BIRBAL SHARMA,GURUGRAM V. INCOME TAX OFFICER WARD 1(3), GURGAON

ITA 5561/DEL/2024

AI Insights

The case involves an appeal by Birbal Sharma against the order of the Commissioner of Income-tax Appeals/National Faceless Appeal Centre (NFAC), Delhi, which sustained the addition of Rs.26,00,000 to the assessee's income for the Assessment Year 2012-13. The addition was initially made by the AO during the reassessment under section 147 of the Income-tax Act, 1961, due to unexplained cash deposits in the assessee's bank account. The ITAT heard the appeal, where the assessee argued that the cash deposits were from legitimate sources, including gifts from relatives for his daughter's marriage and re-deposits of cash withdrawals. The ITAT accepted the legitimacy of Rs.9,00,000 of the deposits but remitted the issue of the remaining Rs.17,00,000 for further verification by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312962 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B.S. ANAND
• Assessee Lawyers: RAJNISH YADAV
• Keywords: Condonation of delay; Opportunity of being heard; Reasonable cause; Corroborative evidences; Gift; Principle of natural justice
• Section: 147; 148; 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.5561/DEL/2024 (Assessment Year: 2012-13) Birbal Sharma, vs. ITO, Ward 1 (3), B – 37, Ground Floor, Platinum Deluxe, Gurgaon. AAR Dee City, Sector 32, Gurgaon – 122 011 (Haryana). (PAN : ABZPS3884L) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Rajnish Yadav, Advocate REVENUE BY : Shri B.S. Anand, Sr. DR Date of Hearing : 06.03.2025 Date of Order : 30.04.2025 O R D E R 1. This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax Appeals/National Faceless Appeal Centre (NFAC), Delhi (for short ‘ld. CIT (A)’) dated 27.07.2023 for Assessment Year 2012-13. 2. At the time of filing of appeal, the Registry has pointed out a defect that appeal is time barred by 335 days. In response thereof, the Assessee has filed an application seeking condonation of delay in filing of the appeal on the ground that the delay in filing the appeal occurred due to assessee’s ill health as he was suffering from a serious heart condition and got heart attack on 27.10.2023; as a result he was under medical 2 ITA No.5561/DEL/2024 supervisions and advised by Doctors to avoid stress and professional obligations to recover and also attached medical certificate; that due to health condition and medical advice, the assessee was unable to attend to legal and financial matters including the timely filing of the appeal. In support of this, he filed an affidavit which is placed on record. Accordingly, he prayed that the delay in filing the appeal be condoned. On the other hand, ld. DR of the Revenue objected to the same. 3. I have heard both the counsels on the issue of condonation of delay. In my considered opinion, there was a reasonable cause for the delay in filing the appeal. Therefore, I condone the delay in filing the appeal before the Tribunal. 4. Brief facts of the case are, the case of the assessee was reopened under section 147 of the Income-tax Act, 1961 (for short ‘the Act’) after recording reasons and with prior approval of the ld. PCIT, Gurgaon. Further notices u/s 142 (1) were issued and served on the assessee. Subsequently, in response to notice u/s 148 of the Act, assessee filed his return of income by declaring income of Rs.4,48,630/- under the head ‘salary’ and ‘income from other sources’. Further notices u/s 143(2) and 142 (1) were issued and served on the assessee. During assessment proceedings, the AO observed that assessee has deposited cash of Rs.26,00,000/- in his bank account maintained with ICICI Bank and the 3 ITA No.5561/DEL/2024 assessee was asked to explain the source of cash deposited with documentary evidences. The assessee has submitted cash deposit made by the assessee out of gift received from the relatives for his daughter’s marriage and re-deposited of cash withdrawals. As per the cash flow statement submitted by the assessee, it was observed that assessee has received cash of Rs.4,00,000/- from his brother, Shri Subhash Chand on 09.04.2011 and Rs.5,00,000/- on 30.04.2011 from Shri Ram Bhagat in contemplation of marriage of his daughter. The other informations shown in connection with cash flow statement were out of earlier cash withdrawals. The AO observed that assessee has furnished affidavit duly deponent by himself and with Shri Subhash Chand and Shri Ram Bhagat. The AO further observed that the assessee has furnished affidavit along with PAN number and copy of jamabandi. However, on perusal of affidavits filed by the assessee, he observed that assessee has furnished PAN card of the persons but failed to furnish copy of ITR, computation of income and bank statement etc.. The assessee has furnished only jamabandi to justify the source of cash gifts. Therefore, he rejected the abovesaid affidavits and jamabandi. With regard to other cash deposit of Rs.17,00,000/-, he observed that assessee has withdrawn small amount through ATM and other cash withdrawals to justify the balance cash 4 ITA No.5561/DEL/2024 deposit in the bank. Accordingly, he rejected the other submissions and proceeded to make the addition of Rs.26,00,000/-. 5. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A) and raised several grounds of appeal and filed detailed submissions. After considering the detailed submissions, ld. CIT (A) sustained the addition made by the AO with the observation that mere filing of affidavit is not suffice to prove the proof of evidence and further observed that identity alone is not sufficient, genuineness and creditworthiness have also to be proved to establish that certain receipts are not in the nature of income. Therefore, the evidences produced by the assessee did not support the source of cash in the bank account. 6. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :- “1. That the learned CIT (Appeals) has erred both in law and on the facts and circumstances of the case in law in sustaining an addition of Rs 26 lakh to the income of the assessee under section 143(3) r.w.s 147 of the income tax act, 1961 by rejecting the appeal of the assessee without judicially examination of the explanation and evidences submitted in support of the legitimacy. 2. That the order passed by the assessing officer under section 143(3) read with section 147 of the income tax act 1961 is incorrect, bad in law and have been passed without properly and judicially considering the submission of the appellant. That the additions are illegal, unjust and unlawful. 3. The assessment proceedings have been initiated on the basis of Reasons recorded on suspicion and doubts and not on belief as the cash deposited into the bank account have been considered as income of the appellant. The learned AO has exercised powers under section 133 (6) illegally. 5 ITA No.5561/DEL/2024 4. The AO has framed the assessment order on the wrong and incorrect interpretation of the word contemplation. The AO did not apply his mind while disposing off the objections raised by the appellant and framed an assessment order against the facts of the case. 5. The appellant had provided all the documents and records in connection with the claim of the appellant about the cash deposits into his bank account but for the reasons best known to the learned AO, he has framed the impugned assessment order completely against the principles of natural justice without affording him sufficient opportunity of being heard simply claiming that the cash deposited into his bank accounts remained unexplained. 6. The learned AO has added the entire cash deposit into the bank accounts of the appellant amounting to Rs.2600000 on estimates, suspicion, conjectures and surmises. 7. The learned AO has arbitrarily considered the cash deposits into the bank account as the income of the appellant without application of mind to the documents and explanation submitted by the appellant and added the cash deposits at his own motion to the income of the appellant. The learned Assessing Officer had very hastily passed the order on 26.11.2019 without affording the learned AO has framed the assessment order arbitrarily in haste and without application of mind hence the same is to be annulled appellant sufficient opportunity of being hear d to explain his case. 8. The learned AO never bothered to enquire about the submissions made by the appellant and passed unreasoned and unwarranted assessment order in the case of the appellant. 9. Framing of an assessment order, which is bad in law and on facts.” 7. At the time of hearing, ld. AR of the assessee submitted that assessee has deposited Rs.26,00,000/- in his bank account and assessee has received Rs.9,00,000/- from his brothers on the occasion of his daughter’s marriage and other deposits were out of cash withdrawals. In this regard, he brought to our notice page 7 of the paper book and brought to our notice that assessee has deposited Rs.9,00,000/-, Rs.2,50,000/- and Rs.5,50,000/- on 12.08.2011, 29.11.2011 and 09.02.2012 respectively. He submitted that these deposits were made out of cash withdrawals 6 ITA No.5561/DEL/2024 made by the assessee from his own bank account on various dates and prayed that the assessee has filed relevant affidavits before the AO claiming the abovesaid facts on record. He submitted that AO has rejected the submissions of the assessee by observing that assessee has made small withdrawals during the year and however he had not considered the fact that the assessee has withdrawn huge cash during the period which was re-deposited within the period of three months. With regard to affidavits, he submitted that AO has rejected the affidavits of assessee’s brothers who were having agricultural income holding agricultural land and he prayed that claim of the assessee may be accepted and additions made by the AO be deleted. 8. On the other hand, ld. DR of the Revenue submitted that the assessee has not filed any corroborative evidences before the lower authorities and if the Bench considers it necessary, then the issue may be remitted back to the file of AO to verify the same. 9. Considered the rival submissions and material placed on record. I observed that assessee has received Rs.9,00,000/- of cash deposit made by him in his bank account from his brothers on the occasion of his daughter’s marriage. I observed that both the brothers have filed affidavit for the above gifts made by them. They have filed affidavits along with their respective PAN. I observed that tax authorities have rejected the 7 ITA No.5561/DEL/2024 affidavits for the reason that the brothers do not have any creditworthiness. After considering the submissions of the assessee and these deposits have made by the assessee during the marriage of his daughter, it is normal in the families to gather funds for the marriage and the brothers have filed affidavit confirming giving of gifts for the purpose of marriage. Therefore, in my considered view, tax authorities have rejected the abovesaid affidavits on gross basis. In my considered view, cash deposit to the extent of Rs.9,00,000/- may be accepted and I order accordingly. 10. Coming to further deposit of cash deposit to the extent of Rs.17,00,000/-, I observed that assessee has submitted a combined statement as per which assessee has withdrawn the cash from his own bank account and re-deposited the same within the gap of three months. For the sake of clarity, it is reproduced below :- 8 ITA No.5561/DEL/2024 11. However, I observed that the AO has observed that assessee has withdrawn a small amount for his necessities during the year and it is not sufficient to redeposit the same. I observed from the record submitted by the assessee that assessee has filed copy of bank account at pages 46 & 47 of the paper book as per which assessee has also withdrawn cash during September, October and November 2011. However, the observation of the AO is also contrary to the bank statement submitted by the assessee. For the sake of justice, we are inclined to remit this issue for verification of cash withdrawal and redeposit to the file of AO. I direct the AO to verify the cash withdrawal and redeposit of Rs.17,00,000/- during various dates as per the statements submitted by the assessee after giving proper opportunity of being heard to the assessee. Accordingly, the grounds taken by the assessee are partly allowed as indicated above. 12. Other grounds of appeal on the issue of jurisdictional issue are not adjudicated and I dealt with the issue on merit only. 13. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on this 30TH day of April, 2025. SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER Dated: 30.04.2025/TS 9 ITA No.5561/DEL/2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "