Sonam Vs ITO (ITAT Delhi)
Delhi ITAT Infers On-Money from Cash Deposit Preceding Registered Sale, Grants Partial Relief by Recognising Household Income and Cash Flow
The Delhi ITAT partly allowed the assessee’s appeal in a reassessment involving cash deposits of ₹15.09 lakh in a bank account. The assessee, a vegetable vendor, contended that the deposits were sourced from business income, cash withdrawals, inter-bank transfers with her husband, and sale proceeds of a plot. The Tribunal rejected the challenge to the validity of the reassessment, holding that the notices issued to the address available in the department’s records and through electronic mode constituted valid service. The Tribunal also held that since no original assessment under section 143(3) had been made, reopening beyond four years was permissible within the statutory limitation period.
On merits, the Tribunal noted that the CIT(A) had already analysed the monthly cash flow and granted partial relief by considering cash withdrawals and household expenses. However, the Tribunal found that the CIT(A) had failed to give due credit for the regular income earned by both the assessee and her husband, who were accepted to be vegetable vendors. Applying the test of preponderance of probabilities, the Tribunal granted an additional credit of ₹2.40 lakh (₹15,000 per month each for the husband and wife from April to November 2011), thereby reducing the unexplained cash deficit for that period to ₹3,72,234.
The Tribunal, however, drew an adverse inference regarding the sale of a plot. Since the assessee had deposited ₹8.65 lakh in cash one day before executing the registered sale deed for ₹3.77 lakh, it held that the difference of ₹4.88 lakh represented on-money received on the sale, taxable in the assessee’s hands on the touchstone of preponderance of probabilities. At the same time, the Tribunal observed that the authorities had wrongly treated the entire sale consideration as income and directed the Assessing Officer to compute capital gains after allowing the benefit of the cost of acquisition, based on evidence to be produced by the assessee.
Accordingly, the Tribunal directed the Assessing Officer to tax ₹4.88 lakh as unexplained on-money, ₹3,72,234 as unexplained cash deficit, compute the capital gains on the registered sale of the plot after allowing the cost of acquisition, and grant consequential relief. The appeal was partly allowed and restored to the Assessing Officer for giving effect to these directions.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal in ITA No. 3084/Del/2026 for Assessment Year: 2012-13 has arisen form the learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in Short “Act”), dated 11.12.2025 in DIN & Order No: ITBA/APL/S/250/2025-26/1083584214(1), which in turn has arisen from the assessment order dated 11.12.2019 passed by the AO u/s 144 read with section 147 of the 1961 Act.
