ACIT, KOLKATA V. SUBHAS KUMAR KEDIA, KOLKATA

ITA 1648/KOL/2024

AI Insights

The case involves an appeal by the Revenue against the order of the National Faceless Appeal Centre, Delhi, which had deleted an addition of \\u20b985,71,100/- made by the Assessing Officer (AO) under section 68 of the Income Tax Act. The addition was initially made due to unexplained cash deposits in the bank accounts of the assessee, Subhas Kumar Kedia, during the financial year 2016-17. The assessee argued that these deposits were from undisclosed income declared under the IDS-16 scheme and were also related to cash received from M/s Dadi Griha Nirmal Private Limited, a company where he was a director. The CIT (A) accepted the assessee's explanations, which were supported by an order from the Settlement Commission under section 245D(4) of the Act, and thus deleted the addition. The Tribunal upheld this decision, emphasizing the finality of the Settlement Commission's order and the principle of avoiding double taxation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126890 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: JCIT v. Sanjay H Thakkar ITA No.490/Ahd/2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUP CHATTERJEE
• Assessee Lawyers: SHREYA LOYALKA
• Keywords: Salary income; Dismissed; National Faceless Appeal; Sources of cash; Opening cash balance; Deleted; Source of cash deposit; Explanation; Disclosure
• Section: 143(1); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 1648/KOL/2024 (Assessment Year: 2017-18) ACIT Aayakar Bhawan Poorva, 110 Shanti Palli, E.M Bypass, Kolkata, West Bengal, 700107 Vs. Subhas Kumar Kedia 41,N.S.Road, Kolkata, West Bengal, 700001 (Appellant) (Respondent) PAN No. AFNPK9669M Assessee by : Ms. Shreya Loyalka, AR Revenue by : Shri Arup Chatterjee, DR Date of hearing: 11.03.2025 Date of pronouncement : 24.04.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 04.08.2023 for the AY 2017-18. 02. The only issue raised by the Revenue is against the deletion of addition of ₹85,71,100/- as made by the ld. AO u/s 68 of the Act on account of cash deposited in the bank accounts by the assessee. 03. The facts in brief are that the assessee filed the return of income on 29.10.2017, declaring total income at ₹1,21,90,090/-, which was duly processed u/s 143(1) of the Act. The case of the assessee was selected for limited scrutiny to examine the cash deposit into the bank account during the year. Accordingly, the statutory notices along with questionnaire were issued and served upon the assessee. The assessee Page | 2 ITA No.1648/KOL/2024 Subhas Kumar Kedia; A.Y. 2017-18 complied with the said notices by furnishing the documents and reply through email stating that cash deposited in the banks was disclosed under IDS-16 Scheme and due taxes were paid thereon. The ld. AO after taking into consideration the reply of the assessee and evidences furnished came to the conclusion that the cash deposited into the bank account during F.Y. 2016-17 were ₹5,34,71,000/-, out of which the assessee disclosed ₹4,50,00,000/- as undisclosed income under IDS- 16 scheme and already paid taxes and hence, there is a difference of ₹85,71,000/- and accordingly, the show cause notice was issued to the assessee, who was also director of M/s Dadi Griha Nirmal Private Limited and assessee replied to the said show cause vide letter dated 10.10.2019, submitted that the assessee having the cash on behalf of M/s Dadi Griha Nirmal Private Limited to the tune of ₹80 lacs, which was disclosed before the settlement commission and order of the settlement commission also furnished before the ld. Assessing Officer. The ld. AO perused from the order of settlement commission that the disclosure was made due to interest paid of 8% instead of 10% on borrowed loan and balance sheet of M/s Dadi Griha Nirmal Private Limited as on 31.03.2017, reflected 80 lakh with Subhas Kumar Kedia, the assessee. However, the ld. AO observed that there is no cash available with the assessee as he was having income from salary and interest from Firm, director’s remuneration from company and interest income under other sources and therefore, there was no source of cash deposits in the bank accounts of the assessee and accordingly, treated as unexplained income and added the same to the income of the assessee. 04. The ld. CIT (A) in the appellate proceedings, allowed the appeal of the assessee after taking into consideration, contention and submission raised by the counsel of the assessee by holding that assessee has duly Page | 3 ITA No.1648/KOL/2024 Subhas Kumar Kedia; A.Y. 2017-18 explained the cash deposited in the bank account by observing and holding as under:- “5.3.4 I agree with the contention of the appellant that since M/s Dadi Griha Nirman Pvt Ltd had given cash of Rs 80 lakh to its Director Subhas Kedia, the same has been recorded as such in its balance sheet, which has been filed before the Settlement Commission and accepted as well. The order u/s 245D(4) of the Act was passed by Settlement Commission after considering the manner in which the income was derived and also the manner in which the income earned has been retained by the appellant. The said income was earned in cash and was lying in the custody of its director, Subhas Kumar Kedia. The Settlement Commission after duly accepting the explanations given by Dadi Griha Nirman Pvt Ltd, has settled the application and passed order under sec 245D(4). Further, this order has also attained finality. 5.3.5 Further, the appellant has relied upon the decision of Ahmedabad ITAT in the case of JCIT v. Sanjay H Thakkar ITA No.490/Ahd/2018 dated 20.4.2022, wherein on similar facts, Hon'ble ITAT has granted the benefit of the cash deposited by assessee in his bank account, which was nothing but cash balance of the society and was utilized by the assessee. The relevant extract of the same is given hereunder: However, the order of the settlement commission has reached to the finality wherein the opening cash balance of 50 lakhs was shown by the assessee. Thus, if we deny the claim of the assessee for having received the money from the society, it would lead to the double addition of the same item of the cash receipt which is unwanted under the provisions of law. Firstly, the amount of cash receipt from the society will suffer from the tax in the year under consideration and secondly, the assessee failed to claim the benefit of the higher amount of available cash in hand as on 1st April 2006 before the settlement commission which eventually has already suffered the tax again. Thus, to avoid the double taxation, we are inclined to admit the contention of the assessee that he has received cash from the society which was utilized to deposit the bank accounts. In the case of the appellant also, the fact that cash declared by M/s Dadi Griha Nirman Pvt Ltd, which was lying with the appellant, has attained finality. Thus, I agree with the appellant that there is no reason of not treating the same being deposited by appellant in its bank as a source of deposit as that will result in double taxation of the same money. 5.3.6 Further, the AO has not commented on the explanation of the appellant with regard to the balance deposit of Rs. 7,36,000. The appellant had cash available with him as per its regular books of accounts and out of the same, the cash of Rs. 7,36,000 was deposited. The same was explained to the AO during the assessment proceedings (see table below). The onus was on the AO to find lacuna or discrepancies in the evidences submitted before him, by the appellant. Nothing to that effect has been brought on record by the AO in this regard. Page | 4 ITA No.1648/KOL/2024 Subhas Kumar Kedia; A.Y. 2017-18 5.3.7 Considering overall factual and legal aspects of the case; considering order u/s 245D(4) of the Act of Hon'ble Settlement Commission in the case of M/s Dadi Griha Nirman Pvt. Ltdand respectfully following decision of Hon'ble ITAT, Ahmedabad in the case of JCIT v. Sanjay H Thakkar ITA No.490/Ahd/2018 dated 20.4.2022, it is held that since the source of the entire cash deposits made by the appellant in its bank account stand explained, no addition is warranted u/s 68 of the Act. Hence, the addition of Rs. 85,71,000/-is deleted and grounds no. 2 to 4 are allowed.” 05. After hearing the rival contentions and perusing the materials available on record, we find that the assessee was having cash of ₹80 lacs as a director of M/s Dadi Griha Nirmal Private Limited, which was duly shown in the balance sheet of the said company in the name of the assessee. We note that this has also been filed before the settlement commission and was also accepted by the said authority. The settlement commission has passed an order u/s 245D(4) of the Act, after considering the manner in which the income was derived by the assessee. We note that the assessee has duly explained the sources of cash deposited before the ld. AO as well as before the ld. CIT (A) and the ld. CIT (A) after taking into consideration of these facts and circumstances and including the order of settlement commission passed u/s 245D(4) of the Act has Page | 5 ITA No.1648/KOL/2024 Subhas Kumar Kedia; A.Y. 2017-18 accepted the plea of the assessee and directed the ld. AO to delete the addition. Having considered of these facts before us also, we do not find any infirmity in the order of the ld. CIT (A), which is a very reasoned and speaking order. Accordingly, we are inclined to uphold the order of the ld. CIT (A) by dismissing the appeal of the Revenue. 06. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 24.04.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 24.04.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "