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Facts
The assessee filed their return for AY 2017-18 declaring income of Rs. 13,61,52,450/-. The AO made additions of Rs. 46,02,500/- for cash deposits during demonetization and disallowed deductions of Rs. 13,85,000/- on donations. The CIT(A) upheld these additions.
Held
The Tribunal held that the cash deposits were from professional receipts already accounted for and taxed, thus the addition under Section 69A was invalid and led to double taxation. It also held that the donations were eligible for deduction under Section 80G as they were made to eligible entities through prescribed modes.
Key Issues
Whether the addition of cash deposits made during demonetization is valid when the source is accounted professional receipts? Whether the denial of deduction for donations made to eligible entities is justified?
Sections Cited
144, 69A, 80G, VIA
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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: Ms. MADHUMITA ROY & SHRI NAVEEN CHANDRA
O R D E R
PER Ms. MADHUMITA ROY, JM:
The instant appeal filed by the assessee is directed against the order dated 06.12.2024 passed by the National Faceless Appeal Centre (hereinafter referred to as ‘CIT(A)/NFAC’), arising out of the assessment order passed by the ACIT Circle -63(1), Delhi dated 26.12.2019 under Section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2017-18.
2 The appeal is time barred by 34 days. An application dated 25.03.2025 requesting condonation of delay supported with affidavit of legal representative, the delay aspect, thus delay of 34 days in filing the instant appeal is condoned.
3 Brief facts, leading to the case are that the assessee has filed the return of income for the Assessment Year 2017-18 on 23.03.2018, declaring an income of Rs. 13,61,52,450/-. The learned Assessing Officer in order of assessment dated 26.12.2019 has made two additions into return of income, first being sum of Rs. 46,02,500/- representing cash deposit into bank account during demonetization period, held as unexplained to protect the interest of revenue and the same is added as unexplained cash credit u/s 69A of the Act . Further deductions amounting to Rs. 40,40,000/- restricted to allowable deduction of Rs. 26,55,000/- under Chapter VI-A has also been denied and added back to the returned income of the assessee.
In appeal raised before Ld. CIT(A), assessee remains unsuccessful.
4 Thus the assessee filed an appeal against the order of First Appellate Authority before us, raising two issues (supra). We have heard both the parties and perused the material placed on record.
5 The case of the appellant in context of first issue i.e. cash deposit during demonetization period, is that the source of deposit is professional receipts received in cash, duly accounted for filing return of income. The appellant has total professional receipts of Rs. 11,21,98,545/- including cash receipts of Rs. 73,70,000/-, which has been accepted by learned Assessing Officer in order of Account No. 629701513028, during demonetization period which is duly recorded in cash book of appellant, being part of audited financial statement of the appellant.
In view of these facts, addition made u/s 69A of the Act is itself invalid.
Provisions of section 69A of the Act read as under:
“Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.”
5.1 From perusal of provisions of section 69A of the Act, it is evident that provisions of section 69A of the Act applies where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, article may be deemed to be the income of the assessee for such financial year.
Thus for applicability of provision of section 69A of the Act, first condition is that in the financial year immediately preceding the assessment year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income and only if this first condition fulfils then second condition i.e. and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, then only the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. However as in the facts of the appellant cash deposit is duly recoded in audited books of appellant, thus the very first condition of levy of provisions of section 69A does not fulfil, therefore in our view addition made and sustained is not in accordance with provisions of section 69A of the Act. Even otherwise once source of cash deposit in professional receipts of the appellant, on which appellant has paid tax, addition made on depositing the said receipts into bank account of the appellant leads to double taxation which is otherwise not directed to delete the same and in result issue decided in favour of assessee.
6 The appellant has made donation of Rs. 40,40,000/- and has claimed eligible deduction of Rs. 26,55,000/- u/s 80G of the Act under Chapter VIA of the Act.
During the year under consideration appellant has made donation to Gujrat Law University having PAN AAATC6633B and All India Heart Foundation Delhi having PAN AAATA0096Q and has in fact made donations in preceding assessment years also. In view of the fact that appellant has made eligible donations to eligible entities and through prescribed mode of payment, denial of deduction is invalid and therefore the AO is directed to allow the deductions claimed by appellant in result issue decided in favour of assessee.
Order pronounced in open court on 09.09.2025.