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Facts
The assessee, an individual, did not file her return of income for AY 2017-18. Proceedings under Section 147 were initiated due to cash deposits of Rs. 17,36,700 in her Savings Bank Account during FY 2016-17. The Assessing Officer treated these deposits as unexplained income.
Held
The Tribunal held that the initial assessment and CIT(A)'s order were based on incorrect figures of total cash deposits instead of peak deposits. The Tribunal noted that a significant portion of the deposits could be explained by prior withdrawals and declared income, directing the deletion of the sustained addition.
Key Issues
Whether the addition made on account of unexplained cash deposits is sustainable when the authorities below failed to consider the peak credit and explained sources of funds, including earlier withdrawals and declared income?
Sections Cited
147, 144B, 148, 69A, 44AD, 142(1)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ,o Jh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 216/JP/2025 fu/kZkj.k o"kZ@Assessment Year : 2017-18 cuke Kanta Devi Gupta Income Tax Officer, Vs. 30, Moti Vihar Balti Factory Agra Dausa Road, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BAHPG6837P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. K. L. Moolchandani, ITP jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 07/05/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 08/05/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM
By way of a present appeal, the assessee challenges the order of learned National Faceless Appeal Centre, Delhi [ for short ‘CIT(A)’] passed u/s 250 of the Act on 24.12.2024 for Assessment Year 2017-18. The said order of the ld. CIT(A) arise as against the order dated 24.09.2021 passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 [ for short Act] by National Faceless Assessment Centre, Delhi [ for short AO].
“1. On the facts and in the circumstances of the case, the learned Authorities below have legally and factually erred in making and confirming addition to the extent of Rs. 5,46,700/- (after allowing relief of Rs. 1190000 by the CIT(A) on account of cash deposits as unexplained income u/s. 69A of the Act without appreciating the correct figures of the bank deposits. Thus the addition so confirmed to the extent of Rs. 5,46,700/- by the Id. CIT(A) is factually and legally incorrect and the same deserves to be deleted summarily.
2. On the facts and in the circumstances of the case, the learned Authorities below have legally and factually erred in taking the entire deposits of Rs. 17,36,700 in the bank account as unexplained while making and confirming the addition instead of peak cash deposits after considering the cash withdrawals of Rs.43,87,00/- as evident from the bank statement. Thus the bank deposits are properly and satisfactorily explained warranting confirming of addition of Rs.54,67,00/- by the CIT(A), which deserves to be deleted summarily.
3. The appellant craves the right to add amend and alter the grounds on or before the hearing.
Succinctly, the fact as culled out from the records is that the assessee is an individual and she did not file her return of income for the Assessment Year 2017-18. As per information available with the department, the assessee deposited cash aggregating to Rs 17,36,700 in her Savings Bank Account during the Financial Year 2016-17. Accordingly, proceedings under section 147 of the Income Tax Act, 1961 were initiated by issue of notice under section 148 of the Act dated 07.02.2020 which was also served upon the assessee. In response to notice under section 148 of the Act, assessee e-filed her return of income on 13.03.2020 disclosing assessee had deposited cash aggregating to Rs 17,36,700 in her Savings Bank Account maintained with Dausa Kendriya Sahkari Bank Limited, Dausa (Rajasthan) during the Financial Year 2016-17. The assessee was given an opportunity to explain the sources of cash deposited.
Ld. AO on verification/computation of income noticed that the assessee had disclosed total income under section 44AD of the Act at Rs 1,58,915 on gross turnover of Rs 19,86,430. Besides, she had also disclosed interest income under the head ”income from Other Sources” at Rs 63,627. On further verification of her bank statement (Bank account number 37001101130029506 maintained with Dausa Kendriya Sahkari Bank Limited, Dausa) ld. AO noticed that she had deposited cash aggregating to Rs 17,36,700 between 02.04.2016 to 21.05.2016. The assessee disclosed total turnover of Rs 19,86,430 whereas, as per her bank statement she had deposited cash aggregating to Rs 17,36,700 in the span of only 50 days and that too at the beginning of Financial Year i.e., between 02.04.2016 to 21.05.2016. deposit of cash. On perusal of the submissions the ld. AO noticed that the assessee had not furnished the computation of income for the preceding two years although she was requested to supply. Further, the assessee furnished Trading and Profit & Loss account but did not submit copies of purchase bills as well as quantitative details, as called for vide notice under section 142(1) of the Act. It was submitted by the assessee that she did not maintain proper books of account. Assessing Officer observed that for the sake of determination of her true and correct figure of income she could have submitted the purchase bills, which she did not furnish. Hence, the ld.
AO did not believe the turnover of the assessee for an amount of Rs 19,86,430/-. Accordingly, the cash deposited by the assessee aggregating to Rs. 17,36,700/- was treated as unexplained money under section 69A of the Act and added to her income.
4. Aggrieved by the order of Assessing Officer, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:
“4.2 the case are that the assessee deposited Rs. 17,36,700 in her savings account during FY 2016-17 but failed to substantiate the sources adequately during assessment. While the assessee claimed that deposits were from earlier withdrawals, business turnover, and other sources as per AO the provided explanations were inconsistent with the cash flow statements and lacked Kanta Devi Gupta vs. ITO supporting evidence like purchase bills or other documentation. The cash flow statement indicated an opening balance of Rs.12,37,397, which did not align with the withdrawal and deposit patterns. The explanation of keeping cash for business and personal needs lacked corroborative evidence. The declared gross turnover of Rs. 19,86,430 under Section 44AD was inconsistent with cash deposits made during a short span of 50 days. This raised questions about the actual turnover and cash-in-hand declarations. The assessee did not maintain proper books of accounts, purchase bills, or quantitative details despite being requested multiple times. The explanation that the business was operated from home and distant banking facilities led to irregular deposits was not deemed credible given the frequency of transactions. Significant withdrawals and immediate redeposit within short periods were observed, contradicting the need to maintain cash for business or personal purposes. The AO observed that the explanations provided by the assessee were found to be unreliable due to lack of evidence to substantiate claims about cash sources (e.g., maturity of FD, business receipts, and personal needs). Inconsistent behaviour of cash management and inadequate explanation for deposits being disproportionately high in relation to the declared turnover. No details furnished about personal or household expenses, further diminishing the credibility of the submissions. The AO treated the cash deposits of 17,36,700 as unexplained income under Section 69A of the Income Tax Act. 4.3 I have gone through the assessment order and record available. In the instant case, as regards, Ground 1 relating to the reassessment proceedings initiated u/s 148 is bad in law and on the facts of the present case and hence, consequent reassessment order may please be quashed is concerned. In my view, the reassessment proceedings are valid because the Assessing Officer (AO) had "reason to believe" that income had escaped assessment as the appellant never filed return of income despite money to her credit. This is tangible material for reopening of the case. 4.4 As regards, Ground 2 relating to the faceless assessment proceedings are bad in law as well as on the facts of the present case and hence the consequent reassessment is also bad in law and therefore, the same may please be quashed is concerned. In my view, the faceless assessment scheme aims to enhance transparency and efficiency, there are no procedural lapses (e.g., lack of opportunity for personal hearing, non-communication of reasons for reassessment, or not considering evidence) to render the proceedings invalid. There is no evidence that the submissions made by the assessee were ignored, it strengthens the claim of procedural fairness by AO.
Kanta Devi Gupta vs. ITO 4.5 As regards, Ground 3 relating to the Ld. AO erred in law as well as on the facts of the present case in not considering the submissions of the assessee even though placed on record, and as such the consequent addition is also bad in law is concerned. This ground challenges the AO's approach and fairness in considering evidence or submissions made during the assessment. The assessee provided explanations or documentary evidence (e.g., for cash deposits or other discrepancies) during assessment which were evaluated by AO. 4.6 As regards, Ground 4 relating to the Ld. AO erred in law as well as on the facts of the present case in making an addition on account of unexplained money u/s 69A of the Act is concerned. In my view, the assessee failed to explain the source of deposits in her Bank account in a short span of time alongwith evidence of business activity carried by her. However It is seen that in Account No. 37001101130029506 Dausa Kendriya Shah. Bank Ltd., the appellant had a matured FD of Rs. 1021192/-on 15.03.2016. Subsequently, an amount of Rs. 10,00,000 dated 30.03.2016 and 1,90,000/- dated 31.03.2016 has been withdrawn in cash alongwith earlier savings. The total above withdrawal of Rs. 10,00,000+ 1,90,000 (11,90,000) may be treated as a valid source of cash deposit afterwards, the assessee gets a relief of Rs. 11,90,000/- and the balance out of 17,36,700 is confirmed as unexplained deposits, due to the assessee's failure to provide any evidence to support her remaining claims. Non-submission of necessary documents will not favour the appellant. Therefore, the appeal of the assessee is partly allowed.
As a result, the appeal of the assessee is partly allowed.
5. As the assessee got only part relief as per the order of the ld. CIT(A), the assessee, for the sustained addition, filed present appeal before this Tribunal on the grounds as stated. To support the various grounds raised by the assessee, ld. AR of the assessee has filed written submissions which are reproduced herein below:
The Appellant is a lady doing trading of Sarees on casual basis from her home only as a Part-time Job on petty scale for last some years and was having income of below taxable limits, having meager turn-over in the vicinity of Rs.20 lac approximately. She has been doing this business for last some years and did not Kanta Devi Gupta vs. ITO file Return of Income having no taxable income. However, the re-assessment proceedings were initiated u/s 148 of the Act for this year on the basis of information regarding cash deposits of Rs.17,36,700/- made by her in her Saving Bank A/c during the year.
During the course of re-assessment proceedings, it was explained by the Appellant that she was having opening cash balance of Rs. 12,37,397/- out of maturity amount of FDR, Receipt of Bank Interest and partly out of her Saree Business being undertaken by her for past some years. Besides opening Cash Balance of Rs.12,37,397/-, other deposits were made out of sale proceeds of her Saree Business during the year under consideration. In support of such explanation, the fact regarding Maturity of the FDR of Rs. 10,00,000/- and the receipt of Bank Interest of Rs.1,90,000/- was made known to the ld. AO, along with copy of the Trading A/c of her Saree Business for this year. The H'ble Assessment Unit did not dispute the trading results of her Saree Business and had assessed the same as declared by her in the Return. The H'ble Assessment Unit had however turned down her explanation regarding past savings of Rs.12,37,397/- and the sale proceeds of her Saree Business etc. summarily on flimsy grounds and had made addition of the entire cash deposits of Rs.17,36,700/- made during the vear; ignoring the vital fact that such cash deposits kept on rotated on subsequent dates as evident from the Bank A/c itself (copy enclosed for ready reference). As a result of rotations of the funds, the Peak of the Cash Deposits of Rs.12,98,000/-was worked out on 21.5.2016 as per enclosed chart. While making addition of Rs.17,36,700/- the honorable Assessment Unit did not take note of these vital facts of the Peak Deposits etc and had brushed aside various contentions of the Appellant summarily on flimsy grounds as mentioned in the body of the Assessment Order.
3. Being aggrieved with such arbitrary addition, an appeal was filed. In the Appeal proceedings, having considered the fact of the Bank withdrawals of Rs. 10,00,000- and 1,90,000/- on 30.3.2016 and 31.3.2016 respectively, the Id.CIT (A) was pleased to delete the addition to the extent of Rs. 11,90,000/- out of total addition of Rs.17,36,700/- and confirming thereby the balance addition of Rs.5,46,700/-(Kindly refer para 4.6 of the Appeal Order), without taking note of the Peak of the Cash Deposits of Rs.12,98,000/- on 21.5.2016 and the fact of the sale proceeds of the Saree Business as undertaken by her in the current vear. Thus the addition of Rs.5,46,700/- as confirmed by the H'ble Appeal Centre, ignoring the above vital facts was factually and legally incorrect and deserved to be deleted summarily. In the circumstances, the addition of Rs.5,46,700/- as confirmed by the H ble Appeal Centre is strongly objected on the following grounds:
Kanta Devi Gupta vs. ITO (A) GROUNDS No.1, 2 and 3: All the three grounds are common grounds regarding taking incorrect figures of the cash deposits of Rs.17,36,700/-during the year instead of the correct figures of Rs. 12,98,000/- being peak of the deposits on 21.5.2016 and making addition of Rs.17,36,700/- by the AO and confirming the addition to the extent of Rs..5,46,700/- by the Appeal Centre on the basis of the incorrect figures of Rs. 17,36,700/-: As discussed in the foregone paras, the Authorities Below have incorrectly taken the entire cash deposits of Rs.17,36,700/- made in the Bank A/c during the year, instead of the correct peak deposits of Rs.12,98,000/- worked out on 21.5.2016 as per enclosed chart to make impugned addition of Rs.17,36700/-by the Assessment Unit which had been reduced to Rs.5,46700/- by the Appeal Centre. While making and confirming the addition by these Authorities, they had incorrectly taken entire cash deposits of Rs.17,36,700/-made during the year. As evident from the enclosed chart, the peak of the cash deposits was Rs.12,98,000/- on 21.5.2016 during this year, having considered the rotation of the cash withdrawals of Rs.4,38,700/- made on 5.4.2016 and 7.4.2016 respectively, which were re-deposited in the same bank account on subsequent dates as evident from the Bank Statement itself. Thus the peak cash deposits made during the year were Rs.12,98,000/- on 21.5.2016 instead of the entire cash deposits of Rs.17,36,700/- as incorrectly taken by the Authorities Below while making and confirming the impugned additions of Rs.17,36.700/- and 5,46,700/- respectively. Thus this being an evident and admitted mistake, the addition as made by the Assessment Unit and confirmed by the Appeal Centre on the basis of the incorrect figures of entire cash deposits of Rs.17,36,700/- are factually and legally incorrect and deserves to be deleted summarily.
Further, having considered the relief of Rs.11,90,000 as allowed by the H'ble Appeal Centre, the resultant balance of the peak deposits of Rs.12,98,000/- (Rs.12,98,000/- minus the funds treated explained by the Appeal Centre) would be Rs.1,08,000/- only the nature and sources of which were required to be explained by the Appellant. Further having considered the opening cash balance as shown by the Appellant at Rs.12,37,397/- as on 1.4.2016 in the Assessment Proceedings which had never been questioned by the Department, the resultant alleged un-explained deposit would work out at Rs.60,607 only, the nature and sources of which were to be explained by the Appellant. In respect of such alleged un-explained cash of Rs.60.607/-, the Appellant had already explained that such funds were out of the sale proceeds of the Turn-over of the Sarees during the vear. The honorable Assessment Unit had however brushed aside the explanation on the plea that these deposits were made in the first two months of the year so availability of the sale proceeds of Sarees at such initial stage was not Kanta Devi Gupta vs. ITO possible as no details of the turn-over at such initial stage was forthcoming. Obviously, the honorable Assessment Unit had turned down such contentions of the Appellant on the basis of presumptions and surmises without brining any material on record to rule out the possibility of having sale proceeds in first two months, particularly when the Appellant had a running business of Sarees with a turn-over of Rs.19 lac approximately during the year. Thus such presumption of the Assessment Centre that the Appellant did not have availability of sale proceeds in the initial months of the year was totally un-founded and without any basis; particularly when the Appellant had a running business having turn-over of Rs.19 lac approximately during the year. In absence of any material brought on record in respect of the claimed turn over in the initial two months of the year, the presumption of the Assessment Unit that the Appellant had no availability of the sale proceeds is patently incorrect and un-founded; particularly when the Trading Results shown during the year had been accepted by the Department without questioning the correctness of the turn-over of Rs.19 lac declared during the year. Without ascertaining the details of month-wise sales, the findings of the Assessment Unit that there was no sale proceeds available with the Appellant during first two months are factually and legally incorrect and deserve to be quashed summarily. As the details of month wise sales were never questioned at the relevant point of time so such findings are obviously incorrect and deserve to be quashed summarily. The relevant month-wise details of Turn-over are however submitted herewith for ready reference and record. On perusal of such month- wise chart of the Turn-over, it would be noted that in first two months, the Appellant had turn-over of Rs.4.50 lacs approximately. In the circumstances, the Appellant could conveniently deposit Rs. 60,607/- out of the sale proceeds of Rs.4.5 lacs in first two months. Thus the findings of the Assessment Unit that the Appellant did not have sale proceeds in first two months is patently and obviously incorrect. The H’ble Appeal Centre did not address the fact of the sale proceeds in first two months and confirmed addition without addressing the fact of the sale proceeds in first two months. If the sale proceeds of Rs.4.5 in first two months as per enclosed chart is taken into account for the purpose of explaining the nature and sources of the resultant cash deposit of Rs.60,607/- as worked out above, then there would remain no un-explained deposit during the year, warranting any addition u/s 69A of the Act. In view of above facts and discussions, the addition of Rs.5,46700/- confirmed by the H’ble Appeal Centre deserves to be deleted.
submission so filed vehemently argued that the assessee is involved in retail trade of sarees, and as such her income being below the maximum amount not chargeable to tax initially, she did not file her return of income, but in response to the notice issued u/s. 148 of the Act filed return of income and also submitted the details of source of cash deposited into bank account by way of bank statement but the lower authorities have not appreciated the fact that the assessee had made withdrawal of Rs. 3,10,000/- on 05.04.2016 and of Rs. 1,28,700/- on 07.04.2016. The contention is that if said amount is considered with that of the income already offered by the assessee, there would be no amount which remains unexplained by the assessee, and therefore, the addition sustained by ld. CIT(A) for an amount of Rs. 5,46,700/- is required to be deleted.
On the other hand, ld. DR relied upon the order of lower authorities and argued that the explanation of the assessee is an afterthought and therefore, he relied upon the order of ld. CIT(A).
In the rejoinder, ld. AR of the assessee submitted that ld. CIT(A) has already accepted the explanation of the assessee but the explanation that income offered and earlier withdrawal has not been taken into consideration appeal.
We have heard the rival contentions and perused the material placed on record. The bench noted that the only issue raised in this appeal by the assessee for sustaining the addition of Rs. 5,46,700/- by the ld. CIT(A) out of total cash deposit of Rs. 17,36,700/- made by the assessee. The bench noted from the order of the ld. CIT(A) that while deciding the appeal of the assessee ld. CIT(A) has already considered the explanation of having the explained source cash for an amount of Rs. 11,90,000/- and for the balance amount he sustained the additions of Rs. 5,46,700/-. Before us the ld. AR of the assessee invited our attention to the fact that the assessee made withdrawals of Rs. 3,10,000/- on 05.04.2016 and Rs. 1,28,700/- on 07.04.2016 leaving behind Rs. 1,08,000/- which considered to be explained deposit out of income of Rs. 2,12,180/- accepted by the AO and contended that if that declared income sustained addition is required to be deleted.
The bench noted that the ld. CIT(A) has considered the withdrawal of Rs. 10,00,000 dated 30.03.2016 and 1,90,000 dated31.03.2016 but not considered the withdrawal of Rs. 3,10,000/- on 05.04.2016 and Rs. 1,28,700/- on 07.04.2016. Thus, on being consistent with the explanation so furnished this sum is also required to be considered as deposited from the explained against the balance amount of Rs. 1,08,000/- the assessee has already declared the income of Rs. 2,12,180/- and therefore, we see no reason to sustain the addition of Rs. 5,46,700/- in the hands of the assessee and therefore, the same is directed to be deleted. In the result, ground Nos. 1 and 2 raised by the assessee are allowed.
In the result the appeal of the assessee is allowed.
Order pronounced in the open court on 08/05/2025. Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 08/05/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Kanta Devi Gupta, Jaipur izR;FkhZ@ The Respondent- Income Tax Officer, Dausa 2. 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 216/JP/2025) 6. vkns'kkuqlkj@ By order,
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