JITENDER PAL,NEW DELHI vs. INCOME TAX OFFICER, WARD 59(5), NEW DELHI
Facts
For Assessment Year 2017-18, the assessee, an insurance agent, deposited Rs. 8,64,000/- in cash during demonetization. The Assessing Officer (AO) accepted Rs. 1,40,000/- but added the remaining Rs. 7,24,000/- as unexplained income, a decision upheld by the CIT(A). The assessee argued the deposits were from business receipts and provided evidence including policy details, bank statements, and a complaint under the Negotiable Instrument Act.
Held
The Tribunal held that the lower authorities failed to properly consider the assessee's evidence, which showed that the cash deposits were from business receipts and that the Revenue had not controverted this material. Consequently, the addition of Rs. 7,24,000/- as unexplained income was deemed unsustainable and deleted. Grounds 2 and 4 of the appeal were specifically allowed.
Key Issues
The key issues were the confirmation of an addition of Rs. 7,24,000/- as unexplained cash deposit under sections 69A and 115BBE, and whether the lower authorities properly considered the assessee's explanation and evidence that the deposits were from business receipts.
Sections Cited
69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
PER KUL BHARAT, JM:
This appeal, by the assessee, is directed against the order of the learned
Commissioner of Income-tax (Appeals)-9, Mumbai, dated 31.01.2024, pertaining
to the assessment year 2017-18. The assessee has raised following grounds of
appeal:
2 ITA no. 1276/Del/2024
“1 That the Ld. CTT(A) has erred in misunderstanding the facts of the case
2 That the Ld. CTT(A) has further erred in confirming the addition of Rs. 724,000.00 in a mechanical and arbitrary manner
3 That the Ld. CIT(A) has further erred in violating the Principles of natural Justice
4 That the Ld. CIT(A) has further erred in confirming the action of the AO in invoking the provisions of section 69A and 115BBE incomplete disregard of the intention of the revenue in introducing these provisions
That the Ld. CIT(A) has further erred in converting a valid explanation into no explanation at all.
6 That the Ld. CIT(A) has further erred in validating the requirement of the AO to ask the assessee to provide copies of the insurance policies running into hundreds.
The appellant craves leave to file one or more grounds of appeal before or at the time of hearing.”
Facts, in brief, are that for A.Y. 2017-18 the assessee filed his return on
21.07.2017, declaring income of Rs. 5,50,050/-. During assessment proceedings
the AO noticed that during demonetization period assessee had cash deposits of Rs.
8,64,000/-. Assessee’s submission was that out of total deposit, Rs. 1,40,000/- was
deposited in new currency; Rs. 2,44,000/- was kept for facility emergency and
house-hold expenses; Rs. 1,57,000/- cash received from unidentifiable person; and
Rs. 4,63,000/- cash received from unidentifiable receipts vehicle insurance
premium received in cash from various clients. The AO accepted the assessee’s
3 ITA no. 1276/Del/2024 explanation of deposit of Rs. 1,40,000/- in new currency. In respect of remaining
cash deposit of Rs. 7,24,000/- the AO rejected the explanation furnished by the
assessee and added the same to the income of the assessee by treating the same as
unexplained income of the assessee. Thus, completing the assessment at total
income of Rs. 12,74,050/-. Aggrieved against it assessee preferred appeal before
learned CIT(Appeals) who also upheld the action of the AO and dismissed the
assessee’s appeal. Aggrieved against it the assessee is in appeal before this
Tribunal.
The assessee has taken multiple grounds but in essence he is challenging
non-granting of adequate opportunity by the authorities below. He also contended
that the learned CIT(Appeals) failed to consider the fact in right perspective. The
assessee is a general insurance agent and the amount so deposited is out of
business receipts. He also submitted that the lower authorities have not considered
the material placed before them.
Apropos to the grounds, learned counsel for the assessee took me through
the impugned order and also the paper book filed by him wherein he has filed the
details of policies issued during the month of November 2016; copies of policy
documents; bank statement and the complaint filed by him under the Negotiable
Instrument Act against one Mr. Amar Jeet Singh to buttress the contention that the
amount was deposited out of the explained source of income. Copy of bank
4 ITA no. 1276/Del/2024 account summary for F.Y. 2016-17 is also submitted. As per this, total cash
deposited during the year is 53,80,600/-. It is also pointed out that in the month of
October 2015 a sum of Rs. 5,81,000/- was deposited. The payments were also
made to the Insurance Company. From the bank statement submitted by the
assessee it is seen that there are payments made to Bajaj Allianz general Insurance
out of deposits. Thus, he submitted that the impugned order is erroneous and
against the facts on record.
On the other hand, learned DR supported the orders of lower authorities.
I have heard rival submissions and perused the material available on record.
It is seen from the paper book submitted by the assessee that from the bank
statement it is transpired that the assessee has made various payments to the
Insurance Company and also deposited the cash in the bank account. The assessee
has also given list of beneficiaries of the insurance. Looking to the material on
record I am of the considered view that the lower authorities have failed to
appreciate the fact in right perspective and also the material placed by the assessee
was not duly considered. Therefore, considering the material placed before me,
which has not been controverted by the Revenue, I am of the considered view that
the impugned addition as made by the AO is not sustainable. Hence, the impugned
5 ITA no. 1276/Del/2024 addition of Rs. 7,24,000/- is hereby deleted. Grounds nos. 2 & 4 are allowed. Other grounds are general in nature and need no adjudication.
In the result, appeal of the assessee is allowed.
Order pronounced in open court on 12th September, 2024.
Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
