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Facts
The Assessing Officer made an addition of Rs. 25,59,405/- to the assessee's income for cash deposits in bank accounts. The assessee explained these deposits were from school fees collected and his wife's agricultural income/land sale proceeds, but the AO and CIT(A) disbelieved this, with the CIT(A) confirming a reduced addition of Rs. 15,95,205/-.
Held
The Tribunal found the assessee's explanation, supported by evidence including the school manager's confirmation and wife's affidavit, to be acceptable. It ruled that the lower authorities disbelieved the explanation based on mere suspicion and conjecture, setting aside the CIT(A)'s order and directing the deletion of the entire addition of Rs. 25,59,405/-.
Key Issues
Whether cash deposits in the assessee's bank accounts, explained as collected school fees and wife's agricultural income/land sale proceeds, could be added to income as unexplained credits when supporting evidence was provided.
Sections Cited
Section 253(3) of the I.T. Act, Section 147 of the I.T. Act, Section 143(3) of the I.T. Act
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Income Tax Appellate Tribunal, ALLAHABAD BENCH “SMC”, ALLAHABAD
Before: SHRI ANADEE NATH MISSHRA & SHRI SUBHASH MALGURIA
2011-12 against impugned appellate order dated 27/06/2024 (DIN & Order No.ITBA/NFAC/S/250/2024- 25/1066142467(1) of Commissioner of Income Tax (Appeals) [“CIT(A)” for short].
This appeal has been filed by the assessee, beyond time limit prescribed under section 253(3) of the I.T. Act. The assessee has submitted an application dated 25/11/2024 duly supported by affidavit for condonation of delay in filing of the appeal pleading that the delay was unintentional and beyond the control of the assessee and has requested to admit the appeal for hearing. The learned Sr. Departmental Representative for Revenue did not express any objection to assessee’s application for condonation of delay in filing of the appeal. In view of the foregoing, and in specific facts and circumstances of the present appeal before us, the delay in filing of this appeal is condoned; and the appeal is admitted for hearing.
The facts of the case, in brief, are that the assessment order dated 29/12/2018 was passed by the Assessing Officer u/s 147/143(3) of the Act whereby the assessee’s total income was determined at Rs.27,18,685/- as against returned income of Rs.1,59,280/-. In the aforesaid assessment order, an addition of Rs.25,59,405/- was made on account of cash deposited by the assessee in bank account. The assessee is an employee of GSJS Public School. During the assessment proceedings the Assessing Officer asked the assessee to furnish explanation regarding cash deposit of aforesaid amount of Rs.25,59,405/- in bank accounts (in State Bank of India and in ICICI Bank). The assessee explained that the amount deposited in aforesaid two bank accounts was out of fees collected from students by the school. The Assessing Officer disbelieved the assessee’s explanation and made the aforesaid addition of Rs.25,59,405/-.
3.1 Aggrieved, the assessee filed appeal in the office of the learned CIT(A). During appellate proceedings in the office of the learned CIT(A), the assessee reiterated the submissions that the cash deposit was towards the fees collected from the students for school education. He further submitted that the Manager of the school was produced before the Assessing Officer, who confirmed that the assessee had used his bank account for depositing fees collected from the students. The assessee also submitted that the bank account was used for personal purposes of his own and his family. He submitted that the assessee’s wife had agricultural income, which was also deposited in the bank account. The assessee furnished affidavit of his wife to the effect that her agricultural income and sale proceeds of land in cash were also deposited in the bank. However, the learned CIT(A) applied peak credit theory and confirmed the addition of Rs.15,95,205/- out of the total addition of Rs.25,59,405/-.
The present appeal has been filed by the assessee against the aforesaid impugned order of learned CIT(A). At the time of hearing, the assessee was represented by none. In the absence of any representation from the assessee’s side, we heard learned D.R. and perused the materials available on record. The learned D.R. placed reliance on the assessment order and on the impugned order of learned CIT(A).
We have heard learned D.R. and perused the materials available on record. It is found that the assessee had produced the Manager of the school in support of the claim that the aforesaid bank accounts were used for depositing cash received from the students of the school. It is further found that the assessee has submitted the affidavit of his wife to the effect that the bank account was used for depositing her agricultural income and sale proceeds of agricultural land in cash. The Assessing Officer and the learned CIT(A) have disbelieved the explanation furnished by the assessee merely on the basis of suspicion, doubt and conjecture. The explanation furnished by the assessee has been disbelieved despite evidence placed on record by the assessee in support of the explanation. In the specific facts and circumstances of the present case, the explanation furnished by the assessee is found to be acceptable. Therefore, we set aside the impugned order of learned CIT(A) and direct the Assessing Officer to delete the entire addition of Rs.25,59,405/- including the aforesaid amount of Rs.15,95,205/- which was confirmed by learned CIT(A) in the impugned order.
In the result, the appeal of the assessee stands allowed.
(Order pronounced in the open court on 25/08/2025)