KSHAMA JAIN,DELHI vs. ITO, WARD-55(2), NEW DELHI

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:

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.