TIKARAM SHARMA,PALWAL vs. ITO WARD-2(4), FARIDABAD

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ITA 1423/DEL/2022Status: DisposedITAT Delhi31 May 2023AY 2017-184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition made by the AO was based on mere conjectures, as the authorities below failed to appreciate the assessee's opening balance and bank statement. The Tribunal deleted the addition as there was an absence of inquiry by the AO and no adverse material against the assessee.

What were the facts?

The assessee declared an income of Rs. 7,41,200 for AY 2017-18. The Assessing Officer (AO) added Rs. 11,00,000 to the returned income, considering it as unexplained cash deposit during the demonetization period, as the assessee failed to provide supporting evidence for the source of funds.

What were the issues?

Whether the addition of Rs. 11,00,000 as unexplained cash deposit is sustainable without proper inquiry and adverse material against the assessee.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI

Before: SHRI KUL BHARAT

For Appellant: Shri Anand Pandey, Adv
For Respondent: Shri Om Parkash, Sr. DR
Hearing: 25.05.2023Pronounced: 31.05.2023

O R D E R PER KUL BHARAT, JM:

This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 20.12.2021, pertaining to the assessment year 2017-18. The assessee has raised following grounds of appeal:

“1. That on the facts and circumstances of the case and in the Law, the NFAC has grossly erred in sustaining assessment order u/s 143(3) assessing income at Rs. 18,41,200 being without jurisdiction. 2. That on the facts and circumstances of the case and in the Law the NFAC has grossly erred in sustaining addition of Rs. 11,00,000 u/s 69A r/w sec 115BBE.”

2.

Facts, in brief, are that for A.Y. 2017-18 the assessee filed his return on 27.02.2018, declaring income of Rs. 7,41,200/-. As per information available with the department, the assessee had deposited Rs. 11,00,000/- in a/c no. 17341000023568 with HDFC Bank Limited during demonetization period.

Therefore, the case of the assessee was selected for limited scrutiny through CASS to examine the issue “Cash deposit during demonetization period”. In response to notice issued by the AO to explain the source of cash deposit in his savings bank a/c, the assessee vide letter dated 9.7.2019 explained that the cash had been deposited out of opening balance and received from different persons. For want of supporting evidence, the learned AO rejected the explanation furnished by the assessee and concluded that the assessee had made cash deposits from undisclosed sources. The AO, accordingly, completed the assessment at a total income of Rs. 18,41,200/- by adding Rs. 11,00,000/- to the returned income, u/s 69A of the Income-tax Act, 1961 (the “Act”). Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals), who also affirmed the action of the AO.

Aggrieved against this the assessee is in appeal before this Tribunal.

3.

The only issue is against sustaining the addition of Rs. 11,00,000/- being the amount deposited by the assessee in his bank account. Learned counsel for the CIT(Appeals) failed to appreciate the fact that the assessee was having source of income. He has also given cash flow statement.

The Authorities below did not consider the cash flow statement as submitted by the assessee.

4.

On the other hand learned DR opposed the submissions and supported the orders of the authorities below.

5.

I have heard rival contentions and perused the material available on record. I find that for the assessment year under consideration the assessee has claimed opening balance of Rs. 8,65,146/-. The assessee had deposited amount of Rs. 11,00,000/- in HDFC Bank. The Authorities below have not appreciated the fact regarding earning of income by the assessee and his bank statement. In the absence of inquiry by the Assessing Officer and bringing any adverse material against the assessee, the addition made by the Assessing Officer cannot be sustained as same is based upon mere conjectures. Accordingly, the impugned addition is hereby deleted and the grounds raised in this appeal are allowed.

6.

Appeal of the assessee stands allowed. Order pronounced in open court on 31st May, 2023.

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