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Facts
The assessee filed an ITR for AY 2013-14, declaring Rs.5,92,280/-. During scrutiny, the AO added Rs.2,44,000/- as unexplained cash deposits under Section 69A from the assessee's HDFC Bank account, despite the assessee's explanation that it was from his and his wife's past savings. The First Appellate Authority upheld the addition, citing unsatisfactory explanation and lack of supporting evidence from the assessee.
Held
The Tribunal found that the assessee, a retired government servant, adequately explained the source of the Rs.2,44,000/- deposit as past savings, which should have been accepted given the lack of contrary evidence from the AO. The Tribunal held that mere disbelief or suspicion is insufficient for an addition under Section 69A once a reasonable explanation is provided, and the onus shifts to the AO to disprove it. Consequently, the addition was deemed unwarranted and deleted.
Key Issues
Whether the addition of Rs.2,44,000/- as unexplained cash deposits under Section 69A was justified when the assessee claimed it was from past savings. Whether the lower authorities erred in not accepting the assessee's explanation and correctly applying the onus of proof regarding the source of deposits.
Sections Cited
69A, 143(3), 115BBE, 271AAC, 154, 250, 80C
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
O R D E R This appeal has been preferred by the assessee against order dated 28.02.2024, passed by the Addl/JCIT(A)-1, Kolkata for Assessment Year 2013-14.
The brief facts of the case are that the assessee e-filed his return of income for the year under consideration on 30.07.2017, declaring a total income of Rs.5,92,280/-. The case of the assessee was selected for scrutiny under CASS. During the course of assessment proceedings, in response to the queries raised by the Assessing Officer (AO), the submission on behalf of the assessee was that Rs.2,44,000/- was deposited in his bank account maintained with HDFC Bank Limited out of his and his wife’s past savings. Not being satisfied with the reply furnished by the assessee, the AO treated the amount of Rs.2,44,000/- as unexplained cash deposits and added the same to the income of the assessee under section 69A of the Income Tax Act, 1961 (hereinafter called “the Act’). The AO completed the assessment under section 143(3) of the Act, computing the income of the assessee as under:
Income declared as per ITR : Rs.6,31,336/- Addition u/s. 69A of the Act : Rs.2,44,000/- : Rs.8,75,336/- Less deduction u/s. 80C of the Act : Rs.39,060/- Total income (rounded off) : Rs.8,36,280/- 2.1 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under section 271AAC of the Act, separately.
Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority. Subsequently, the case of the assessee was migrated to Addl/JCIT(A)-1, Kolkata, who dismissed the appeal of the assessee, observing that the assessee failed to satisfactorily explain the source of cash deposits of Rs.2,44,000/- and that the assessee could not file any satisfactory explanation backed by supporting evidence during the appellate proceedings.
Now, the assessee has approached this Tribunal challenging the orders passed by the AO as well as the Addl/JCIT(A)-1, Kolkata by raising the following grounds of appeal:
A. Because the learned assessing officer and C.I.T.(A) has grossly erred on facts and law in holding that Appellant did not make any withdrawal from the account during the year therefore his submission is not convincing and made addition of Rs.2,44,000 to the income from undisclosed income of the year completing the assessment on total income of Rs.8,36,280/- B. Because the learned Assessing Officer erred in misinterpreting the submission of the appellant about the source of the withdraw assuming it as withdrawal from the bank during the year under assessment. C. Because the learned C.I.T.(A) did not considered the contention of the appellant unsatisfactory toward the addition of Rs.2,44,000/- as undisclosed income and upheld the order of the Assessing Officer without any base. D. Because the appellant is relying on the judgment of Delhi High court in The Commissioner Of Income Tax (International Taxation)-1, New Delhi Vs Hersh Washesher Chadha, ΙΤΑ 676/2023, in which if respondent/assesse had given specific explanation about the money and the record of the unexplained money is ingress in the bank account then that money cannot be treated as unexplained money under sec 69A.
E. Because the learned C.I.T.(A) rejected the rectification application dated 05/12/2024 without application of mind stating that authority has no power to review its own while in the whole rectification application the prayer was only rectify the mistake apparent from record not of review. F. Because the rectification application was only eliminate the error. The Hon'ble High Court in, Blue Star Engineering Co. (Bombay) Pvt. Ltd. V CIT (1969) 73 ITR 283, held thatunder section 154, the power to rectify the error must extend to the elimination of the error, even though the error may be such as to go the root of order and its elimination may result in the whole order falling to the ground.
The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 245 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated 03.01.2025 for condonation of delay, duly supported by an Affidavit, stating therein that the impugned order of the Addl/JCIT(A)-1, Kolkata was received by the assessee on 28.02.2024. However, the assessee, presuming that there are some mistakes apparent from record in the order of the Addl/JCIT(A)-1, Kolkata, filed a rectification application on 03.04.2024 under section 154 of the Act. It was further stated that since the rectification application under section 154 of the Act was pending before the Addl/JCIT(A)-1, Kolkata, he did not file appeal within the stipulated time and immediately after passing of the order by the NFAC under section 154 r.w.s. 250 of the Act, the appeal was filed before the Tribunal. It was prayed that the delay caused in filing the appeal was not deliberate and that the delay may please be condoned and the appeal be heard on merits.
The Ld. Sr. D.R. had no objection to the delay being condoned.
In view of the prayer made by the Assessee, duly supported by an Affidavit and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
During the course of hearing before me, the Ld. A.R. submitted that the assessee is a retired Government employee and that while explaining the source of income, it was stated before the authorities below that the amount of Rs.2,44,000/- was deposited in the joint Bank Account No. 01271330013259 of the assessee and his wife, Mrs Tahera Arif, maintained with H.D.F.C. Bank, Civil Lines, Kanpur, on 08.11.2016. The Ld. A.R. further submitted that the wife of the assessee, Mrs Tahera Arif had withdrawn a sum of Rs.2,60,000/- from her Bank Account No. 32465578713 maintained with State Bank of India, P.P.N. Market on 15.06.2016, which was kept in home for some future investments, but could not be invested, as no suitable opportunity was found. The Ld. A.R. also submitted that the assessee had disclosed his both the Bank accounts while filing the return of income and that the amounts accumulated in his bank accounts were from pension received by him. The Ld. A.R. submitted that the authorities below had failed to appreciate the full and correct facts of the case and made/confirmed the addition irrationally, which is unwarranted and, therefore, the same may be deleted.
The ld. D.R., on the other hand, placing reliance on the orders of the authorities below, submitted that the assessee could not furnish any satisfactory explanation supported by evidence before the authorities below, therefore, the addition made by the AO and confirmed by the Addl/JCIT(A)-1, Kolkata is to be upheld.
I have heard both the parties and have perused the material on record. It is a fact that the assessee is a retired Government servant and earned income from pension. Since the assessee had earns regular income from pension, the claim of the assessee that the deposits of Rs.2,44,000/- were from past savings, ought to have been believed in absence of any evidence to the contrary. The AO has not brought on record anything to disprove the claim of the assessee that the deposit of Rs.2,44,000/- was from his past savings or has made any allegation about undisclosed expenditure/investment. The AO must have concrete reasons based on evidence to reject the assessee’s explanation. If the assessee has provided a reasonable explanation, mere disbelief or suspicion is not sufficient to make an addition under the Income Tax Act. Once the assessee explains the source of deposits, the onus shifts to the AO to prove that such explanation is incorrect or unsatisfactory. If the AO has not brought any contrary evidence to disprove the claim, the addition is unwarranted. There are several judicial rulings where Hon'ble Courts have held that past savings can be a valid source of deposits unless proven otherwise by the Department. In this view of the matter, the addition made by the AO and sustained by the Addl/JCIT(A)-1, Kolkata is liable to be deleted. I order accordingly.
In the result, the appeal of the assessee stands allowed.
Order pronounced in the open Court on 24/03/2025.