The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘SMC’, adjudicated the appeal filed by Santosh, resident of New Delhi, against the order passed by the Income Tax Officer (ITO), Ward-37(1), New Delhi. The appeal, registered as ITA No. 367/DEL/2021, pertains to the assessment year 2011-12.
Santosh filed the appeal on 31/03/2021, challenging the assessment order issued by the ITO, which treated cash deposits in her bank account as unexplained money under Section 69A of the Income Tax Act, 1961. The final order was pronounced on 28/12/2022.
The assessee, Santosh, did not file a return of income for the assessment year 2011-12. However, based on AIR information, it was discovered that she had deposited cash amounting to Rs. 27,60,000 in her savings account with Punjab National Bank during the relevant year. This led the Assessing Officer to reopen the assessment under Section 147 of the Income Tax Act. The assessment was completed ex parte under Section 144 read with Section 147, treating the cash deposits as unexplained money under Section 69A and adding them to the income of the assessee.
Santosh, represented by her counsel, argued that the cash deposits were made from money withdrawn by her husband, Shri Nafe Singh, a retired gardener previously employed with the Municipal Corporation of Delhi (MCD). The counsel explained that Santosh’s husband had received Rs. 17,10,082 as compensation for land acquisition, which was deposited in his SBI account. From this amount, Rs. 10,00,000 was withdrawn on 05.01.2010, and Rs. 9,00,000 of this was deposited into Santosh’s account in June 2010.
The Commissioner of Income Tax (Appeals) partially accepted Santosh’s explanation and granted relief for Rs. 18,60,000, acknowledging that these deposits were made from earlier withdrawals. However, the Commissioner (Appeals) sustained the addition of Rs. 9,00,000, citing a six-month gap between the withdrawal and deposit as the reason for disbelieving the claim.
The Tribunal noted that the delay in filing the appeal was due to a reasonable cause, including the uneducated status of the assessee and the actions taken by her previous counsel. Consequently, the delay was condoned.
On examining the facts, the Tribunal found that Santosh’s husband had indeed received the land acquisition compensation and had withdrawn Rs. 10,00,000, out of which Rs. 9,00,000 was claimed to have been deposited in Santosh’s account. The Tribunal held that the mere six-month gap between withdrawal and deposit did not justify disbelieving the assessee’s claim, especially when there was no evidence to suggest that the withdrawn money was used elsewhere.
The Tribunal relied on judicial precedents, including the cases of SR Venkatarathnam vs. CIT (127 ITR 807) and ACIT vs. Baldev Raj Charla (121 TTJ 366), which supported the view that a plausible explanation backed by evidence should not be rejected due to minor discrepancies like timing gaps.
Based on the evidence and arguments presented, the Tribunal deleted the addition of Rs. 9,00,000 made by the Assessing Officer under Section 69A, thereby allowing the appeal in favor of Santosh.
The appeal was allowed, and the addition of Rs. 9,00,000 was deleted.
Order pronounced in the open court on 28th December, 2022.
Signed by:
(SAKTIJIT DEY) – Judicial Member
Date: 28th December, 2022
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
ITA No. 367/DEL/2021 – Santosh vs ITO Ward-37(1) – Cash Deposit Appeal for AY 2011-12
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