AARTI SEHGAL,YAMUNA NAGAR vs. INCOME TAX OFFICER WARD 1 , YUMNA NAGAR

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ITA 530/CHANDI/2024Status: DisposedITAT Chandigarh09 December 2024AY 2017-18Bench: SHRI SANJAY GARG (Judicial Member)4 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 assessee had demonstrated the source of the deposits, which was a withdrawal from her husband's sufficient capital in the partnership firm. Therefore, the addition made by the lower authorities was not justified.

What were the facts?

The assessee deposited Rs. 26,00,000/- in her bank account during demonetization. The Assessing Officer added this amount as unexplained cash, stating the assessee's capital in the firm was insufficient. The CIT(A) upheld this addition.

What were the issues?

Whether the cash deposits in the assessee's bank account were unexplained, and if the assessee had sufficiently demonstrated the source of these funds.

Which sections of the Income-tax Act were involved?

Not specified

AI-generated summary — verify with the full judgment below

(PHYSICAL HEARING) �नधा�रतीक�ओरसे/Assessee by : Shri. Ajay Jain, C.A. राज�वक�ओरसे/ Revenue by : Shri. Vivek Vardhan, J.C.I.T सुनवाईक�तार�ख/Date of Hearing : 13.11.2024 उदघोषणाक�तार�ख/Date of Pronouncement : 09.12.2024 आदेश/Order The present appeal has been preferred by the assessee against the order passed by the ld. Commissioner of Income Tax, Appeal National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “Ld. CIT(A)] dated 05.03.2024 for the Assessment Year: 2017-18. The assessee in this appeal is aggrieved by the action of the ld. CIT(A) vide which he confirmed the addition of Rs.26,00,000/- made by the Assessing Officer on account of unexplained cash deposits in the bank account of the assessee.

Aarti Sehgal v. ITO 2 2. Before the Assessing Officer, the assessee explained that the assessee had withdrawn capital from her partnership firm M/s S. N. Wood Industries, Yamuna Nagar and deposited the said amount in her bank account during the demonetization period. However, the Assessing Officer rejected the aforesaid contention observing that the assessee had only a capital of Rs.7,72,915/- in the firm and there was no question of withdrawing more than her capital lying with the firm. The ld. CIT(A) also confirmed the aforesaid findings of the Assessing Officer.

Before us, the ld. Counsel for the assessee has submitted that though, in the capital account of the assessee, the amount was less, however, the capital of her husband was sufficient, which was at Rs.39,65,931/-, out of which the aforesaid amount was withdrawn and deposited in the bank account of the assessee. It was also explained that the firm had taken loan from the bank, which was declared as NPA (Non Performing Assets). That if, the firm would have deposited the amount in its bank account, that would have been seized and appropriated by the bank towards the loan account. That is why, the amount was withdrawn from the firm and deposited in the assessee’s account.

Aarti Sehgal v. ITO 3 4. In this case, the assessee has duly demonstrated the source of the deposits. Therefore, the impugned addition made by the lower authorities is not justified and the same is ordered to be deleted.

In the result, the appeal of the assessee is allowed.

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