Case Number: ITA 1025/DEL/2021
Appellant: Suraj Negi, Delhi
Respondent: ITO, Ward-71(3), Delhi
Assessment Year: 2017-18
Case Filed on: 2021-08-27
Order Type: Final Tribunal Order
Date of Order: 2022-10-12
Pronounced on: 2022-10-12
The case of Suraj Negi versus the Income Tax Officer, Ward-71(3), Delhi, revolves around the issue of the addition of Rs. 8,00,000 under Section 69A of the Income Tax Act, 1961, for unexplained cash credit. The appellant, Suraj Negi, challenged the addition made by the Assessing Officer, arguing that the amount represented cash reimbursements from friends for the use of his credit card.
The case was heard by the Delhi Bench ‘SMC’ of the Income Tax Appellate Tribunal (ITAT), with Judicial Member Shri Saktijit Dey presiding over the proceedings.
The appeal was filed by Suraj Negi against the order dated 27.07.2021, passed by the National Faceless Appeals Centre (NFAC), Delhi, for the assessment year 2017-18. The dispute arose from the addition of Rs. 8,00,000 under Section 69A of the Income Tax Act, 1961, by the Assessing Officer, which was upheld by the first appellate authority.
The Learned Authorized Representative (AR) for Suraj Negi submitted that the addition under Section 69A was unsustainable because Section 69A can only be invoked when the assessee is found to be the owner of money, bullion, jewellery, or other valuable articles that are not recorded in the books of accounts. In this case, no money, bullion, or jewellery was found from the possession of the assessee. The AR argued that the credit card was used by friends for purchasing fuel, and the amount represented reimbursements for such purchases.
The Learned Senior Departmental Representative (Sr. DR) supported the addition, suggesting that if Section 69A was not applicable, the addition could be made under Section 69C of the Act by treating it as unexplained expenditure.
The ITAT reviewed the arguments and evidence presented by both parties. It was undisputed that the Assessing Officer had accepted an amount of Rs. 6,83,300 as explained but disallowed Rs. 8,00,000, which was claimed as cash reimbursement from friends for credit card purchases. The tribunal noted that the Commissioner (Appeals) had found the explanation plausible but did not fully accept it.
The ITAT concluded that the addition of Rs. 8,00,000 under Section 69A was not justified as the conditions for invoking Section 69A were not satisfied. The tribunal noted that no money, bullion, or jewellery was found from the possession of the assessee. Additionally, the tribunal referenced the decision of the Hon’ble Punjab and Haryana High Court in the case of CIT vs. Ravi Kumar (2007) – 294 ITR 78, which supported the appellant’s position.
Given these findings, the ITAT deleted the addition of Rs. 8,00,000 and allowed the appeal filed by Suraj Negi.
Order: The appeal filed by Suraj Negi is allowed.
This case reaffirms the principle that additions under Section 69A can only be made when specific conditions are met. It provides clarity on the applicability of Section 69A and emphasizes the importance of properly substantiating claims regarding unexplained cash credits.
The judgment serves as a precedent for other taxpayers facing similar additions under Section 69A. It underscores the necessity for taxpayers to maintain proper documentation and provide credible explanations for cash credits to avoid such disputes and potential disallowances.
This detailed review of the case of Suraj Negi vs. ITO, Ward-71(3), Delhi, highlights the key aspects of the tribunal’s decision and its implications for other taxpayers.
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