Priya Jain Vs ACIT (ITAT Delhi)
Wrong ITR Figures ≠ Unexplained Cash Credit: Delhi ITAT Deletes ₹16.36 Cr Addition After AO’s Own Remand Verification
The Delhi ITAT in Priya Jain vs ACIT deleted an addition of ₹16.36 crore made u/s 68, holding that mere correction of wrongly reported capital figures in the ITR cannot automatically lead to an unexplained cash credit addition when the assessee has substantiated the reconciliation with evidence.
The assessee had originally shown opening capital of ₹3.67 crore in the earlier year, whereas the capital reflected in the current year stood at ₹20.03 crore, leading the AO to treat the differential amount as unexplained. However, the assessee explained that the earlier return contained omissions relating to FDRs, bank balances and sale proceeds of property, which were inadvertently not reflected in the capital statement.
During remand proceedings, the AO himself verified that the assessee possessed FDRs of ₹12.58 crore, bank balances exceeding ₹1.10 crore and had sold property for ₹8 crore in the preceding year while investing in a new property. The Tribunal noted that these facts were independently verified and supported by records and bank statements.
The ITAT further observed that the source of the new property was self-explanatory since deduction u/s 54 had been claimed out of the earlier capital gains, while the bank statements also showed maturity of old FDRs immediately preceding creation of fresh FDRs. Thus, the assets represented opening balances and recycled funds from earlier years rather than unexplained credits of the relevant year.
The Tribunal held that once the assessee demonstrated that the discrepancy arose due to errors and omissions in the earlier ITR and such explanation stood verified by the AO in remand proceedings, no addition u/s 68 could survive merely because the capital figures were corrected in the subsequent year. Accordingly, the entire addition of ₹16.36 crore was deleted.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal is filed by assessee against the order dated 08.01.2024 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-18/10529/2019-20 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 21.12.2019 passed u/s 143(3) of the Act pertaining to Assessment Year 2017-18.
