counsel for the assessee is that the assessee had made total deposit of Rs.1,86,000/- in the bank account during the assessment year under consideration. He referring to the page no.86 of the PB, which is a chart showing the withdrawals and deposits in the bank account of the assessee, has demonstrated that there were corresponding withdrawals also against certain cash deposits. He, therefore, has submitted that the AO was not justified in making addition of the entire cash deposits in the bank account of the assessee.
After going through the said chart, I find that there were substantial cash withdrawals also from the bank account of the assessee. The said chart is also reproduced hereunder:
ASHISH BHATT A.Y 2012-13 Statement of cash Flow Date Particulars CHQ.No. Cash Cash Cash Withdrawn Deposited Balance from bank in Bank 01-Apr-11 Opening Cash balance 518600 19-Apr-11 Cash Withdrawl 649533 65000 0 583600 03-May-11 Cash Withdrawl 649534 100000 0 683600 16-May-11 Cash Withdrawl - 16000 0 699600 20-May-11 Cash deposited in Bank - 0 50000 649600 23-May-11 Cash deposited in Bank - 0 15000 634600 23-May-11 Cash deposited in Bank - 0 215000 419600 24-May-11 Cash deposited in Bank - 0 100000 319600 26-May-11 Cash Withdrawl ATM 15000 0 334600 09-Sep-11 Cash deposited in Bank 320000 14600 13-Sep-11 Cash Withdrawl 649540 10000 0 24600 14-Sep-11 Cash deposited in Bank - 0 10000 14600 15-Sep-11 Cash Withdrawl 649543 290000 0 304600 19-Sep-11 Cash deposited in Bank - 0 300000 4600 21-Sep-11 Cash Withdrawl 649544 300000 0 304600 26-Sep-11 Cash Withdrawl 649545 300000 604600 03-Oct-11 Cash deposited in Bank 0 500000 104600 04-Oct-11 Cash Withdrawl 649548 200000 0 304600 04-Oct-11 Cash deposited in Bank - 0 12000 292600 23-Dec-11 Cash Withdrawl 344320 100000 0 392600 02-Jan-12 Cash deposited in Bank - 0 50000 342600 06-Jan-12 Cash deposited in Bank - 0 10000 332600 06-Mar-12 Cash deposited in Bank - 0 50000 282600 06-Mar-12 Cash Withdrawl 344325 20000 0 302600 20-Mar-12 Cash Withdrawl 436351 20000 0 322600 24-Mar-12 Cash deposited in Bank - 0 186000 136600 5 7. A perusal of the above chart would reveal that there were substantial cash withdrawals also before the deposits in the bank account. If we ignore the minor withdrawals, still I find that there was a cash withdrawal of Rs.65,000/- on 19.4.2011 and further of Rs.1,00,000/- on 3.5.2011. There was deposit of Rs.50,000/- on 20.5.2011 and Rs.15,000/- on 23.5.2011. The aforesaid two amounts deposited by the assessee within the short span of time can well be considered out of the higher cash withdrawals made by the assessee. Further, I do not find any reason to give any relief to the assessee in respect of the amounts deposited on 23.5.2011 of Rs.2,15,000/- and Rs.1,00,000/- and further deposit on Rs.9.9.2011 of Rs.3,20,000/-. However, I find that on 15.9.2011 the assessee had withdrawn an amount of Rs.2,90,000/- and had deposited Rs.3,00,000/- on 19.9.2011. In my view, benefit of the said withdrawals to the extent of 50% of the amount withdrawn by the assessee in this respect will be reasonable. Therefore, out of Rs.3,00,000/-, the addition to the extent of Rs.1,60,000/- is confirmed.
Thereafter, there are cash withdrawals of Rs.3,00,000/- each on 21.9.2011 and 26.9.2011 and there is a corresponding deposit of Rs.5,00,000/- on 3.10.2011. Considering the short interval between the withdrawals and deposits no addition on this amount is warranted.
Similarly, there are cash withdrawals of Rs.2,00,000/- on 4.10.2011 and Rs.1,00,000/- on 23,12.2011, and there is a corresponding deposit of Rs.50,000/- on 2.01.2012. In my view, the relief to the assessee in respect of the said deposit of Rs.50,000/- should be given. However, the ld.AR could not prove the source of the amount of deposit of Rs.10,000/- on 6.1.2012 and Rs.50,000/- on 6.3.2012, and I do not find any justification of the source of the 6 above deposits. Accordingly, the additions to the extent of Rs.2,15,000/-, Rs.1,00,000/-, Rs.3,20,000/-, Rs.1,60,000/-, Rs.10,000/- and Rs.50,000/- thus totaling to Rs.8,55,000/- is hereby confirmed.
Addition of the remaining deposits, apparently found to be from withdrawals, is hereby deleted.
With the above observations, the appeal of the assessee is hereby partly allowed.
In the result, the appeal of the assessee stands partly allowed. Order pronounced on 18th December, 2025.