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Facts
The assessee deposited Rs. 30,65,000 in cash during the demonetization period, claiming it was a gift from her deceased grandmother. The Assessing Officer (AO) added this amount to the assessee's income as unexplained cash.
Held
The Tribunal held that the cash deposits were a gift from the assessee's deceased grandmother, who had received rental income in cash and saved it over the years. The Tribunal found the explanation satisfactory and the evidence sufficient.
Key Issues
Whether the cash deposits made by the assessee during demonetization were unexplained or a valid gift from her grandmother's rental income.
Sections Cited
69A, 143(2), 142(1), 143(3), 115BBE, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC’’ : NEW DELHI
Asstt. Year : 2017-18 Priyanka vs. ITO, Ward 50(3), Block 5/25, Old Rajinder Nagar, Delhi New Delhi (PAN: AVNPP5108Q) (Appellant) (Respondent) Appellant by : Ms. Meenal Goyal, CA & Sh. Abhinav Jain, Adv. Respondent by : Shri Manoj Kumar, Sr. DR. Date of Hearing 04.09.2025 Date of Pronouncement 24.09.2025 ORDER This appeal by the assessee is emanating from the order of the Ld. NFAC, Delhi dated 26.07.2025 on the solitary ground relating to sustaining the addition of Rs. 30,65,000/- made by the AO u/s. 69A of the Act.
Brief facts of the case are that assessee filed its return of income for the assessment year 2017-18 on 31.10.2017 declaring a total income of Rs. 3,23,910/-. Subsequently, the case was selected for scrutiny and notices u/s. 143(2) and 142(1) of the Act were issued and served. The reasons for selection of the case for scrutiny were, “abnormal increase in cash deposits during demonetization period and High Value receipt of cash shown from third parties in response data”. The assessee was found to have deposited cash of Rs. 30,65,000/- during the demonetization period in FY 2016-17 in her bank account maintained with the Punjab National Bank. The assessee claimed that the said cash was received by her as gift from her deceased grandmother as a gift post her death. The AO did not find the explanation offered by the assessee to be satisfactory in respect of the sources of the cash such deposits. Hence, he made the addition of Rs. 30,65,000/- u/s. 69A of the Act as unexplained money and completed the assessment u/s. 143(3) of the Act on 26.12.2019 at Rs. 33,88,910/- and the same was taxed u/s. 115BBE @ 60%. However, in appeal, Ld. First Appellate Authority sustained the addition. Against the above, assessee appealed before the Tribunal.
After hearing both the sides and perusing the records, I note that the main contention of the assesssee that the sources of the cash deposits as gift from her deceased grandmother Smt. Bhagwati Hermrajani. The assessee claims that Late Smt. Bhagwanti Hemrajani had been earning rental income by renting out her property located at House No. 5/25, Old Rajinder Nagar, New Delhi to one Shri Anil Paul. It was the claim of the assessee that the said rental income was received in cash and was disclosed in the return of income filed by Late Smt. Bhawanti Hemrajani. It was the further contention that the said issue was also examined by the Investigation Directorate of the Income Tax Department at Delhi, where Shri Anil Paul has confirmed to have paid rent to Late Smt. Bhagwanti Hemrajani and on his account no adverse findings were made by the Investigation Directorate in this respect. During the appellate proceedings, it was submitted by the assessee that there was no written rental agreement between Smt. Bhagwanti Devi and Shri Anil Paul for rent of property being House No. 5/25, Old Rajinder Nagar, New Delhi. There is only oral claim made by the assessee and allegedly by Shri Anil Paul. The assessee has stated that, ‘Shri Anil Paul has confirmed the above staetd facts in separate Investigation proceedings conducted by the Income Tax Officer (Inv.), Unit-5(1), New Delhi qua the present assessee. Shri Anil Paul’s response via email dated 25.8.2018 to summons dated 24.8.2018 was duly accepted by the Wing and no adverse inference was drawn. It was the further contention of the 2 | P a g e assessee that Shri Anil Paul was withdrawing cash and handing over to Smt. Bhagwanti Hemrajani by stating that the bearer cheques were then used for cash withdrawals by Shri Anil Paul throughout his tenancy during FY 2011-12 to FY 2015-16 from his Standard Chartered Bank Account No. 52211021047 and accordingly, cash payment for rent was made on request. It was the further contention of he assessee that Late Smt. Bhawanti Devi was in receipt of rent from Shri Anil Paul in respect of her property given on rent to him for the last several years. Given her constrained physical condition due to medical circumstances and old age, Smt. Bhagwanti Devi insisted to received the said rent in cash and saved it over the years. Shri Anil Paul in turn withdrew the requisite amount of rent from his bank accounts and on her request, used to give the same in cash to Smt. Bhawanti Devi, which establishes from the bank statement of Shri Anil Paul. Shri Anil Paul vide response to summons dated 24.08.2018 had also provided details of the amount of rent deposited in cash over assessment years 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 and the same has not been doubted / discarded by the AO. The contents of the aforesaid response reads as under:- “A.Y. Amount 2012-13 3,48,000/- 2013-14 9,00,000/- 2014-15 9,00,000/- 2015-16 9,00,000/- 2016-17 9,00,000/-
In connection to the above, it may be stated that Late Smt. Bhagwanti Devi was ridden for last 15-16 years and she therefore, insisted for the payment of rental income in cash. It is further mentioned that by me bearer cheques were issued in the name of Mrs. G.R. Nagpal (alias Smt. Bhagwanti Devi), because she is the wife of Shri G.R. Nagpal. Reply to 2(d): I had paid the entire amount by withdrawing it from my bank account with Standard Chartered Bank, my PAN is AAFPP8080Q. A copy of my specimen bank statement showing withdrawal of the amount from my bank account (highlighted in yellow) is attached for perusal.
3 | P a g e In case any further information is required, I shall be obliged to provide the same.
Thanking you, Yours faithfully, (Anil Paul) Zone 5A, India Habitat Centre, Lodhi Road, New Delhi – 110 003” 3.1 Besides above, it was the further contention of the assessee that the source of gift (source of source) being rental income received by her late grandmother during financial year 2011-12 to 2015-16, same also having been duly offered to tax in her ITRs u/s. 139(1) of the Act, hence, taxing the said cash receipts again in the hands of the asssee would lead to double taxation. 3.2 In view of the aforesaid factual matrix, I am of the considered view that that the sources of the cash deposits of assessee was gift from her deceased grandmother Smt. Bhagwati Hermrajani, who was earning rental income by renting out her property to one Shri Anil Paul. The said rental income was received in cash and was disclosed in the return of income filed by Late Smt. Bhawanti Hemrajani during the FYs 2011-12 to 2015-16. During the examination by the Investigation Directorate of the Income Tax Department at Delhi, Shri Anil Paul has confirmed to have paid rent to Late Smt. Bhagwanti Hemrajani. Late Bhagwanti Devi due to her constrained physical condition, medical circumstances and old age, insisted to receive the said rent in cash and saved it over the years. All these facts justified the creditworthiness and genuineness of the amount in dispute, which was received by the assessee from her late grandmother (relative) as a token of love and affection for which sufficient documentary evidences have been produced before the lower authorities on this count, which justifies the explanation relating to source
4 | P a g e of cash deposits, therefore, in my considered opinion, the addition of Rs. 30,65,000/- made u/s. 69A of the Act deserve to be deleted. I hold and direct accordingly.
So far as assessee’s assessment u/s. 115 BBE of the Act is concerned, in view of Hon’ble Madras High Court in SMILE Microfinance Ltd. vs. ACIT in WP(MD) no. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue against the department that the law applies to the transaction on or after 01.04.2017 only.