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Facts
The assessee deposited Rs. 65.12 lakhs into their bank account during the demonetization period, claiming it was from an opening cash balance of Rs. 73,76,918/- as of 1.4.2016. The department denied the source of funds because the assessee had not filled the "cash in hand" column in their Income Tax Returns for the assessment years 2016-17 and 2017-18.
Held
The Tribunal held that the addition made by the Assessing Officer (AO) under Section 69 of the Income Tax Act was not sustainable solely because the "cash in hand" column in the ITR was not filled, especially when the opening balance was reflected in the balance sheet. The department failed to provide evidence that the opening cash balance was utilized elsewhere.
Key Issues
Whether the addition of Rs. 65.12 lakhs as unexplained cash deposit is sustainable when the assessee claims it is from opening cash balance, despite not filling the "cash in hand" column in ITR, and whether Section 115BBE is applicable.
Sections Cited
69, 115BBE, 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SHRI SOUNDARARAJAN K.
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of NFAC passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2017-18 dated 1.12.2023. The assessee has raised following grounds of appeal:
1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The learned CIT [Appeals] failed to appreciate that the order of assessment passed by the learned ACIT Circle 5(2)(1) is illegal for want of jurisdiction and that the said lack of jurisdiction is a pure legal issue which can be raised at any stage of the appellate proceedings under the facts and in the circumstances of the appellant’s case.
Devjibhai Patel, Bengaluru Page 2 of 4 3. Without prejudice to the above, the order of assessment passed without issuance of the statutory notice u/s 129 of the Act by the learned A.O. is bad in law and void ab initio and requires to be cancelled.
The learned CIT[A] is not justified in upholding the addition of Rs.65,12,000/- as unexplained cash deposit u/s.69 of the Act, under the facts and in the circumstances of the appellant's case. 4.1 The learned CIT [Appeals] failed to appreciate that the aforesaid addition made by the learned A.O. u/s.69 of the Act is opposed to law and facts of the appellant's case in as much as the cash deposits made by the appellant are from known and explainable sources of funds and hence, the addition made deserves to be deleted. 4.2 Without prejudice to the above, the extent of addition made is excessive and requires to be reduced substantially.
The learned CIT[A] is not justified in upholding the invocation of the provisions of section 115BBE and taxing the aforesaid addition made at the rate of 60% under the facts and in the circumstances of the appellant's case.
Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s. 234-A, 234-B and 234-C of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled.
For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of4he costs
Ground No.1 is general in nature which do not require any adjudication. Ground Nos.2 & 3 are not pressed and hence these grounds are dismissed as not pressed.
The assessee confined to the argument to the issue raised on merit with regard to sustaining addition of Rs.65.12 lakhs as unexplained cash deposit u/s 69 of the Act an`d bring into tax u/s 115BBE of the Act. Thereafter levying penalty u/s 234A, 234B & 234C of the Act.
Devjibhai Patel, Bengaluru Page 3 of 4 4. We have heard the rival submissions and perused the materials available on record. In this case, the assessee has deposited Rs.65.12 lakhs to assessee’s bank account with Canara Bank bearing No.1146101024183 with Vijayanagar Branch, Bengaluru during the demonetization period. The assessee has not furnished the source of this deposit and same has been treated as income u/s 69 of the Act. Before us, ld. A.R. submitted that assessee is having opening cash balance at Rs.73,76,918/-, which is available as on 1.4.2016 and same has been deposited into assessee’s account with Canara Bank. Further, it was submitted that the availability of opening cash balance is denied by the department on the reason that assessee has not filled the column regarding “cash in hand” in the ITR filed by the assessee for the assessment year 2016-17 and 2017- 18. According to the ld. A.R., the assessee has filed the relevant financial statement in these assessment years, which is reflected in its balance sheet, which fact is not denied by the department and only on the technical reason of not filling the relevant column in the ITR regarding “cash in hand” the benefit of availability of opening balance has not been given to the assessee. In our opinion, when the assessee has pleaded that earlier opening balance of cash has been available to the assessee to explain the source of deposit into assessee’s bank account and the due credit of the same to be given and same cannot be rejected on the reason that the relevant column in ITR regarding “cash in hand” is not filled up, if the said cash balance has been shown in the balance sheet of the assessee in the relevant assessment years. In the present case, nothing is brought on record by the department to substantiate that opening cash balance available with the assessee had been utilized elsewhere by the assessee and it is not deposited into assessee’s bank account during demonetization period. Therefore, merely for the reason that relevant column in ITR regarding “cash in hand” has not ben filled up cannot be reason to deny the benefit of availability of opening cash