Venkateswarlu Chandu Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has ruled in favor of the taxpayer in the case of Venkateswarlu Chandu Vs DCIT, deleting an addition of Rs.9,99,000/− that had been made under Section 69C of the Income Tax Act, 1961, as unexplained expenditure. The Tribunal concluded that the addition, which questioned cash payments made towards credit card bills, was based on mere doubt and suspicion rather than substantive evidence to rebut the declared source of the funds.
Background of the Assessment
The appeal relates to the assessment year 2017-18. The assessee, Venkateswarlu Chandu, had filed a return declaring a ‘NIL’ total income. The case was selected for Limited Scrutiny through the CASS system.
During the assessment proceedings, the assessee explained that he had earned agricultural income of Rs.23,10,000/− in cash from his property in Nellipudi Village, Andhra Pradesh. The assessee claimed that this cash was subsequently used to pay credit card bills through cash deposits made in his bank account in Delhi.
The Assessing Officer (AO) accepted the claim regarding the existence of the agricultural income. However, the AO was not satisfied with the explanation provided for the cash payments made against the credit card bills. Consequently, the AO added Rs.9,99,000/− to the assessee’s income under Section 69C—which allows for the addition of unexplained expenditure—on the grounds that the cash payments remained inadequately explained.
