Loading judgment…
Facts
The assessee deposited Rs. 16,71,000 in her bank accounts and explained Rs. 5,72,000 as receipts from relatives and a petty business. The Assessing Officer, however, made an addition of Rs. 5,06,900 as unexplained cash from sales and debtors, which was affirmed by the JCIT(A) citing a lack of purchase and sales bills.
Held
The Tribunal found that the JCIT(A) erroneously overlooked the assessee's claim of running a petty business, which was substantiated by references in earlier assessment documents. The Tribunal concluded that the addition made by the Assessing Officer, therefore, could not be sustained.
Key Issues
Whether an addition made under Section 69A for unexplained cash receipts from sales and debtors is justified when the assessee claims the amount is business proceeds, and if the lower authorities failed to consider the assessee's explanation of running a petty business.
Sections Cited
143(3), 69A, 271AAC, 270A(2), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. Kul BharatDr. B. R. R. Kumar
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of Addl./JCIT(A)-2, Mumbai dated 17.10.2023.
Following grounds have been raised by the assessee:
“1) The Appellant filed his Return of Income for A.Y. 2017-18 declaring an Income of Rs. 1,93,776 /. The taxable income has been fixed at Rs. 7,79,816/- as per the assessment order under section 143 (3). 2) The Learned Assessing Officer has made an addition of Rs.5,86,040/-. The details are Rs. 5,06,900/- in account of addition under section 69A of Income Tax Act. 1961 And Rs.79,140/- in an account of Salary Income. 3) The Learned Assessing Officer also initiated penalty proceedings u/s 271AAC of Income Tax Act 1961 and U/s 270-A (2) for under reporting respectively for the above-mentioned addition. 4) The Appellant has not accepted the addition of Income as the amount, in addition, was not an Un-explained income U/s 69 A the amount Rs. 5,06,900/- was a receipt against the sale 2 Raveena Khera of products which the Assessee received during the year, are based on profit & loss account attached with the Income-tax Return for the A.Y. 2017-18. The reason for this belief is explained in our attached sheet. 5) The Appellant has accepted the amount of Rs. 79,140/- as an addition of Income, under the head Income from the salary. With a request not to impose penalty u/s 270A (2) 6) The Appellant, in reply to the notice under section 271AAC and 270A (2) also requested the Assessing Officer to drop the penalty proceedings. 7) The Appellant filed an appeal against the order under section 143(3) of the Income Tax Act 1961 passed by Ward 34(4) Delhi to Add/JCIT (A)-2, Mumbai vide appeal no. CIT (A) Delhi- 12/11123/2019-20. 3) The Order U/s 250 Of Income Tax Act 1961, has been passed on 17/10/2023 by the office of The Commissioner of Income Tax, Appeal Add/JCIT(A)-2, Mumbai 9) This appeal is being preferred with a request to delete the demand for the Addition of Taxable income U/s 250 and Penalty proceedings under sections 271AAC and 270A (2).”
The pertinent facts relevant for adjudication of this case are that the assessee had deposited the total amount of Rs.16,71,000/- in her bank accounts maintained at Kotak Mahindra Bank and ICICI Bank Ltd. Before the Assessing Officer, the assessee submitted that an amount of Rs.5,72,000/- has been received from four of her relatives on various occasions and from the petty business. The Assessing Officer held that the cash received from sales & debtors of Rs.5,06,900/- has not been proved.
The ld. JCIT(A) affirmed the action of the Assessing Officer on the grounds that no purchase bills and sales bills have been provided.
We find that the ld. JCIT(A) wrongly held that the assessee never took a stand that these are proceeds from business rather
3 Raveena Khera produced statement of relative to show that they had given gifts. We find that the explanation of running a business has already been mentioned in para 7 page 3 and also at page 5 of the Assessment Order. The assessee has duly submitted that the assessee was into petty business before the Assessing Officer, the fact of which has been ignored wrongly by the ld. JCIT(A). Hence, keeping in view, the entire record, we hold that the addition made by the Assessing Officer cannot withstand the test of fitness.
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 23/04/2024.