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Facts
The Assessing Officer (AO) initially added Rs. 11,45,000 to the assessee's income. Subsequently, the AO deleted this addition under Section 154, accepting that the cash deposits were from retirement benefits. However, the Pr. CIT, under Section 263, directed the AO to re-inquire, leading to the re-addition of the same amount by the AO. The CIT(A) then granted 50% relief.
Held
The Tribunal held that since the Department had previously accepted the source of the cash deposits (retirement benefits) in rectification proceedings under Section 154, there was no legal basis to sustain any addition under Section 69A. Therefore, the Tribunal set aside the CIT(A)'s order and directed the AO to delete the entire addition.
Key Issues
The key legal issue was whether an addition, once deleted by the AO in rectification proceedings after accepting the source of funds, could be re-added based on a Pr. CIT's direction under Section 263.
Sections Cited
Section 154, Section 263, Section 69A, Section 147, Section 144B, Section 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 10.11.2025 for the assessment year 2013-14 as per the grounds of appeal on record.
2. At the very outset, the Ld. Counsel for the assessee submitted that this is a case where the A.O added an amount of Rs.11,45,000/- during the original assessment and consequent to a rectification application filed by the assessee u/s.154 of the Income Tax Act, 1961 (for short ‘the Act’), the said addition was deleted by the A.O. For the sake of completeness, the relevant extract of the order passed by the A.O u/s. 154 of the Act, dated 02.04.2019 are extracted as follows: “Apparent from the record it is observed that in response to the notice u/s. 148 of the IT Act, 1961 the assessee filed return of income on 24-04-2018 showing total taxable income from salary (pension from State Govt.) and submitted written submission on 25-03.2019 to this office, copies of such as ITR-1 along with the computation of taxable income of Rs.3,02,680/-. Regarding cash deposits lump sum amount which were received at the time of retirement by way of PF, gratuity and leave encashment. At the same time, the assessee is having diagnosed with cancer and suffering this decease. The penalty u/s. 271(1)(c) of the Act was initiated, but after rectifying u/s. 154, this penalty does not attract. In response to the notice u/s. 148 of the IT Act, 1961 the assessee filed return of his income on 24-04-2018 vide Ack. No.612516340240418 showing total taxable salary income of Rs.3,02,680/- is accepted, and therefore, the order passed u/s. 144 of the IT Act, 1961 is rectified.”
3. Thereafter, as per order passed by the Pr. CIT u/s. 263 of the Act, dated 27.03.2021, consequential assessment order was passed wherein again the same amount addition was made vide order passed by the A.O u/s. 147 r.w.s. 263 r.w.s. 144B of the Act, dated 28.03.2022.
That as discernable, the Department had admitted in Section 154 proceedings that source of such cash deposits were from various retirement benefits and therefore, the income was revised and accepted at Rs.3,02,680/- by the A.O. However again the Pr. CIT through his order passed u/s. 263 of the Act had directed the A.O to inquire into the said cash deposits of Rs.11,45,000/- and accordingly, in the consequent order, dated 28.03.2022, the A.O had added the entire same amount of Rs.11,45,000/- in the hands of the assessee.
That during the First Appellate Proceedings, the Ld. CIT(Appeals)/NFAC had given relief of 50% of the said addition.
I am of the considered view that in the original assessment when the amount was added as unexplained money u/s.69A of the Act in the hands of the assessee and thereafter, in the rectification proceedings u/s. 154 of the Act, the Department itself has admitted the validity of the nature and source of such cash deposits i.e. various retirement benefits of the assessee which was deposited. In such scenario, there cannot be any 4 Beeraswamy Yogeshwar Mudaliar Vs. ITO-1, Ambikapur (C.G.) legal sustainability of any addition u/s. 69A of the Act in the hands of the assessee. In view thereof, the order of the Ld. CIT(Appeals)/NFAC is set- aside and the A.O is directed to delete the additions which had been sustained by the Ld. CIT(Appeals)/NFAC from the hands of the assessee while giving appeal effect of this order.
As per the aforesaid terms grounds of appeal of the assessee are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in open court on 16th day of February, 2026.