VIJAYALAKSHMI VALATHURU,TADEPALLI vs. COMMISSIONER OF INCOME TAX (APPEALS), FACELESS ASSESSMENT

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ITA 207/VIZ/2024Status: DisposedITAT Visakhapatnam13 May 2025AY 2017-187 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had established the source of the cash deposits before the AO, which were out of withdrawals made from her spouse's account. The Tribunal noted that while the AO did not accept the submissions due to a time lag of approximately one year between the withdrawals and deposits, there is no legal bar to holding cash for an extended period after withdrawal before depositing it. The AO had not presented any material evidence to demonstrate that the withdrawn cash was utilized for any other purpose. In the absence of such evidence, the Tribunal concluded that the assessee had indeed held the cash for a longer duration before depositing it. Consequently, the Tribunal directed the AO to delete the addition of Rs. 14,34,500. The grounds raised by the assessee were allowed.

What were the facts?

The assessee, Vijayalakshmi Valathuru, filed her return of income for Assessment Year 2017-18 on July 26, 2017, declaring a total income of Rs. 12,78,740. Her case was selected for scrutiny, and the Assessing Officer (AO) issued a notice under section 143(2). The assessee provided explanations and evidence for cash deposits. The AO completed the assessment under section 143(3) on December 9, 2019, treating cash deposits of Rs. 14,34,500 as unexplained money under section 69A, leading to a demand of Rs. 58,91,010, which was later revised to Rs. 14,75,575 under section 154 on December 16, 2019. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the AO's order. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT) after a delay of 29 days, which was condoned.

What were the issues?

1. Whether the time gap between cash withdrawal from a spouse's bank account and its subsequent deposit into the assessee's bank account can be treated as income from undisclosed sources, thereby attracting addition under section 69A of the Income Tax Act, 1961? (Mixed question of law and fact) Assessee's Contention: The assessee argued that the cash deposits were sourced from withdrawals made from her spouse's bank account totaling Rs. 36,20,000 between May 25, 2015, and August 13, 2015. She contended that there is no prohibition against holding cash for a longer period before depositing it. The time lag between withdrawal and deposit, which was approximately one year, should not lead to the deposits being treated as unexplained money, as the source was established. The AO's rejection was based on assumption and surmises. Revenue's Contention: The revenue, through the Learned Departmental Representative (DR), relied on the orders of the lower authorities, implying that the time lag was a valid reason to treat the deposits as unexplained.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM

Before: SHRI VEERAVALLI DURGA RAO, HON’BLE

For Appellant: Shri Chundru Sudheer

आदेश /O R D E R

PER SHRI VEERAVALLI DURGA RAO, JUDICIAL MEMBER:

1.

This appeal is filed by the assessee against revenue order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] vide DIN & Order No:

I.T.A.No.207/VIZ/2024 Vijayalakshmi Valathuru ITBA/NFAC/S/250/2023-24/1060431275(1) dated 02.02.2024 for the A.Y.2017-18 arising out of order passed under section 143(3) of Income Tax Act, 1961 [hereinafter in short “the Act”] dated 09.12.2019.

2.

At the outset, we observe from the appeal record that there is a delay of 29 days in filing the appeal before us. On perusal of the affidavit filed by the Ld.AR and Medical certificate filed along with the petition for condonation of delay, we are of the opinion that the assessee has reasonable and sufficient cause for the delay in filing the appeal before us. Accordingly, we condone the delay and proceed to dispose of the case on merits.

3.

Briefly stated facts of the case are, assessee is an individual filed her return of income on 26.07.2017 admitting a total income of Rs. 12,78,740/- for the A.Y. 2017-18. Subsequently, the case was selected for scrutiny through CASS. The Ld. Assessing Officer (hereinafter in short “Ld. AO") issued a notice under section 143(2) of the Act. Assessee from time to time submitted the explanations and evidences in support of cash deposits made during the year. Considering the explanations of the assessee, Ld. AO completed the assessment under section 143(3) of the Act on 09.12.2019 by treating the entire cash deposits of Rs. 14,34,500/- as unexplained money under section 69A of the Act by raising demand of Rs. 58,91,010/-. The demand was revised under section 154 of the Act, and the Ld. AO reduced the demand to Rs. 14,75,575/- vide order dated 16.12.2019.

Page No. 2

I.T.A.No.207/VIZ/2024 Vijayalakshmi Valathuru 4. On being aggrieved by the order of the Ld. AO, assessee filed an appeal before Ld. CIT(A). Assessee made similar submissions before the Ld.CIT(A). Ld. CIT(A) after examining the same found the claim of the assessee is not tenable and thereby upheld the order of the Ld. AO while dismissing the appeal of the assessee.

5.

On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds in its appeal: - “1. Time gap between withdrawal of cash and its further deposit to the Bank account, cannot be treated as Income from undisclosed sources

2. There is no bar to hold cash by the assessee in any quantum.

3. Amount withdrawn from Spouse Bank account is deposited in Assessee's Bank account cannot be treated as Unexplained Money u/s 69A of Income tax act 4. When Assessing officer does not have discrepancies on Source of Income, treating the Deposits as Unexplained Money Just because of Time lag is unjust and contrary to the Provisions of Law.”

6.

The only issue contested by the assessee is with respect to the addition of Rs. 14.34.500/- being the cash deposits made by the assessee into the bank account. Ld. AR argued that source for the cash deposits were out of withdrawals made from the spouse account as detailed below: -

Date of S.No. Withdrawal made Amount withdrawn by spouse (1) (2) (3) 1. 25.05.2015 Rs.5,80,000 2. 30.06.2015 Rs.24,00,000

Page No. 3

I.T.A.No.207/VIZ/2024 Vijayalakshmi Valathuru Date of S.No. Withdrawal made Amount withdrawn by spouse (1) (2) (3) 3. 17.07.2015 Rs.2,00,000 4. 13.08.2015 Rs.4,40,000 Total Withdrawal by Spouse Rs.36,20,000

7.

Ld.AR further submitted hat assessee was holding the cash and later during the year 2016-2017 deposited the same into the assessee’s bank account as detailed below: - Amount S.No. Date of Deposit Deposited in Rs. 1. 11.04.2016 10,000 2. 25.04.2016 15,000 3. 16.05.2016 20,000 4. 07.06.2016 8,50,000 5. 09.06.2016 4,75,000 6. 25.07.2016 20,000 7. 26.09.2016 10,000 8. 18.10.2016 10,000 9. 31.10.2016 5,000 10. 23.01.2017 3,000 11. 31.01.2017 16,500 Total 14,34,500

8.

Ld.AR argued that, Ld. AO has not considered the cash withdrawals as the source for cash deposits because of time lag of one year between the date of withdrawals and date of deposits. He therefore pleated that the onus of proving the source has been established whereas the Ld. AO has merely not accepted the claim of the assessee based on assumption and surmises. He therefore prayed to delete the addition made by the Ld. AO.

Page No. 4

I.T.A.No.207/VIZ/2024 Vijayalakshmi Valathuru 9. Per contra, Ld. Departmental Representative (hereinafter in short “Ld.DR) heavily relied on the orders of the Revenue Authorities.

10.

We have heard both the sides and perused the material available on record. It is an admitted fact that the assessee has made the cash withdrawals from the account of Shri K. Sankar (spouse of assessee), as below: - S.No. Date of Withdrawal Amount withdrawn made by spouse 1. 25.05.2015 Rs.5,80,000 2. 30.06.2015 Rs.24,00,000 3. 17.07.2015 Rs.2,00,000 4. 13.08.2015 Rs.4,40,000 Total Withdrawal Rs.36,20,000

11.

Assessee stated that these cash were held by her and deposited into her bank account as follows: Amount S.No. Date of Deposit Deposited in Rs. 1. 11.04.2016 10,000 2. 25.04.2016 15,000 3. 16.05.2016 20,000 4. 07.06.2016 8,50,000 5. 09.06.2016 4,75,000 6. 25.07.2016 20,000 7. 26.09.2016 10,000 8. 18.10.2016 10,000 9. 31.10.2016 5,000 10. 23.01.2017 3,000 11. 31.01.2017 16,500 Total 14,34,500

Page No. 5

I.T.A.No.207/VIZ/2024 Vijayalakshmi Valathuru 12. The assessee has established the source of cash deposits before the Ld.AO. However, Ld. AO had not made any enquiries but has not accepted the submissions of the assessee on the basis that there was a time lag of one year between the withdrawals and the deposits. Ld. AO further observed that assessee has not furnished any reasons for keeping such huge amount as cash in hand. However, in our considered view there is no bar in holding the cash after withdrawals for the longer period before being deposited into bank on subsequent dates. Ld. AO has neither brought any material on record to prove that the cash withdrawn by the assessee during the year 2015 was utilized for some other purpose other than making the deposits into the spouse account. In the absence of any material evidence that the cash has been expended it can be concluded that assessee held the cash for a longer period of time before depositing the same into the bank account during the year 2016-2017. We therefore direct the Ld. AO to delete the addition of Rs.14,34,500/- since the assessee has proved the sources of cash deposits into the bank account. Thus, Grounds raised by the assessee are allowed.

13.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 13th May, 2025.

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