Income Tax Appeal Judgment: Gagan Chhabra vs. ACIT Circle-72(1), Delhi for AY 2017-18

Introduction

This case concerns the appeal filed by Gagan Chhabra against the order passed by the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18. The case, marked as ITA No. 1017/DEL/2022, was presided over by Shri Saktijit Dey, Judicial Member, at the Income Tax Appellate Tribunal, Delhi Bench. The contention revolves around the addition of Rs.6,91,000 under Section 69A of the Income-Tax Act, 1961.

Background

Gagan Chhabra, the appellant, is a resident individual who filed his return of income on July 30, 2017, declaring an income of Rs.35,87,750. During the assessment proceedings, it was observed that the appellant had made cash deposits amounting to Rs.7,41,000 in different bank accounts. The Assessing Officer, not convinced by the appellant’s explanation regarding the source of these deposits, added Rs.6,91,000 to the appellant’s income under section 69A of the Income-Tax Act.

Appeal Proceedings

The appellant, represented by Shri Pankaj Sharma, CA, argued that the account was jointly held with his wife, and a portion of the deposits was made from her income from petty business and past savings. In contrast, the respondent, represented by Shri Anil Kumar Sharma, Sr. DR, supported the Assessing Officer’s decision. During the proceedings, various documents and case laws were referenced to support the appellant’s claims.

Judicial Findings

After examining the materials and submissions, the Tribunal noted the joint account nature and acknowledged the plausible explanation regarding a portion of the deposits. It was found that an amount of Rs.2,48,000 deposited by the appellant’s wife was justifiable. Furthermore, withdrawals made from April 4, 2016, to November 7, 2016, amounting to Rs.2,28,800, were considered legitimate. However, the claim regarding the balance amount being from earlier year’s withdrawals was not considered credible due to the improbability of the appellant retaining withdrawn cash for an extended period. Consequently, relief was granted for Rs.4,76,800, but the addition of Rs.2,14,000 was sustained.

Conclusion

The Tribunal partly allowed the appeal, providing substantial relief to Gagan Chhabra, but also affirming part of the addition made by the Assessing Officer. This case illustrates the complexities involved in proving the source of cash deposits and the rigorous examination by the tax authorities of such explanations.

Order pronounced in the open court on 24th February, 2023, thereby concluding a significant judgment in the realm of income tax law, specifically relating to unexplained cash deposits and the applicability of Section 69A of the Income-Tax Act, 1961.

Income Tax Appeal Judgment: Gagan Chhabra vs. ACIT Circle-72(1), Delhi for AY 2017-18