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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SHRI SAKTIJIT DEY
ORDER This is an appeal by the assessee against order dated 27.09.2019 of learned Commissioner of Income-Tax (Appeals)-23, New Delhi for the assessment year 2010-11.
On merits, the dispute is confined to addition of an amount of Rs.4,97,841 representing cash deposits in the bank account.
Of course, the assessee has raised various other grounds including additional grounds challenging the validity of reopening of assessment under Section 147 of the Act.
Briefly, the facts are, the assessee did not file any return of income under Section 139(1) of the Income-Tax Act,1961.
Based on information received indicating that in the previous year relevant to the assessment year under dispute, assessee had deposited cash in her bank account, the Assessing Officer reopened the assessment under Section 147 of the Act. In response to the notice issued under Section 148 of the Act, the assessee filed her return of income on 04.11.2017 declaring income of Rs.3,26,454.
In course of assessment proceedings, the Assessing Officer, while examining the bank statement of the assessee, noticed that in the year under consideration, the assessee had deposited cash amounting to Rs.17,75,000.
Not being satisfied with assessee’s explanation regarding the source of cash deposits, the Assessing Officer treated the cash deposits as unexplained cash credits under Section 68 of the Income-Tax Act,1961 and added to the income of the assessee.
Assessee contested the aforesaid addition before learned Commissioner (Appeals).
After considering the submissions of the assessee, learned Commissioner (Appeals) restricted the addition to Rs.4,97,841 with the following observations:
“4.8 However, I find that for AY 2010-11, the appellant is showing gross total income of Rs.4,78,454/- which includes receipt of cash of Rs.2,60,000/- from the tuition fee (income). For AY 2009-10 the appellant had shown gross total income of Rs.5,05,119/- vide noting on letter for adjournment dated 16.01.2010, the appellant was asked to submit bank statement statements for FY 2009-10. However, the appellant submitted copies of bank statements for the FY 2009-10, only. Therefore, opening cash balance of Rs.19,70,826/- appears to be on slightly higher side. Looking at the quantum of income returned by the appellant, even, if it is assumed that cash equal to three times of the average gross total income would be accumulated, the opening cash to the extent of Rs.14,72,359/- (3*[(5,05,119 + 4,76,454)/2) can be explained. As there is only closing balance of Rs.626/- as on 23.03.2010, therefore, the balance of Rs.4,97,841/- {(10,70,826-14,72,359, therefore, the balance of Rs.4,97,841/- {(19,70,826 -14,72,359)-628) is treated as not explained and addition to the extent of Rs.4,97,841/- is sustained.”
I have considered rival submissions and perused the material available on record.
Though, the Assessing Officer has added back the entire cash deposits as the income of the assessee, however, learned Commissioner (Appeals) restricted the addition to Rs.4,97,841.
From the observations of learned Commissioner (Appeals) reproduced hereinabove, it is evident, he was satisfied with assessee’s explanation not only with regard to availability of opening cash balance but also the income earned from tuition fee. The only reason for which he was of the view that the opening cash balance of Rs.19,70,826 is on slightly higher side is because, bank statements for financial years 2008-09 and 2010-11 were not furnished. This, in my view, is unwarranted, since, learned Commissioner (Appeals) has not specifically stated that the availability opening cash balance shown by the assessee is not feasible as per the bank statement of financial year 2009-10. Further, I do not find any rational basis in estimating the opening cash at three times the average gross total income.
In view of the aforesaid, I do not find any valid reason to sustain the addition of Rs.4,97,841. Accordingly, the Assessing Officer is directed to delete the addition.
In view of my decision on merits in the foregoing paragraphs, all legal grounds raised by the assessee including the additional ground challenging the validity of reopening of assessment under Section 147 of the Act having become academic, do not require adjudication.
In the result, the appeal is partly allowed. Order pronounced in the open court on 25th April, 2023.