ITAT deletes section 69 Additions for deposits duly reflected in Broker Agency’s account

In a recent judgment, the Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) quashed additions made by the Assessing Officer (AO) to the declared income of taxpayer Kavita Samtani for the Assessment Year (AY) 2017-18. The ITAT’s order overturns findings upheld by the Commissioner of Income Tax (Appeals) [CIT(A)] in relation to undisclosed transactions and investments, on the grounds of lack of incriminating material.

Case Background

The case centers on undisclosed deposits and investments by Ms. Samtani, which were highlighted during a search and seizure operation conducted on March 29, 2018, at her residence and her husband’s business premises in Bhilwara. The AO raised two key additions based on financial documents recovered during the search.

1. Unexplained Cash Deposits: Ms. Samtani had deposited ₹1,22,000 and ₹54,000 on July 8, 2016, and January 7, 2017, respectively, in an account held by M/s Mohan Broker Agency, a business entity associated with her husband, Mr. Deepak Samtani. The AO flagged these as unexplained cash deposits under Section 69 of the Income Tax Act, ultimately adding ₹1,76,000 to her income.
2. Undisclosed Property Purchase: A purchase deed dated March 27, 2016, indicated Ms. Samtani’s acquisition of a plot valued at ₹12,20,600 in Suwana. The AO determined that the source of this purchase was insufficiently explained, leading to an additional inclusion of ₹12,20,600 in her income.

Following the search, the AO issued a notice under Section 153A, to which Ms. Samtani responded with a revised income declaration. However, the AO was not satisfied with her explanations for the above transactions, which led to additional scrutiny and the final assessment order.