Jagdish Chand Verma Vs ITO (ITAT Delhi)
This case concerns an appeal by a 70-year-old retired individual against the order of the Commissioner of Income-tax (Appeals) (CIT(A)), Delhi, arising from an assessment under Section 144 of the Income Tax Act, 1961 for the assessment year 2013-14. The Assessee had sold a residential flat in Delhi in October 2013 for ₹70,00,000, resulting in an indexed capital gain of ₹54,35,000. Subsequently, the Assessee purchased a residential property in Australia in March 2014 for $5,50,000, as he had relocated permanently to Australia. During the relevant assessment year, the Assessee also consolidated cash deposits from his spouse and son amounting to ₹40,51,000 into his bank account.
The Assessing Officer (AO) made the following additions under Section 144:
1. ₹54,35,000 – disallowance of deduction under Section 54, alleging no details of the new property purchase were available.
2. ₹40,51,000 – addition under Section 68 read with Section 115BBE, treating the consolidated deposits as unexplained cash credits.
The Assessee appealed to the CIT(A), providing additional evidence including property purchase documents, home loan papers, bank statements, passport copy, and affidavits supporting the bank deposits. The CIT(A) concluded:
1. Section 54 deduction – not allowable, reasoning that the amendment requiring the new property to be purchased in India was clarificatory in nature.
2. Section 68 addition – upheld, as no sale receipts or confirmations were furnished for the sold household items; affidavits alone were insufficient.
On appeal to the ITAT, the Tribunal noted:
- The assessment was conducted under Section 144 while notices were sent to the Indian address, which justified the Assessee’s non-appearance.
- The CIT(A) erred in treating the amendment to Section 54 as clarificatory. The CBDT Circular No. 01/2015 clarified that the amendment took effect from 1st April 2015 and applied to AY 2015-16 and subsequent years. Since the property was purchased in Australia prior to this amendment, the Assessee was eligible for the deduction under Section 54. The ITAT relied on High Court decisions in Vinay Mishra, Hosagrahar, and others confirming that the amendment applied prospectively.
- Regarding the addition under Section 68, the ITAT agreed with the Assessee that no business was carried out during the assessment year, and there was no “credit to the books of account,” which is a precondition for invoking Section 68. The Tribunal relied on Supreme Court and Delhi High Court decisions (Baladin Ram, Ms. Mayawati, Deepak Srivastava) holding that bank deposits alone do not constitute books of account, and Section 68 cannot be applied to such deposits.
Based on these findings, the ITAT held that:
1. The denial of deduction under Section 54 could not be sustained.
2. The addition under Section 68 for cash deposits was not tenable.
Consequently, the Tribunal allowed the appeal, deleting both additions. The order was pronounced on 12.11.2025.
