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Facts
The assessee deposited Rs. 9,00,000/- cash in her Axis Bank account, claiming it as a gift from her mother, who stated the source was accumulated agricultural savings. The Assessing Officer (AO) made an addition of this amount as unexplained investment under section 69, noting similar additions were made in the mother's assessment for a total of Rs. 36,00,000/- gifted to daughters.
Held
The Tribunal found that the fact of the gift from the mother was undisputed and since the mother's assessment, where the source of the gift was questioned and an addition was made, was pending adjudication before the CIT(A), the same amount could not be simultaneously added in the hands of the assessee. Therefore, the addition under section 69 was not justifiable.
Key Issues
Whether cash deposits claimed as gifts from a mother can be added as unexplained investment under section 69 in the daughter's hands when the mother's assessment for the source of these gifts is still pending adjudication.
Sections Cited
143(3), 147, 148, 143(2), 142(1), 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
& 185/VIZ/2023 Erothi Latha Rani & Erothi Purnima Rani आदेश /O R D E R PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
These appeals are filed by different assessees against different orders of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi vide respective DIN & Order No. as stated below: -
ITA No. & A.Y. DIN & Order No. Dated ITBA/NFAC/S/250/2023-24/1052368660(1) 26.04.2023 (A.Y. 2009-10)
ITBA/NFAC/S/250/2023-24/1052828295(1) 15.05.2023 (A.Y. 2009-10)
Since the appeals are belonging to same family group and grounds raised by the assessees in both the appeals are common and identical, both these appeals are clubbed and heard together and a consolidated order being passed. Firstly, we take up the appeal in (A.Y. 2009-10) in the case of Mrs. Erothi Latha Rani and brief facts are culled out therefrom.
ITA No. 184/VIZ/2023 (A.Y. 2009-10)
This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1052368660(1) dated 26.04.2023 for the A.Y.
Page No. 2 & 185/VIZ/2023 Erothi Latha Rani & Erothi Purnima Rani 2009-10 arising out of order passed under section 143(3) r.w.s. 147 of Income Tax Act, 1961 (in short ‘Act’) dated 31.10.2016.
Brief facts of the case are, based on the certain information received from ADIT(Investigation), Visakhapatnam that the assessee Ms. Erothi Latha Rani and three others namely Mrs Erothi Appala Narasamma, Mother of the assessee; Ms. Erothi Lily Rani, and Ms. Purnima rani, sisters of the assessee, have deposited cash of Rs.9,00,000/- each in their Axis Bank account during the F.Y. 2008-09. The ADIT(Inv.), further stated that assessee did not have any sources for the cash deposits amounting to Rs.9,00,000/- in her individual capacity and accordingly passed information to the territorial jurisdictional Assessing Officer. It was observed that assessee did not file return of income by disclosing the sources for cash deposits made in her Axis Bank Account during the F.Y. 2008-09. Therefore, Ld. Assessing Officer [hereinafter in short “Ld.AO"] had reason to believe that the income chargeable to tax has escaped assessment within the meaning of section 147 of Income Tax Act, 1961 (in short ‘Act’). Thereafter proceeded to issue notice under section 148 of the Act on 29.03.2016. In response to the notice under section 148 of the Act, assessee filed the return of income on 20.04.2016 admitting a total income of Rs.60,600/- representing the interest income. Subsequently, notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. In response, Shri
Page No. 3 & 185/VIZ/2023 Erothi Latha Rani & Erothi Purnima Rani J. Kurma Rao, Income Tax Practitioner appeared from time to time and furnished the details as called for by the Ld. AO.
The contention of the assessee is that the she had received gift amount of 5. Rs.9,00,000/- from her mother Mrs Erothi Appala Narasamma in cash during the impugned assessment year which was deposited into the bank account of the assessee. Ld. AO noticed that the assessment in the case of her mother Mrs Erothi Appala Narasamma was also subjected to scrutiny assessment, where it was directed to explain the sources to sum of Rs.36,00,000/- accumulated and gifted to her three daughters amounting to Rs.9,00,000/- each. The mother of the assessee stated that the sum of Rs.36,00,000/- was accumulated from agricultural savings over a period of 15 years and being an illiterate person, she has not deposited into her bank account. She also confirmed that she has given gift of Rs.9,00,000/- to her daughter which was deposited to her daughter bank account. Ld. AO observed that the entire sum of Rs.36,00,000/- was considered as income of the mother of the assessee in the A.Y. 2009-10 and considered it as not proved. Accordingly, Ld. AO proceeded to complete the assessment of the assessee by making addition of Rs.9,00,000/- as unexplained investment under section 69 of the Act in the hands of the assessee during the A.Y. 2009-10.
On being aggrieved by the order of the Ld. AO, assessee filed an appeal before the Ld. CIT(A). Assessee reiterated the submissions made before the Page No. 4 & 185/VIZ/2023 Erothi Latha Rani & Erothi Purnima Rani Ld.AO. Ld. CIT(A) rejected the submissions made by the assessee and dismissed the appeal of the assessee.
On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal: -
1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.
2. The learned Commissioner of Income Tax (Appeals) ought to have quashed the notice u/s 148 of the Act as invalid and the consequent reassessment proceedings as void ab initio.
3. The learned Commissioner of Income Tax (Appeals) is notjustified in sustaining the addition of Rs.9,00,000 made by the assessing officer u/s 69 of the Act towards alleged unexplained deposit in bank account of the appellant.
4. Any other grounds may be urged at the time of hearing.”
Ground Nos. 1 and 4 are general in nature and needs no adjudication.
Ground No. 2 is relating to initiation of reassessment proceedings under section 148 of the Act, which was not argued by the Ld. Authorised Representative [hereinafter “Ld.AR”].
Ground No. 3 relates to sustaining the addition of Rs.9,00,000/- under section 69 of the Act. On this issue, Ld.AR submitted that it was not disputed by the revenue that the mother Mrs Erothi Appala Narasamma has given gift of Rs.9,00,000/- to each of her daughters, out of her past savings from agricultural income and from sale of agricultural land but the sources for the mother of the Page No. 5 & 185/VIZ/2023 Erothi Latha Rani & Erothi Purnima Rani assessee was doubted by the AO. During the assessment, in the hands of the mother Mrs Erothi Appala Narasamma, the Ld. AO proceeded to add an amount of Rs.36,00,000/- without accepting the submissions of the mother that the amount was accumulated out of her past savings. Ld.AR submitted that Ld. AO in the instant case, has not disputed the gift received and has once again taxed in the hands of the assessee. Further, he also submitted that the same amount be taxed in the hands of the assessee’s mother and in the hands of the assessee. He also further submitted that against order of the Ld. AO the appeal is pending before Ld. CIT(A) in the case of her mother Mrs Erothi Appala Narasamma. He therefore pleaded that the addition of Rs.9,00,000/- in the hands of the daughters is not justifiable and hence prayed for deletion.
Percontra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] relied on the orders of the Revenue Authorities.
We have heard both the sides and perused the material available on record. It is an admitted and undisputed fact that the assessee has deposited Rs.9,00,000/- from the gift received from her mother Mrs Erothi Appala Narasamma during the impugned assessment year. The Gift was stated to be received in cash, given by her mother out of accumulated savings over a period of 15 years from agricultural income and from sale of agricultural land. During the scrutiny assessment in the hands of the mother an amount of Rs.36,00,000/-
Page No. 6 & 185/VIZ/2023 Erothi Latha Rani & Erothi Purnima Rani was added to her total income which is now pending before the Ld. CIT(A) for adjudication. Since it was claimed by the Ld.AR, out of Rs.36,00,000/- accumulated by the mother of the assessee, she had gifted to her daughters Rs.9,00,000/- each and she herself has deposited Rs.9,00,000/- in her bank account by way of cash and since the addition was made in the hands of the assessee’s mother, same amount cannot be added in the hands of the assessee. There is no dispute on the fact that the assessee has received a gift from her mother. Further, we are also of the considered view that the addition cannot be made in the hands of the assessee, since the sources of the donor cannot be proved. In these circumstances, we find the addition made in the hands of the assessee is not justifiable and could not be sustained. Thus, ground No. 3 raised by the assessee is allowed.
In the result, appeal filed by the assessee is allowed.
Assessee has raised following grounds of appeal: - “1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.
2. The learned Commissioner of Income Tax (Appeals) ought to have quashed the notice u/s 148 of the Act as invalid and the consequent reassessment proceedings as void ab initio.
3. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.9,00,000 made by the assessing officer u/s Page No. 7 & 185/VIZ/2023 Erothi Latha Rani & Erothi Purnima Rani 69 of the Act towards alleged unexplained deposit in bank account of the appellant.
4. Any other grounds may be urged at the time of hearing.”
We observe that Grounds raised by the assessee (Erothi Purnima Rani) in this appeal are identical to grounds raised in the case of Erothi Latha Rani in and our decision in the aforesaid paragraphs, shall mutatis mutandis apply to these grounds also.
In the result, appeal filed by the assessee is allowed.
To sum-up, both the appeals filed by the assessees are allowed.
Order pronounced in the open court on 22nd August, 2025.