Smt. Krishna Agarwal Vs ITO (ITAT Jodhpur)
Smt. Krishna Agarwal (Appellant) filed an appeal against Order of Ld. CIT (A), NFAC, Delhi dated July 31, 2021 pertaining to Assessment Year (AY) 2017-18.
In the case, the Appellant contended that she derived income from renting of property and other income under “income from other sources” and had filed her due return. Appellant’s case was selected for limited scrutiny to verify the “Cash deposits during the year” and accordingly a Notice under Section 143(2) & 142(1) of the Income Tax Act, 1962 (ITAct) was issued by the Assessing Officer (AO).
During the assessment proceedings, the Appellant had submitted that she has deposited the cash amounting to ₹68, 95,000/- in her saving bank account and further contended, that those deposits were made out of cash in hand lying with her as on April 01, 2016 which can be duly verifiable from bank statements, cash flow statement and other documentary evidence placed on record.
The AO only on the basis of assumption & presumption and making wrong allegation without bringing on record any material or evidence to justify such allegation had treated the cash deposits of ₹68, 95,000/- as undisclosed income and passed the assessment order under Section 143(3) of the IT Act assessing the total income of ₹73, 92,980/- by making addition of ₹68, 95,000/- as unexplained cash deposits in bank account under Section 69A of the IT Act.
Furthermore, the Appellant contended her only source of income is rental income and was duly disclosed by her in her return. Nevertheless, due to Appellant’s husband’s sudden demise on January 04, 2014 she inherited his property as per the will of her husband. Subsequently, the Appellant had sold the very property with view to purchase another one for her son and the remainder amount was allotted for continuing livelihood. Affixing to all this, the Appellant provided the bank statements and contended that the Appellant had received a sales consideration for the sale of the said property and she had withdrawn cash for the sake of buying property for her son but the transaction never came into fruition therefore, the Appellant had to re-deposit the said amount to the bank. The Appellant contended that the claims of the AO were grossly parallel to the material evidence provided by her.
After taking perusal of all the facts and evidences on records, the Honorable Income Tax Appellate Tribunal (“ITAT”), Jodhpur Bench held that mere time gap between withdrawals and deposits cannot be a sole basis for rejecting the explanation of the Appellant as there was no material that amount so withdrawn had been utilized somewhere else. The Court believed that the explanation by the Appellant was reasonable and therefore, directed that the addition so made must be deleted.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
This is an appeal filed by the assessee against the order of Ld. CIT(A), NFAC, Delhi dated 31.07.2021 pertaining to assessment year 2017-18 wherein the assessee has raised the following grounds of appeal:-
“1. That on the facts and in the circumstances of the case, the CIT(A)NFA C has grossly erred in violating the principal of faceless appeal as announced for justice of honest taxpayers and the functioning of faceless processing’s in honesty and judicially manner and to avoid litigation as created unnecessary by A O.
2. That on the facts and in the circumstances of the case the CIT(A) NFAC grossly erred in sustaining addition of Rs 68,95,000/- in respect of unexplained cash deposits in the bank account u/s 69A of the Act.
3. That on the facts and in the circumstances of the case the CIT(A) NFAC grossly erred in representing erroneous and irrelevant finding in the order which are not born out from the assessment order, and thereby sustaining arbitrary addition in a hypothetical way by putting the assessee to erroneous harassment and inconvenience.
4. That on the facts and in the circumstances of the case the CIT(A) NFAC ought to have analyzing the submission, material and legal & valid evidences in right prospective and judicial manner.
5. That on the facts and in the circumstances of the case the CIT(A) NFAC grossly erred in sustaining addition made in returned income without having any credible evidence or only on the basis of assumption and presumption. ”
2. During the course of hearing, the ld AR submitted that the assessee derives income from renting of commercial property and other income under the head “income from other sources” and filed her return of income declaring the total income of Rs 4,97,980/-. The case of the assessee was selected for limited scrutiny to verify the “Cash deposits during the year” and accordingly the notice u/s 143(2) & 142(1) of the Act were issued by the AO. During the assessment proceedings, the assessee has submitted that she has deposited the cash amounting to Rs. 68,95,000/- in her saving bank account maintained with Oriental Bank of Commerce and also explained such deposits were made out of cash in hand lying with the assessee as on 01/04/2016 which can be duly verifiable from bank statements, cash flow statement and other documentary evidence placed on record. The AO only on the basis of assumption & presumption and making wrong allegation without bringing on record any material or evidence to justify such allegation had treated the cash deposits of Rs. 68,95,000/- as undisclosed income of assessee and passed the assessment order u/s 143(3) of the Act assessing the total income of Rs. 73,92,980/- by making addition of Rs. 68,95,000/- as unexplained cash deposits in bank account u/s 69A of the Act.
3. It was submitted that the assessee only source of income is rental income which was received through banking channel after deduction of TDS and duly disclosed in the return of income. However due to sudden death of husband of the assessee, the assessee was mentally disturbed and facing lots of financial problems in her life. That after the death of her husband and as per Will of her husband, the property which was in the name of her husband was transferred in her name and she subsequently sold the said property with the intention to purchase another property for her son and the remaining amount to be utilized for her survival. The sales consideration received from sale of such property in advance was received through banking channel from the buyer of property in the bank account of the assessee and on completion of sale transaction, the assessee has computed the capital gains as per provision of law and disclosed the same in her return of A.Y 2016-17.
4. It was submitted that from the bank statement, it can be observed that the assessee has received the sales consideration from sale of property in 2014 & 2015 and thereafter has withdrawn the cash for the purpose of purchase of house for her son and due to certain reasons, the property had not been purchased therefore out of such cash withdrawal, the assessee has redeposited a sum of Rs. 68,95,000/-in the bank account during the year under consideration. It was submitted that the allegation made by the ld AO in the assessment order are contrary to the material available on record as from beginning the assessee had explained that she has withdrawn the cash from the bank account and same was redeposited in the bank account. The details of cash withdrawal & cash deposits from bank account are as follow:-
