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Facts
The assessee, KunjumolShali, did not file her income tax return for AY 2015-16. Her case was reopened by the AO due to cash deposits of Rs. 20.5 lakhs, which she explained as gifts from relatives and proceeds from gold sales. However, the AO rejected the explanation and added the amount as unexplained cash credit under Section 68, an order subsequently confirmed by the CIT(A).
Held
The Tribunal noted that the assessee had furnished documentary evidence, including confirmations and bank statements from donors, but the AO had discarded these without conducting any further enquiries. Citing judicial precedent, the Tribunal ruled that an assessee should not suffer due to the AO's inaction in verifying the provided evidence. Consequently, the Tribunal found no ground for the addition made by the AO.
Key Issues
Whether the addition of cash deposits as unexplained cash credit under Section 68 was justified when the assessee provided evidence for the source of funds, but the AO failed to conduct proper enquiries for verification.
Sections Cited
250, 148A(d), 148, 68
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Income Tax Appellate Tribunal, COCHIN BENCH:COCHIN
Before: SHRI INTURI RAMA RAO & SHRI PRAKASH CHAND YADAV
Appellant by :Sri.Sureshkumar Varma, CA Respondent by :Smt.Leena Lal, Sr.AR Date of Pronouncement : 04.04.2025 Date of Hearing : 27.02.2025. O R D E R PERPRAKASH CHAND YADAV, JUDICIAL MEMBER: Present appeal of the assessee is arising from the order of ld. CIT(A)/NFAC dated 30.8.2024 having DIN & Order No. ITBA/NFAC/S/250/2024-25/1068184943(1) and it relates to assessment year 2015-16 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”).
The assessee is an individual, could not file her return of income for the impugned year. Thereafter, on the basis of an information available on insight portal of revenue, the AO reopened the case of the assessee u/s 148A(d) of the Act and accordingly, notice u/s 148 of the Act was issued to the assessee on 31.5.2022.
SP No.194/Coch/2024 KunjumolShali, Alappuzha Page 2 of 4 During the course of assessment proceedings, the AO observed that the assessee has made cash deposit of Rs.20,50,000/- in her State Bank of Travancore account and has also purchased immovable property of Rs.43,00,000/-. In response to the queries of AO, the assessee filed certain explanation along with documentary evidences explaining the source of cash viz. gift received from brother and sister. However, the AO could not find any force in the submissions of the assessee and made an addition of Rs.20,50,000/- as unexplained cash credit in the hands of assessee.
Aggrieved with the order of AO, the assessee filed an appeal before the ld. CIT(A) and reiterated the arguments advanced before the AO. However, the ld. CIT(A) could not find any force in the submissions of the assessee and confirmed the order of AO.
Aggrieved with the order of ld. CIT(A), assessee has come up in appeal before us and has raised 7 grounds of appeal. However, the solitary issue involved in these grounds is taxability on amount of Rs.20,50,000/- u/s 68 of the Act.
5. Ld. Counsel appearing on behalf of the assessee pointed out that the assessee has duly filed confirmations of the relatives who had gifted the sum to the assessee and the ld. AO could not conduct any further enquiries from those donors and has made the addition. Ld Counsel drawn the attention of the Bench towards relevant paras of the assessment order and pointed out that all the documentary evidences were duly furnished before the AO.
Ld. D.R. relied upon the orders of the lower authorities.
SP No.194/Coch/2024 KunjumolShali, Alappuzha Page 3 of 4 7. We have heard the rival submissions and perused the materials available on record. Perusal of page 5 of the assessment order would show that the assessee has duly furnished the source of the amounts received. Perusal of the assessment order would show that an amount of Rs.6,00,000/- was received by the assessee after sale of her gold ornaments, in support of this sale, the assessee has also filed documentary evidences with the AO. Similarly, the assessee has also filed confirmation of his brother Naushad, sister Shylaja, relative Hashim, all are NRIs and have confirmed along with their bank statements that they have advanced money to the assessee. It is an admitted position of fact that the ld. AO has simply discarded these evidences without conducting any further enquiries. Therefore, we are of the view that no addition is called for in the hands of assessee. Since it is a settled position of law that an assessee would not suffer on account of inaction on the part of AO as held by Hon’ble Punjab & Haryana High Court in the case of CIT Vs. FCS International Marketing reported in 203 CTR 601. Therefore, the appeal of the assessee is allowed.
Since we have already decided the appeal, the stay petition filed by the assessee becomes infructuous.
In the result, appeal of the assessee is allowed and stay petition filed by the assessee is dismissed.