SHRI T. PSALMJEBRAJ,ARAKKONAM vs. ITO, VELLORE

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ITA 2600/CHNY/2016Status: DisposedITAT Chennai22 February 2017AY 2011-123 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the cash deposits could have been made from the assessee's opening cash balance, thus explaining the source. Therefore, the addition sustained by the CIT(A) was not warranted.

What were the facts?

The assessee, engaged in religious activities, filed his return of income. The Assessing Officer (AO) made additions for opening balance and cash deposits in his bank account. The CIT(A) deleted the addition for the opening balance but confirmed the addition for cash deposits.

What were the issues?

Whether the cash deposits in the bank account were sufficiently explained by the assessee's opening cash balance, and if the addition made under Section 68 was justified.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ ‘A’ BENCH, CHENNAI

Before: Shri A. Mohan Alankamony

Hearing: 22.02.2017

आदेश / O R D E R

1.

This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-13, Chennai dated 14.07.2016 in and it pertains to assessment year 2011-12 passed u/s. 143(3) r.w.s. 147 of the Act.

2.

The assessee has raised several grounds in his appeal, however the lone issue that survives for adjudication is that the Ld. CIT(A) has erroneously confirmed the order of the Ld. AO with respect to the addition made on account of bank deposits amounting to Rs.1,70,000/-.

3.

The brief facts of the case are that the assessee is an individual engaged in religious activities such as conducting convention meetings, prayers, orchestra etc., on full time basis, filed his return of income on 05.03.2012 admitting total income of Rs.1,59,000/-. Initially, the return was processed u/s. 143(1) of the Act, however the file was taken up for scrutiny and finally assessment was completed on 31.03.2015 u/s. 143 r.w.s.

147/148 of the Act, wherein the Ld. AO made addition for Rs.3,46,000/- being the opening balance against which source could not be established and also made an addition of Rs.1,70,000/- with respect to cash deposits made in his savings bank account on the following dates:-

29.07.2010 Rs.20,000/- 11.08.2010 Rs.90,000/- 06.09.2010 Rs.20,000/- 01.10.2010 Rs.20,000/- 28.10.2010 Rs.20,000/- TOTAL Rs.1,70,000/-

4.

On appeal, the Ld. CIT(A) deleted the addition of Rs.3,46,000/- taking into account of the income return by the assessee during the earlier years and based on the cash flow statement filed by the assessee.

However, as regards Rs.1,70,000/- cash deposit made in the bank accounts of the assessee, the Ld. CIT(A) opined that the source for such deposits was not explained and therefore upheld the action of the Ld. AO, who had invoked the provisions of Section 68 of the Act.

5.

At the outset, I do not find any merit in the order of the Ld. CIT(A) on the issue of addition made on account of cash credit U/s.68 of the Act, because the Ld. CIT(A) had already accepted the fact that the assessee had opening cash balance of Rs.3,46,000/-. There is every possibility that the bank deposit of Rs.1,70,000/- could have been made from the opening cash balance of the assessee. Thus the source of cash deposit is explained. Hence, I’m of the view that the addition sustained by the Ld. CIT(A) for Rs.1,70,000/- is not warranted. Accordingly, I hereby direct the Ld. AO to delete the addition made for Rs.1,70,000/-.

6.

In the result the appeal of the assessee stands allowed.

Order pronounced in the court on the 22nd February, 2017.

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