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Facts
The assessee did not file an income tax return for AY 2012-13. The Assessing Officer reopened the case based on information of significant cash deposits (Rs. 26,01,780/-) in her bank account and an investment of Rs. 10,00,000/- in bonds/debentures. Despite filing a return in response to a Section 148 notice, the assessee failed to explain the source of these funds, leading to an ex-parte assessment and additions.
Held
The Tribunal partially confirmed the addition for cash deposits to the extent of Rs. 10,00,000/-, accepting Rs. 4,65,500/- as re-deposits of withdrawals and Rs. 9,16,250/- as transportation receipts. The addition of Rs. 10,00,000/- for unexplained investment in bonds/debentures was deleted as it was proven to have originated from her daughter's bank account, where the assessee was a nominee.
Key Issues
The key legal issues were the justification of additions under Section 69A for unexplained cash deposits and under Section 68 for unexplained investment in bonds/debentures, and whether the assessee's explanations for these sources of funds were acceptable.
Sections Cited
144, 147, 148, 69A, 68, 44AE
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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 11.09.2024 for the Assessment Year (A.Y.) 2012-13 in the proceedings under Section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the return of income was not filed by the assessee for the A.Y. 2012-13. The AO had reopened the case (Assessment Year: 2012-13) Renu Vinod Kaushal vs. ITO Page 2 of 6 under section 147 of the Act on the basis of information that there were cash deposits of Rs.26,01,780/- in the bank account of the assessee and the assessee had also made investment of Rs.10,00,000/- in bonds/debentures. Accordingly, a notice under Section 148 of the Act was issued on 31.03.2019, in response to which, the assessee had filed her return on 24.04.2019 declaring income of Rs.2,49,840/-. In the assessment proceeding, however, no compliance was made by the assessee and the source of cash deposits and investment in bonds/debentures was not explained. The AO had, therefore, completed the assessment ex-parte under Section 144 r.w.s. 147 of the Act on 28.11.2019 at a total income of Rs.38,51,620/-.
Aggrieved with the order of the Assessing Officer, the assessee filed an appeal before the First Appellate Authority which was decided vide the impugned order and the appeal of the assessee was dismissed.
Now, the assessee is in second appeal before us. The following grounds have been taken in this appeal: -
1. On the basis of facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in making addition of Rs.26,01,780/- u/s. 69A and Rs.10,00,000/- u/s.68 to the total income of the assessee by making the additions, as against actual return of income of Rs.2,49,840/- It is pleaded that this total addition of Rs.36,01,780/- being bad in law and devoid of any merit be deleted.
2. On the basis of facts and in the circumstances of the case and in law, the Id. CIT(A) has grossly erred in confirming the addition of Rs.26,01,780/- as made by the AO u/s.69A of the Act despite the fact that the assessee was having three trucks for the purpose of running them on hire. Thus, this addition of Rs.26,01,780/- as confirmed by the Ld. CIT(A) is devoid of any merit, illogical and illegal and therefore such addition may kindly be deleted.
3. On the basis of facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in not accepting the returned income of the appellant considering it as afterthought.
(Assessment Year: 2012-13) Renu Vinod Kaushal vs. ITO Page 3 of 6 4. On the basis of facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred to consider only cash deposits in the bank and for not considering the cash withdrawals from the bank.
5. On the basis of facts and in the circumstances of the case and in law, the Id. CIT(A) has grossly erred in confirming the addition of Rs.10,00,000/- on the ground that appellant has made investment in bond and debenture despite knowing the fact that the payment for the same was made through proper banking channels and the same were from her daughter’s bank account. Therefore, the addition of Rs.10,00,000/- as made u/s.68 of the Act has been confirmed by the Id. CIT(A) illegally and without considering the merit of the case. In view of this, this addition of Rs.10,00,000/- as confirmed by the Ld. CIT(A) may kindly be deleted.
6. The appellant craves leave to add, alter or amend any of the aforesaid ground or grounds if necessary.”
Shri Jigar Adhyaru, Ld. AR of the assessee submitted that the assessee was engaged in small business of transportation with three lorries/trucks and the proceeds received from this business were deposited in the bank account. He explained that the assessee had produced copy of RC book in support of the trucks operated by her. Further that the income declared by the assessee in the return was on presumptive basis under Section 44AE of the Act. The Ld. AR explained that there were frequent cash withdrawals from the bank account which were subsequently redeposited in the bank account and that the aggregate cash withdrawal of Rs.14,65,500/- was redeposited and accordingly the source of cash deposit to that extent was explained. Regarding balance cash deposit of Rs.9,16,250/-, the Ld. AR explained that the same represented the receipts of business of transportation. As regarding addition of Rs.10,00,000/- in respect of unexplained investments, the Ld. AR submitted that the investment was made from the bank account of the assessee’s daughter Ms. Tinku Ajay Shah and the assessee had produced copy of her bank account before the lower authorities. The Ld. AR submitted that considering the fact that the (Assessment Year: 2012-13) Renu Vinod Kaushal vs. ITO Page 4 of 6 investment in bond was made out of withdrawal from the account of the daughter, the Assessing Officer was not correct in treating the same as unexplained.
Per contra, Shri Nitin Kulkarni, Ld. Sr. DR submitted that only one truck was registered in the name of the assessee. Further, that the contention of the assessee that the entire cash withdrawals were redeposited in the bank account was not correct, considering the fact that the assessee must have incurred substantial expenditure towards fuel, driver’s salaries and other expenses for running the trucks. He, therefore, strongly supported the orders of the lower authorities.
We have considered the rival submissions. The assessee did not file her original return of income for the A.Y. 2012-13 and the return was filed only in response to notice under Section 148 of the Act disclosing income of Rs.2,49,840/- under Section 44AE of the Act. It is true that only one of the truck was registered in the name of the assessee. Nevertheless, the assessee had disclosed income from transportation in the return filed for earlier years. In the ITR for the A.Y. 2008-09, the assessee had disclosed two trucks in the fixed assets and the total receipt was to the extent of Rs.11,05,621/- on which net profit of Rs.1,29,987/- was disclosed. The assessee had been regularly disclosing transportation income in the A.Ys. 2001-02 to 2008-09. However, no return of income for subsequent years has been brought on record. Considering the fact that the assessee had disclosed transportation receipt of Rs.11,05,621/- in the A.Y. 2008-09, it will be reasonable to accept that the assessee had transportation receipt of Rs.9,16,250/- during the current year, as explained by the Ld. AR.
(Assessment Year: 2012-13) Renu Vinod Kaushal vs. ITO Page 5 of 6 8. From the copy of bank statement brought on record it is found that the substantial cash deposits were made on certain dates which cannot be transportation receipt considering the quantum of cash deposits on the other dates, which were only nominal. Further, the contention of the assessee that the entire cash withdrawal of Rs.14,65,500/- was redeposited in the bank account also cannot be accepted. The assessee must have incurred expenses for running the trucks towards fuel, spares, insurance, salaries & wages etc. Considering the totality of the facts, the redeposit of cash in the bank account is accepted to the extent of Rs.4,65,500/- and the addition for cash deposits in the bank account made by the AO is confirmed to the extent of Rs.10,00,000/-. The ground taken by the assessee in this regard is partly allowed.
As regarding investment of Rs.10,00,000/- on 11.10.2011 in bonds/debentures, the assessee had brought on record the bank statement of her daughter Ms. Tinku Ajay Shah before the Ld. CIT(A), a copy of which has also been filed before us. It is found therefrom that the withdrawal of Rs.10,00,000/- was made from her account on 12.10.2011 and that the assessee was also a nominee of the said account. Considering the evidence brought on record by the assessee, the addition of Rs.10,00,000/- in respect of unexplained investment in bonds/debentures is deleted. The ground of the assessee is allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on this 9th September, 2025.