Loading judgment…
Facts
The assessee's appeal concerns AY 2010-11, where no return was filed. The AO reopened the case under Section 147 based on information of a cash deposit of Rs. 16,00,000/-. The assessment was completed under Section 144 r.w.s. 147 at Rs. 16,00,000/-. The CIT(A) partly allowed the appeal, confirming an addition of Rs. 8,00,000/- for cash deposits and adding Rs. 7,32,513/- as interest income.
Held
The Tribunal held that the cash deposit of Rs. 8,00,000/- pertained to the sale of land and was not unexplained income. The Tribunal also held that the interest income of Rs. 7,32,513/- was derived by other family members, not the deceased assessee, and therefore, could not be added to the assessee's income.
Key Issues
Whether the cash deposit and interest income were correctly added to the deceased assessee's income, considering the source and ownership of the accounts.
Sections Cited
144, 147, 159, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SHRI NARENDRA PRASAD SINHA, AM:
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”), dated 07.05.2024, for the Assessment Year (A.Y.) 2010-11 in the proceedings under Section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
There was a delay of 206 days in filing of this appeal. An affidavit has been filed by Sh. Arjunsinh Rana, Legal Heir of Late Shri Sursinh Rupsingh Rana, explaining that he was son of the deceased assessee who had passed away on 30.08.2011. It is submitted that he is residing Ahd 2025 Assessment Year: 2010-11 Arjunsinh Rana vs. ITO Page 2 of 7 in a remote area and not conversant with Income Tax proceedings. As a result, considerable time was taken in co-ordinating with other legal heirs which resulted in delay of 206 days in filing of this appeal. It is submitted that the delay is not intentional. Considering the explanation of the assessee, the delay in filing the appeal is condoned.
The brief facts of the case are that no return of income was filed by the assessee for the A.Y. 2010-11. The Assessing Officer, on the basis of information that cash deposit of Rs.16,00,000/- was made in the savings bank account of the assessee during the Financial Year 2009-10, the case of the assessee was reopened under Section 147 of the Act. In the course of assessment proceedings, there was no compliance by the assessee or by the Legal Heir of the deceased assessee and the assessment was completed under Section 144 r.w.s. 147 of the Act on 07.12.2017 at total income of Rs.16,00,000/-.
4. Aggrieved with the order of the Assessing Officer, the Legal Heir of the deceased assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.
Now the assessee is in second appal before the us. The following grounds have been taken in this appeal: -
“1. The learned CIT(A) erred in law and on facts by confirming the assessment order issued solely against me without considering that (i) no legal heirship determination was made regarding my late father, and notices were not served to all legal heirs. and (ii) the cash deposits under scrutiny were in an account not belonging to me, neither before nor after my father's demise (post father's demise, held in name of my sister and my mother). The Ld. CIT(A) failed to appreciate that the proceedings are Ahd 2025 Assessment Year: 2010-11 Arjunsinh Rana vs. ITO Page 3 of 7 invalid under Section 159 of the Income Tax Act, 1961, as proper procedure was not followed.
2. The Ld. CIT(A) has erred in confirming the addition of Rs.8,00,000/- under Section 68 of the Act, without properly considering the fact that the cash deposits were made by my late father out of accumulated agricultural income of the entire family. It is submitted that the family's agricultural income, generated over time in a village with no prior banking facilities, justifies the source of deposits. The addition of Rs.8,00,000/- is unjustified on facts and in law and is prayed to be deleted.
3. The learned CIT(A) has erred in making the addition of Rs.7,32,513/- as interest income without appreciating that the said amount does not constitute interest income of the appellant. Further, the bank account from which this alleged income is said to have arisen is not held by the appellant. The addition is factually incorrect and contrary to law, and it is respectfully prayed that the same be deleted.
The Order passed by the Ld. CIT(A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.
5. Your appellant craves leave to add, alter, and/or amend all or any of the grounds before the final hearing of the appeal.”
First two grounds pertain to addition in respect of cash deposit in the bank account. Shri Sunil Talati, the Ld. AR of the assessee, submitted that the Assessing Officer had made addition of Rs.16,00,000/- in respect of cash deposit in the bank account. The Ld. CIT(A), however, had allowed partial relief to the assessee and confirmed the addition to the extent of Rs.8,00,000/-. He explained that the evidences filed before the Ld. CIT(A) were not considered in the right perspective. The Ld. AR submitted that the bank account in which the cash deposit was appearing was not in the name of the deceased assessee but his family members. Further, the fact that the deceased assessee had received cash amount over and above the cheque amount as mentioned in the sale deed, towards the sale consideration of land, was not considered in right perspective. In addition, the explanation of the assessee for deriving agricultural income was not Ahd 2025 Assessment Year: 2010-11 Arjunsinh Rana vs. ITO Page 4 of 7 properly considered in the absence of bills and receipts. The Ld. AR submitted that it was not possible for the Legal Heir to produce the bills and receipts for such an old period.
On the other hand, Shri Umesh Kumar Agrawal, the Ld. Sr. DR submitted that the Assessing Officer and the Ld. CIT(A) had considered the additional evidences filed by the assessee in the course of appeal proceedings and accordingly relief was given to the extent of Rs.8,00,000/- in respect of cash deposit. He, therefore, strongly supported the orders of the lower authorities on this issue.
We have considered the rival submissions. At the outset, the assessee has submitted that the cash deposit of Rs.16,00,000/- was not made in the bank account of the assessee. It was explained that the SBI account no.30854695779 in which cash deposit of Rs.16,00,000/- was made on 12.08.2009 was in the name of Asmaben Sursinh Rana and Padmaben Sursinh Rana, daughter and wife of the deceased assessee. Considering the fact that the cash deposit was not made in the bank account of the assessee, the Assessing Officer was not correct in making the addition in the hands of the deceased assessee. Further, the assessee had explained that a piece of land was sold vide sale deed dated 11.08.2008 for a consideration of Rs.4,11,000/- which was received vide cheque dated 11.08.2009. A cash deposit of Rs.16,00,000/- was made in the bank account on 12.08.2009 i.e. one day after the sale deed was executed. Considering the proximity of the sale deed of the land and cash deposit in the bank account, the Revenue was not correct in rejecting the contention of the assessee that the cash was received in respect of sale of agricultural land. In the remand report, the Assessing Officer had Ahd 2025 Assessment Year: 2010-11 Arjunsinh Rana vs. ITO Page 5 of 7 observed that the cash deposit of Rs.16,00,000/- represented on-money on sale of land and has to be considered as unexplained money. However, the fact remains that the cash deposit of Rs.16,00,000/- was part of sale consideration of land and had to be considered as part of sale value while working out the Long Term Capital Gain (LTCG) derived from sale of land and no separate addition of Rs.16,00,000/- could have been made as income from other source. Considering these facts, we are of the considered opinion that the Ld. CIT(A) was not correct in upholding the addition of Rs.8,00,000/- in respect of cash deposit in the bank account which did no pertain to the assessee. Therefore, the addition of Rs.8,00,000/- in respect of cash deposit, as sustained by the ld. CIT(A), is deleted. The ground of the assessee taken in this regard is allowed.
The next ground pertains to addition of Rs.7,32,513/- in respect of interest income. From the additional evidences brought on record before the Ld. CIT(A), it was found that the assessee had substantive deposits on which interest income of Rs.7,32,513/- was received. Accordingly, the Ld. CIT(A) had directed to treat this interest received as income of the assessee. Shri Sunil Talati, Ld. AR. of the assessee, submitted that the bank account and deposits on which interest received, was not in the name of the assessee. Therefore, the Ld. CIT(A) was not correct in directing to add the interest income in the hands of the assessee. He further submitted that the addition made by the Assessing Officer was enhanced by this amount by the Ld. CIT(A) without allowing any opportunity/show cause notice to the assessee.
Per contra, the Ld. Sr. DR submitted that the interest income was evident from the additional evidences brought on record by the assessee Ahd 2025 Assessment Year: 2010-11 Arjunsinh Rana vs. ITO Page 6 of 7 in the course of appeal proceedings. Therefore, he strongly supported the order of the Ld. CIT(A).
We have considered the rival submissions. It is found that the issue of interest on FD was flagged in the remand report of the Assessing Officer, a copy of which was provided to the assessee by the Ld. CIT(A). Under the circumstances, the assessee cannot take a plea that no opportunity was allowed in respect of direction of the Ld. CIT(A) to treat the interest amount as the income of the assessee. However, it is found from the remand report of the Assessing Officer, as reproduced in the order of the Ld. CIT(A), that the additional evidence furnished by the assessee was bank account of Asmaben Sursinh Rana & Padmaben Sursinh Rana and the interest income on closure of the deposits were noticed in this bank account only. Therefore, the interest income was not derived by the assessee but by the account holders namely Asmaben Sursinh Rana & Padmaben Sursinh Rana. No other evidence has been brought on record to establish that the interest of Rs.7,32,513/- was derived by the deceased assessee. In view of this fact, the direction of the Ld. CIT(A) to treat this amount as income of the assessee cannot be held as correct. Accordingly, the directions of the ld. CIT(A) to treat the interest income of Rs.7,32,513/- as income of the assessee is quashed and the ground taken by the assessee is allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on this 14th August, 2025.