AMARJIT KAUR,MOHALI V. INCOME TAX OFFICER, WARD 6(1), CHANDIGARH, CHANDIGARH

ITA 1609/CHANDI/2025

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The case involves Amarjit Kaur, the appellant, who contested the reassessment of her income for the assessment year 2014-15. Initially, her return declared an income of Rs. 2,73,210, which was later questioned due to substantial time deposits and unexplained cash deposits amounting to Rs. 7,44,500. The Income Tax Officer (ITO) reopened the case under section 147 based on new information about these deposits. The Commissioner of Income Tax (Appeals) upheld the ITO's decision, leading to the appeal before the Tribunal. The Tribunal upheld the reopening but found that not all cash deposits were unexplained, thus reducing the addition to Rs. 2,00,000.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847929 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Chandigarh
• Assessment Year: 2014-2015
• Appeal Filed On: 28-11-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: ABHINAV VIJH
• Keywords: Reassessment proceedings; Onus to prove; Reopening of assessment; Source of fund; Reason to believe; Tangible material
• Section: 147; 143(3); 68; 69

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “एसएमसी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “SMC”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ BEFORE: SHRI. LALIET KUMAR, JM आयकर अपील सं./ ITA No. 1609/Chd/2025 िनधाŊरण वषŊ / Assessment Year : 2014-15 Amarjit Kaur H. No. 2629, Sector – 69 Mohali, Punjab - 160062 बनाम ITO Ward – 6(1) Pashudham Bhawan Livestock Building, Sector – 68 Mohali, Punjab - 160017 ˕ायी लेखा सं./PAN NO: ACEPK0291R अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Abhinav Vijh, CA राजˢ की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 23/03/2026 उदघोषणा की तारीख/Date of Pronouncement : 24/03/2026 आदेश/Order PER LALIET KUMAR, J.M: This appeal filed by the assessee is directed against the order dated 12.09.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, arising out of the assessment order passed u/s 143(3) read with section 147 of the Income Tax Act, 1961 for the assessment year 2014-15. 2. The assessee filed her original return of income on 19.08.2014, declaring a total income of Rs. 2,73,210/-. Subsequently, the case was reopened u/s 147 on the basis of information that the assessee had made time deposits amounting to Rs. 34,70,500/- during the year under consideration. 3. In response to notice u/s 148, the assessee filed return declaring the same income. During reassessment proceedings, the Assessing Officer accepted the explanation regarding time deposits but made an addition of Rs. 7,44,500/- on account of cash deposits, treating the same as unexplained money u/s 69A of the Act. Printed from counselvise.com 4. The Ld. CIT(A) upheld both the reopening and the addition, observing that the assessee failed to discharge the burden of proof and the explanation regarding cash deposits was not satisfactory. 5. Before me, the Ld. The Authorised Representative contended that the reopening is bad in law as the reasons recorded were vague and based on incorrect facts. It was further argued that identical reasons were recorded for different years, which reflects the non-application of the mind. 6. It was also contended that no addition has been made on the issue for which the case was reopened and therefore the reassessment deserves to be quashed. 7. The Ld. AR reiterated that the deposits were sourced from earlier withdrawals, rental income and agricultural income and that a cash flow statement was furnished. The Ld. DR supported the orders of the lower authorities and emphasized that the explanation lacked verifiable evidence. 8. The Ld. Departmental Representative supported the orders of the lower authorities and submitted that the reopening was based on credible information regarding high-value deposits and therefore the Assessing Officer had a valid “reason to believe” that income had escaped assessment. 9. It was further submitted that the sufficiency of reasons cannot be questioned at this stage and once there exists tangible material, reopening is valid. 10. I have considered the rival submissions and perused the material available on record. The reopening in the present case has been made on the basis of specific information regarding time deposits amounting to Rs. 34,70,500/- made by the assessee during the year under consideration. Such information constitutes tangible material enabling the Assessing Officer to form a prima facie belief that income chargeable to tax had escaped assessment. Printed from counselvise.com 11. The contention of the assessee that the reasons recorded are vague is not borne out from record. The reasons clearly indicate the nature of the transaction, i.e., time deposits, and the quantum involved. At the stage of reopening, the Assessing Officer is only required to form a prima facie belief and not to conclusively establish escapement of income. 12. Further, it is observed that the Assessing Officer has duly issued notice u/s 148, supplied reasons, disposed of objections of the assessee and thereafter proceeded with the assessment. Thus, the procedural requirements set out by law have been complied with. 13. The argument of the assessee that no addition has been made on the issue for which reopening was initiated also does not invalidate the reassessment proceedings. Explanation 3 to section 147 permits the Assessing Officer to assess any other income which comes to his notice during the course of proceedings, even if such issue was not part of the recorded reasons. Therefore, I find no infirmity in the assumption of jurisdiction u/s 147 by the Assessing Officer. The reopening of assessment is held to be valid. Accordingly, the legal grounds raised by the assessee are dismissed. 14. Now I will deal with the case on merit. I have given thoughtful consideration to the rival submissions and have perused the material available on record.The undisputed facts emerging from the record are that the assessee, in response to the show cause notice, furnished a detailed reply explaining the entries aggregating to Rs. 34,70,500/-. The explanation regarding time deposits of Rs. 7,80,000/- and Rs. 14,80,000/- having been made out of the maturity proceeds of earlier deposits and opening balances has been accepted by the Assessing Officer on the basis of the bank certificate and statements. Similarly, the transaction of Rs. 4,66,000/- has also been accepted as not pertaining to the year under consideration. Thus, to this extent, the explanation of the assessee has been found to be satisfactory and duly corroborated by documentary evidence. 15. The dispute, therefore, narrows down to cash deposits of Rs. 7,44,500/- comprising Rs. 3,14,500/- and Rs. 4,30,000/-. Printed from counselvise.com 16. The assessee has explained that the said cash deposits were made out of cash in hand available from earlier withdrawals, rental income and agricultural income, and has furnished a cash flow statement in support thereof. However, it is observed that the cash flow statement furnished by the assessee is only an estimated statement and is not supported by any contemporaneous books of account or day-to-day cash records. The assessee has failed to establish a clear one-to-one nexus between withdrawals and subsequent deposits. 17. At the same time, it is equally important to note that the Assessing Officer has not disputed the fact of earlier cash withdrawals from bank accounts nor has brought any material on record to demonstrate that such withdrawn cash was utilized elsewhere or was not available with the assessee at the time of redeposit. The existence of declared sources of income, including rental and agricultural income, is also not in dispute. 18. The Assessing Officer has rejected the explanation of the assessee primarily on the ground that the income declared is not commensurate with the cash deposits. However, such rejection, in the absence of any material to demonstrate that the cash available with the assessee was either not sufficient or stood utilized elsewhere, cannot justify treating the entire deposits as unexplained. It is a settled position that though the initial onus lies upon the assessee to explain the source, once a plausible explanation supported by surrounding circumstances is furnished, the same cannot be rejected arbitrarily without bringing cogent material on record. At the same time, where the explanation is not fully substantiated, it may not merit acceptance in entirety. 19. In the present case, the explanation of the assessee finds partial support from the admitted facts on record, namely, earlier cash withdrawals and the existence of declared sources of income. However, the assessee has failed to substantiate the same with complete and contemporaneous documentary evidence so as to establish a direct nexus between withdrawals and deposits. The Assessing Officer, on the other hand, has proceeded to make addition of the entire deposits without considering the possibility of availability of opening cash or recycling of withdrawals, which renders the addition excessive. Printed from counselvise.com 20. In these facts, the issue calls for a reasonable and balanced approach. Considering the admitted withdrawals, availability of disclosed income, absence of any evidence showing utilisation of cash elsewhere, and the deficiencies in the assessee’s evidence, the addition made cannot be sustained in full. 21. Accordingly, in order to meet the ends of justice, I restrict the addition to Rs. 2,00,000/- and direct the Assessing Officer to delete the balance addition Order pronounced in the open Court on 24/03/2026 -SD- लिलत क ुमार (LALIET KUMAR) Ɋाियक सद˟ /JUDICIAL MEMBER AS आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "