Case Number: ITA 952/DEL/2021
Appellant: Komal Nagpal, South Delhi
Respondent: Deputy Commissioner of Income Tax, New Delhi
Assessment Year: 2017-18
Result: 2017-18
Case Filed on: 2021-08-10
Order Type: Final Tribunal Order
Date of Order: 2022-09-16
Pronounced on: 2022-09-16
Tribunal: IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH ‘C’, NEW DELHI
Before: Sh. N. K. Choudhry, Judicial Member and Dr. B. R. R. Kumar, Accountant Member
Introduction
This appeal was filed by Komal Nagpal against the order of the Commissioner of Income Tax (Appeals)-31, New Delhi, dated 26.07.2021, concerning the taxability of Rs. 11,97,500 found in a locker at ICICI Bank, Greater Kailash-1, New Delhi, during search proceedings.
Background
The case arose from a search conducted on 27.04.2016 in the premises of Sanjay Bhandari/OIS Group, which led to a search warrant for locker No. 109 in the names of Smt. Komal Nagpal and Smt. Nirmal Bhandari. The search, conducted on 15.06.2016, revealed cash amounting to Rs. 11,97,500. Komal Nagpal’s statement was recorded under section 132(4) of the Income Tax Act, 1961, during the locker operation.
Key Issues
The primary issue was the ownership and source of the cash found in the locker. Komal Nagpal claimed that the cash belonged to her mother, Smt. Nirmal Bhandari, as part of her lifelong savings inherited from her late husband, R. K. Bhandari. Due to Smt. Nirmal Bhandari’s old age and health, the locker was jointly held, and Komal Nagpal assisted in its operation.
Assessment Proceedings
The Assessing Officer (AO) held that neither Komal Nagpal nor Smt. Nirmal Bhandari could provide documentary evidence for the source of the cash. Consequently, the AO added Rs. 11,97,500 as unexplained cash under section 69A of the Income Tax Act, making a substantive addition in Komal Nagpal’s hands and mentioning a protective addition in the hands of Smt. Nirmal Bhandari.
Appeal to CIT(A)
Komal Nagpal appealed to the CIT(A), who confirmed the AO’s action, stating that the locker was jointly held and primarily operated by Komal Nagpal. The CIT(A) reasoned that the cash was not convincingly explained as belonging to Smt. Nirmal Bhandari, given the long gap since her husband’s death.
Appeal to ITAT
Aggrieved, Komal Nagpal appealed to the Income Tax Appellate Tribunal (ITAT). Her representative, Sh. Pradeep Dinodia, CA, argued that withdrawals from Bhandari Agencies from September 2013 to March 2016 explained the cash’s presence. He contended that the locker was primarily in Smt. Nirmal Bhandari’s name and Komal Nagpal was added for convenience.
ITAT’s Decision
The ITAT, considering all arguments and evidence, made the following key observations and conclusions:
The ITAT concluded that the substantive addition should not be made solely in Komal Nagpal’s hands. Instead, it should be assessed proportionately, with primary liability on Smt. Nirmal Bhandari or her legal heirs.
Conclusion
The ITAT held that Komal Nagpal is not solely liable for the cash found in the locker. The substantive addition should be made in the hands of Smt. Nirmal Bhandari or her legal heirs.
Final Judgment
Order pronounced in the open court on 16/09/2022.
Signed:
(N. K. Choudhry)
Judicial Member
(Dr. B. R. R. Kumar)
Accountant Member
Dated: 16/09/2022
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
Relevant Legal Provisions and Precedents
The case hinged on section 69A of the Income Tax Act regarding unexplained money and the procedural aspects of joint ownership and the right to operate lockers. The ITAT referenced previous cases like CIT vs. Durga Prasad More and Sumati Dayal vs. CIT, alongside CBDT circulars.
Impact of the Judgment
This judgment emphasizes careful consideration of joint ownership and the importance of clear documentation and evidence when assessing unexplained cash. It also highlights the role of ITAT in balancing fairness and legal scrutiny in tax assessments.
Key Takeaways
The case illustrates the necessity of clear evidence in tax assessments involving joint assets and the importance of procedural correctness. It underscores the ITAT’s role in ensuring just assessments based on factual ownership and legal principles.
Komal Nagpal vs DCIT: Cash Found in Locker Dispute for AY 2017-18
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