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Facts
The assessee, an individual, filed their ITR for AY 2017-18 and subsequently deposited Rs. 10.90 lakhs (SBI) and Rs. 18,000 (Central Bank) during the demonetization period. The assessee explained Rs. 7.50 lakhs as a refund of an advance paid for a property in 2012 (received back in 2016) and Rs. 3.40 lakhs from accumulated savings. The Assessing Officer added Rs. 10.90 lakhs under Section 69A as unexplained money, which was upheld by the CIT(A).
Held
The Tribunal held that the assessee had properly explained the sources of the cash deposits with corroborative evidence, and these explanations were not disputed by the Revenue. Consequently, the addition made by the Assessing Officer, based on surmises and conjectures, was deemed unjustified and ordered to be deleted.
Key Issues
Whether the cash deposits made during demonetization, sourced from a refund of property advance and accumulated savings, constitute unexplained money under Section 69A of the Income Tax Act.
Sections Cited
143(3), 143(2), 142(1), 133(6), 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI K NARASIMHA CHARY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
सुिवधई की तधरीख / Date of Hearing : 06/02/2025 घोर्णध की तधरीख/Date of Pronouncement : 20/02/2025 O R D E R PER S. BALAKRISHNAN, Accountant Member :
This appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (“Ld. CIT(A)-NFAC”) vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1070405080(1), dated 18/11/2024 2 for the AY 2017-18 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 (“the Act”) dated 07/12/2019.
Brief facts of the case are that the assessee is an individual deriving income from salary and business filed his return of income admitting a total income of Rs. 3,04,560/- for the AY2017-18 on 20/03/2018. The same was summarily processed on 9/4/2018. Subsequently, the case was selected for scrutiny under CASS to verify the cash deposits made during the demonetization period. Subsequently, statutory notices U/s.143(2) and 142(1) of the Act were issued and served on the assessee. Simultaneously, information was also obtained from the bank U/s. 133(6) of the Act. It was observed that the assessee is having two bank accounts ie., one with State Bank of India, Kankipadu Branch and another with Central Bank of India, Kankipadu Branch. It was also further noticed that the assessee has made cash deposits of Rs. 10,90,000/- in SBI Account and Rs. 18,000/- in his Central Bank account. In response to the notices issued, the assessee submitted that he has paid an advance for buying a property to Smt. Venigalla Srikanya Kumari at Governorpet on 20/12/2012. It was also submitted before the Ld. AO that the property was not registered 3 the by the seller due to some personal problems and she return back the money on 13/03/2016 after selling the property to some other some other person on 11/03/2016. The assessee also furnished a copy of the sale deed dated 11/03/2016 for selling the property for a consideration of Rs. 7 lakhs. In the meantime, the assessee filed a suit against the seller and the Hon’ble Court has passed a decree in favour of the assessee with a direction to the seller to execute the registered sale deed in favour of the assessee within one month and also directed the assessee to deposit the balance sale consideration of Rs. 50,000/-. The Ld.AO thereafter issued a show cause notice on 25/11/2019 requiring the assessee to explain as to why the cash was kept idle for a period of eight months before depositing the same into the bank account during the demonetization period. In reply, the assessee submitted that he wants to purchase a residential property and the assessee could not get bank loan and the funds available with him are not sufficient and therefore he deposited the amount in bank consequent to announcement of demonetization. Further, it was also submitted by the assessee the balance amount of Rs. 3,40,000/- was accumulated out of the savings. The Ld. AO found that it was not supported by any documentary evidence. Further, the Ld. AO found that after 4 depositing Rs. 7 lakhs in SBI, Kankipadu Branch on 14/11/2016, he transferred the amount to M/s. Srinivasa Enterprises for purchase of bullion on the same day. The assessee also provided a copy of the bill. However, the Ld. AO did not accept the fact that the amount was kept idle for a period of eight months and therefore proceeded to add an amount of Rs.10,90,000/- U/s. 69A r.w.s 115BBE of the Act. Being aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A)-NFAC.
3. Before the Ld. CIT(A)-NFAC the assessee made similar submissions wherein the Ld. CIT(A)-NFAC by relying on various judicial pronouncements, dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before us by raising the following grounds:
“1. The Ld. CIT(A) is erred in facts and law while passing the order.
2. The Ld. CIT(A) is not justified in upholding the addition made of Rs. 10,90,000/- by the Assessing Officer U/s. 69A of the Act as unexplained money.
The Ld. CIT(A) is not justified in confirming the addition made by the AO even though the sources explained by the appellant that same was emanated from sale advance received back from the seller and from past accumulated savings has been accepted.
The Ld. CIT(A) is not justified in confirming the addition made on mere observation that the advance given to mentioned seller was out of appellant’s taxable income even though the appellant is a regular filer of tax returns.
5 5. The CIT(A) ought to have accepted the sources explained by the appellant before the Ld. AO with corroborative evidences instead of rejecting the claim with mere surmises and conjectures. 6. The appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of appeal.”
4. The only issue emanating from the above grounds is with respect to the addition of Rs. 10,90,000/- made U/s. 69A as unexplained credits. The Ld. AR submitted that the assessee has paid an advance during March-2012 for buying a property which could not materialize and thereafter, the advance paid by the assessee was received on 13/3/2016 from the seller of the property after selling the same property to some other person. In the meantime, the Ld. AR also explained that, the assessee filed a suit against the seller for registering the sale deed in his favour. The assessee is also a regular filer of income tax returns by declaring approximately Rs. 3 lakhs every year. The Ld. AR further submitted that the assessee’s own savings of Rs.3,40,000/- deposited into the bank account during demonetization is out of the savings from salaries for a period of more than four years. The Ld. AR also submitted the ITR copies of the assessee. He therefore pleaded that since the sources have been explained by the assessee with documentary evidence, addition made U/s. 69A shall be deleted.
6 5. Per contra, the Ld. DR relied on the orders of the Ld.Revenue Authorities.
We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is an admitted fact that the assessee has deposited an amount of Rs.10,90,000/- in his SBI account on 14/11/2016 arising out of the advance given to M/s. Srinivasa Enterprises and out of his own savings of Rs. 3,40,000/-. The assessee has explained the sources for Rs. 7,50,000/- being the amount received as refund of the advance during March-2016 which was paid by the assessee during March-2012. Further, the assessee also submitted copies of his return of income before us to prove that the assessee is a regular filer of the Income Tax Returns and has accumulated savings of Rs. 3,40,000/- over the period of years. The assessee also submitted a copy of the suit filed which was decreed in his favour against the seller. All these above facts are not disputed by the Revenue however, the Ld. AO has proceeded to make an addition on mere surmises and conjectures without appreciating the facts on hand. The Ld. AO has also not brought on record any material to substantiate his view that the assessee was not holding the cash for more than eight months.
7 In this scenario, we are of the considered view that the assessee has properly explained the sources for the cash deposits and hence we are inclined to allow the grounds raised by the assessee.
In the result, appeal filed by the assessee is allowed.
Pronounced in the open Court on 20th February, 2025.