Case Law Details
Ashok Ravsaheb Tambe Vs ITO (ITAT Pune)
In a recent judgment, the Income Tax Appellate Tribunal (ITAT) Pune delivered a significant ruling in the case of Ashok Ravsaheb Tambe Vs ITO, where the Tribunal deleted an addition made by the Assessing Officer (AO) regarding cash deposits during the demonetization period. The case revolves around the explanation provided by the assessee for cash deposits, which were allegedly sourced from a gold loan obtained prior to demonetization.
Case Background
The assessee, Ashok Ravsaheb Tambe, filed his return of income for the assessment year 2017-18, declaring a total income of ₹1,98,650/-. During scrutiny, the Income Tax Officer (ITO), Ward-3(1), Nashik, questioned the source of cash deposits amounting to ₹7,51,939/- made by the assessee into his bank account with Nashik Merchant Co-op. Bank Ltd. The AO treated these deposits as unexplained money under Section 69A of the Income Tax Act, 1961, and subjected them to tax under Section 115BBE of the Act.
Proceedings Before CIT(A)
The assessee’s appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] was unsuccessful, leading him to appeal to the ITAT Pune. The primary contention was that the cash deposits in question were sourced from a gold loan of ₹8,50,000/- taken on May 12, 2016, from the same bank. The loan was originally intended for his daughter’s marriage, but plans changed as she pursued further education. Consequently, the remaining cash was deposited back into the bank account during the demonetization period.
ITAT Pune’s Observations
The ITAT noted that the explanation provided by the assessee was consistent and adequately supported by documentary evidence. The assessee had demonstrated that the cash deposits were from the balance of the gold loan, which was taken months before the demonetization announcement. The Tribunal also emphasized that the Revenue failed to disprove the assessee’s explanation or present any contrary evidence.
In its assessment, the ITAT referred to the Supreme Court’s decision in Shashi Garg Vs PCIT, where it was held that once the assessee satisfactorily discharges the burden of proof regarding the source of income, the Revenue cannot make additions based on mere conjecture or guesswork. The Tribunal found that the Revenue’s action of treating the cash deposits as unexplained income under Section 69A was unjustified.
Judgment
Based on the detailed examination of the facts and evidence, the ITAT Pune set aside the orders of both the AO and CIT(A), directing the deletion of the entire addition. The Tribunal allowed the appeal in favor of the assessee, holding that the source of the cash deposits had been fully explained.
FULL TEXT OF THE ORDER OF ITAT PUNE
In this appeal assessee challenges DIN & Order No. ITBA/APLS/S/250/2023-24/1062404804(1) dt. 11/03/2024 passed u/s 250 of the Income-tax Act, 1961 [‘the Act’ hereinafter] by the Addl./JT Commissioner of Income Tax Appeals-3, Bengaluru [‘CIT(A)’ hereinafter] which in turn arisen out of order of assessment passed u/s 143(3) of the Act by the Income Tax Officer, Ward-3(1), Nashik [‘AO’ hereinafter] for assessment year 2017-18 [‘AY’ hereinafter];
2. The case was called twice, none appeared at the bequest of the appellant, in absence of any application seeking adjournment and none prosecution, after the primary briefing from the Ld. DR we deem it fit to proceed & adjudicate the issue ex-parte u/r 24 of ITAT-Rules, 1963, ergo advanced accordingly.
3. Heard the Ld. DR and subject to rule 18 of ITAT-Rules 1963 perused material placed on record, considered the facts in the light of settled legal position.
4. We note that, the assessee is an individual who filed his return of income u/s 139(1) of the Act declaring total income at ₹1,98,650/-. The return of the assessee was selected for scrutiny and was called upon to explain the source & nature of ₹7,51,939/- cash deposited by him into his bank account maintained with ‘Nashik Merchant Co-op. Bank Ltd.’ [‘NMCBL’ hereinafter]. In the event of assessee’s failure to offer satisfactory explanation about nature & source thereof, the Ld. AO treated such cash deposits as unexplained money u/s 69A in the hand of assessee and brought the same to tax u/s 115BBE of the Act. The appeal there against before the Ld. CIT(A) did yield no favourable results to the assessee. Aggrieved thereby the assessee came in present appeal before the Tribunal.
5. We further note that, prior to aforestated cash deposit the assessee had obtained a ‘Gold-Loan’ of ₹8,50,000/- on 12/05/2016 from the same bank and made equal cash withdrawal for the purpose of his daughter’s marriage who recently completed her Master in Pharmacy. Postponing assessee-father’s plan, the daughter wanted to continue further education/studies and by her fortunate she was able to get admission in ‘Narsee Monjee Institute of Management Studies, Shirpur, Dist. Dhule on 16/07/2016 for MBA degree’. But natural the assessee had to postpone daughter’s marriage plan due to which the balance cash available with him after payment of MBA admission Fee was deposited into the same bank, since as was not required for the time-being. Though the period of cash deposits coincided with period of demonetisation, the source available with assessee in our considered view has been fully & satisfactorily explained by him before both the tax authorities below. The Revenue on the other hand could hardly dismantle the explanation by bringing any deprecative material on record to prove otherwise.
6. The burden of proof that, the nature & sources of amount of cash deposits made into bank account do not in any way represents income is on claimant assessee and when discharged the same fully & satisfactorily then the Revenue in view of Hon’ble Apex Court decision in ‘Shashi Garg Vs PCIT’ [2020, 113 com 93 (SC)] is not entitled to treat the same as unexplained income u/s 69A of the Act and saddled the assessee on mere conjecture & guesswork.
7. In view of the aforestated discussion and applying the ratio laid in the former judicial precedents, we see no reasons in countenancing the action of both the tax authorities below. Consequently, we set-aside the impugned order and direct the Ld. AO to delete the addition in its entirety.
8. The assessee’s appeal in result stands ALLOWED.
In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday, 01st August, 2024
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