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Facts
The assessee's case was selected for scrutiny assessment due to a cash deposit. The Assessing Officer (AO) made an addition of Rs. 1,62,676/- under Section 69A for non-disclosure of the closing balance in the assessee's bank accounts, which the assessee attributed to a bona fide mistake by the accountant. The CIT(A) upheld this addition.
Held
The Tribunal observed that the non-disclosure was indeed a bona fide mistake by the accountant and not connected with any unexplained income, as the assessee had consistently explained. Considering the totality of facts, the Tribunal directed the Assessing Officer to delete the addition.
Key Issues
Whether an addition made under Section 69A for non-disclosure of a bank account's closing balance, which the assessee claims was a bona fide mistake by the accountant and not unexplained income, should be deleted.
Sections Cited
69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
This appeal, by the assessee, is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 22.12.2023, pertaining to the assessment year 2018-19. The assessee has raised following grounds of appeal:
“1. That the impugned order passed by the Ld. AO is bad in law, without jurisdiction and ultra-vires the provisions of the Act.
2. That having regard to the facts and circumstances of the case, Ld. AO has erred in law and on facts in making addition of Rs. 1,62,676/- u/s 69A of the Act.
3. That the Ld. CIT(A) has erred in law and on facts, in confirming the action of Ld. AO in making addition of Rs. 1,62,676/- in the hands of the assessee us 69A of the Act.
4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
Facts, in brief, are that case of the assessee was selected for complete scrutiny assessment on account of cash deposit and verification of transaction.
After issuing statutory notices and giving opportunity to the assessee the AO proceeded to frame the assessment. The AO made addition of Rs. 1,62,676/- on account of non-disclosure of closing balance of the bank accounts held by the assessee. Before AO the assessee had stated that it was a mistake on the part of the Accountant who failed to disclose the closing amount. However, the AO did not accept the contention of the assessee and made the addition. Thus, he assessed income at Rs. 6,35,360/- against the returned income of Rs. 4,72,683/-. Aggrieved against this the assessee preferred appeal before the learned CIT(A) who sustained the finding of the AO. Now the assessee is in appeal before this Tribunal.
Learned counsel for the assessee vehemently argued that the authorities below failed to appreciate the fact that the mere mistake on the part of the Accountant would not be basis for making addition. He submitted that proper explanation was provided about the total balance lying credited in the bank accounts of the assessee. Reliance is placed on the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Kailash Jewellery House ITA no. 613/2010.
On the other hand, learned DR opposed the submissions and supported the authorities below.
I have heard rival submissions and perused the material available on record.
The only effective ground in this appeal is against sustaining the addition of Rs. 1,62,676/- being closing balance in the bank account held by the assessee. Basis of such addition is stated to be claim of the assessee about closing balance being Nil.
It is contended that such claim was based upon a bona fide mistake and no prejudice is caused to the Revenue and it was brought to the notice of the concerned authority vide letter dated 18.12.2015. There is no denying the fact that the assessee himself has stated before the lower authority about the bona fide mistake and the closing balance is not connected with any unexplained income. I, therefore, considering the totality of facts, direct the AO to delete the addition.
Ground is allowed.
Appeal of the assessee is allowed.
Order pronounced in open court on 27th June, 2024.