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Facts
The Assessing Officer (AO) made an addition of Rs. 1,25,000/- for unexplained cash credit in the assessee's bank account, comprising Rs. 1,00,000/- bank deposit and Rs. 25,000/- cash deposit, as the assessee failed to respond to a notice u/s 142(1). Before the CIT(A), the assessee explained Rs. 1,00,000/- as salary and Rs. 25,000/- from past savings, but the CIT(A) sustained the addition citing lack of evidence and non-disclosure in the ITR.
Held
The Tribunal noted that the assessee's salary income from the same employer was accepted in previous assessment years. It held that the CIT(A) failed to consider the explanation properly and that the non-disclosure of salary in the ITR for the current year, when consistency in facts was demonstrated, was not sufficient to disbelieve the explanation. Consequently, the addition made u/s 68 could not be sustained.
Key Issues
Whether the addition of Rs. 1,25,000/- as unexplained cash credit under Section 68 of the Income Tax Act was justified, given the assessee's explanation of salary income and past savings, and the consistent acceptance of salary income in prior assessment years.
Sections Cited
144, 142(1), 153D, 69A, 115BBE, 139, 68
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Income Tax Appellate Tribunal, DELHI BENCHES : F : NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI ANUBHAV SHARMA
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 22.03.2023 of the Commissioner of Income-tax (Appeals)-3, Gurgaon (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeal No.10775/CIT(A)-3/GGN/2018-19 arising out of the appeal before it against the order dated 26.04.2021 passed u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the DCIT, Central Circle-II, Faridabad (hereinafter referred to as the Ld. AO).
On hearing both the sides, we find that the AO has primarily drawn conclusion of unexplained cash credit as the assessee had failed to respond to notice u/s 142(1) and, accordingly, the assessment order was passed u/s 144 of the Act. Then, before the CIT(A), the assessee had tried to explain the deposits of Rs. 1,25,000/- with following: “Ld. A.O. has made an aggregate addition of Rs.1,25,000/- being the amount of Rs.1,00,000/- credited in bank account and cash deposited into the bank account of Rs. 25,000/- allegedly on the ground that assessee failed to substantiate the source of the same. It is respectfully submitted that vide letter dated 16.02.2021 (PB 6-12) the assessee duly explained the source of credit of an amount of Rs. 1,00,000/- on 22.06.2018 as salary received during F.Y. 2019-20, which is evident from copy of computation of income, tax credit statement for A.Y. 2019-20 and cash of Rs.25,000/- on 17.04.2018 deposited out of past savings and cash withdrawals and thus, the source of aggregate of Rs. 1,25,000/- is duly explained. It is not out of place to submit that income of assessee during the impugned year is below the maximum amount chargeable to tax under the Income Tax Act, 1961. Therefore, there is no question of making any addition on account of the cash deposited into the bank out of the cash in hand available with assessee and in respect of credit into the bank account.”
However, the CIT(A) was not satisfied and with the following finding in para 4, sustained the additions:- “4. Ground no. 1-11 The AO has made addition in this case of Rs. 1,25,000/- on account of unexplained credits in bank account. It was explained during the appellate proceedings that the appellant has received salary of Rs. 1 lacs from one of the company of the SRS group and further cash of Rs. 25,000/- was deposited out of past savings. It was further stated that there was no valid approval u/s 153D of the Act. On facts of case and material on record it is found that there is no evidence on record for the claim of salary received during the year. The explanation offered has been found without any evidence. Merely making a claim in this 2
respect is not sufficient to corroborate the source of credits in the bank account. No such income from salary has been disclosed in the ITR filed u/s 139 of the Act furnished on 29.12.2020. Accordingly it is held that the AO was justified in making addition of Rs. 1,25,000/-. The same is hereby confirmed u/s 69A of the Act r.w.s. 115BBE of the Act. Grounds of appeal no. 4and 5 are dismissed. From the record it is found that the order of the AO has been approved by Addl. CIT on 15.04.2021 u/s 153D of the Act. Accordingly ground of appeal 8 is dismissed. Remaining grounds of appeal are general in nature.”
The ld. AR submitted that the assessee’s return of income for AY 2013- 14, 2014-15, 2015-16, 2016-17 and 2018-19 was examined by the AO and the salary income was accepted in all these years. This fact is duly established by the documents relating to these assessments filed in the paper book. It is submitted that in this year a lumpsum payment of Rs.1 lakh as salary was received as the assessee had was given up employment and settlement of the same a lumpsum amount was received.
We are of the considered view that the ld.CIT(A) has completely failed to take into consideration the due explanation and, accordingly, the addition u/s 68 cannot be sustained. The question of assessee having a job and from which he was having salary should not have been doubted in present AY, when in precious year from same employer the salary was accepted. The reason that ‘No such income from salary has been disclosed in the ITR filed u/s 139 of the Act furnished on 29.12.2020’., is not sufficient to disbelieve an explanation based on facts explained on consistency principles. The ground is allowed.
The appeal of the assessee is allowed. Order pronounced in the open court on 11.12.2024. Sd.- Sd/- (S. RIFAUR RAHMAN) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 11th December, 2024. dk