Prem Chand Dalal, Palwal V. ACIT, Central Circle-31, New Delhi

ITA 1598/DEL/2022

AI Insights

The case involves an appeal by Prem Chand Dalal against the order of the Commissioner of Income-tax (Appeals)-30, New Delhi, which sustained the addition of Rs. 7,15,000 to the assessee's income for the assessment year 2017-18. The addition was initially made by the Assessing Officer, who treated the cash deposits during the demonetization period as income from undisclosed sources under section 68 of the Income Tax Act. The assessee argued that these deposits were from cash withdrawals made prior to the demonetization. The Tribunal found that the lower authorities had not adequately justified their rejection of the assessee's explanation and allowed the appeal, directing the deletion of the addition.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 112764 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-12-2022
• Assessment Year: misc
• Appeal Filed On: 13-07-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 143(3); 143(1); 139(1)

Judgement Text

1 ITA no. 1598/Del/2022 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No. 1598/DEL/2022 Assessment Year: 2017-18 Prem Chand Dalal, H.No. 1691-1692, HUDA Sector-2, Palwal, Haryana. PAN- AANPD3366K Vs DCIT, Central Circle-31, New Delhi. APPELLANT RESPONDENT Assessee represented by Shri Gurjeet Singh, CA & Shri Shantanu Jain Adv. Department represented by: Shri Sumesh Swani, Sr. DR Date of hearing 07.12.2022 Date of pronouncement 13.12.2022 O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals)-30, New Delhi, dated 27.05.2022, pertaining to the assessment year 2017-18. The assessee has raised following grounds of appeal: “1. Because the action for initiation, continuation and conclusion of assessment proceedings u/s 143(3) at an amount of Rs 17,78,840/- is 2 ITA no. 1598/Del/2022 being challenged on facts & law. 2. Because the action is being challenged on facts & law for making addition of Rs. 7,15,000/- by treating cash deposit in bank accounts as income from undisclosed sources u/s 68 whereas per assessee, the said cash deposits in bank accounts are fully explainable and deposited out of cash withdrawals from bank account. Alternatively, quantum of addition is challenged. 3. Because the action is being challenged on facts & law for making addition of Rs. 7,15,000/- by treating cash deposit in bank accounts as income from undisclosed sources u/s 68 whereas per assessee addition has been made on surmises and conjectures without there being any direct material on record. 4. For any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee.” 2. Facts giving rise to the present appeal are that in this case the assessee had filed his return of income through electronic mode on 05.08.2017 declaring total income of Rs. 10,63,840/-. Thereafter the case of the assessee was selected for limited scrutiny through CASS for verification of cash deposits during demonetization period. 3. The Assessing Officer observed that assessee had deposited a total sum of Rs. 12,15,000/- during the demonetization period. In response to the query of the Assessing Officer the assessee explained the source being the cash withdrawn on earlier occasion from 1.4.2016 to 7.11.2016 amounting to Rs. 13,59,000/-. The 3 ITA no. 1598/Del/2022 Assessing Officer did not accept the explanation offered by the assessee. He made addition of Rs. 7,15,000/- out of total deposit of Rs. 13,59,000/-. The assessee carried the matter before the learned CIT(Appeals), who also sustained the addition made by the Assessing Officer and the appeal of the assessee was dismissed. Aggrieved, the assessee is in appeal before this Tribunal. 4. Apropos to the grounds of appeal learned counsel for the assessee vehemently argued that authorities below were not justified and have proceeded purely on conjectures and surmises and the addition has been made purely on ad hoc basis without being supported by any credible evidence. On the contrary, the assessee had given supporting evidence relating to the cash deposited by the assessee. 5. The learned DR opposed the submissions and supported the orders of the authorities below. 6. I have heard rival contentions and perused the material available on record. The learned CIT(Appeals) has decided the issue by observing as under: “9. Ground nos. 1 to 4: The Appellant has e-filed his Return of Income u/s 139(1) of the Income Tax Act, 19(51 on 05.08.2017 declaring total income of Rs. 10,63,840/- which was processed u/s 143(1) of the IT Act 1961. Subsequently the case was selected for limited secrutiny through CASS for verification of cash deposits during demonetization period. The appellant has deposited cash of Rs. 12,15,000/- (Rs. 6,00,000/- on 10.11.2016 and Rs. 6,15,000/- on. 17.11,2016) during the demonetisation 4 ITA no. 1598/Del/2022 period. The appellant has claimed that the cash withdrawal amounting to Rs. 13,59,000/- from 01.04.2016 to 04.11.2016 was though made to meet household expenses and other investment needs but was not spent during the period and, same was deposited in his bank account after the demonetization of specified bank-notes. The claim of the appellant appears to be un-reliable as the withdrawal of amounts appears to be for the purpose of personal and household expenses which were withdrawn almost every month. There is no logic in withdrawal of additional cash unless the cash in hands of appellant are spent and exhausted. The appellant failed to provide any evidence or purpose for the accumulation of cash in his hands. Therefore, I find that the Assessing Officer was reasonable to consider the cash withdrawal of Rs. 5 lakhs on 04.11/2016 being close to demonetization date as part of the cash deposited by the appellant during demonetization period and to disallow remaining amounts. In view of these facts, I have no reasons to interfere with the order of Assessing Officer and the addition made by him amounting to Rs. 7,15,000/- is confirmed.” 7. Undisputedly, the assessee had withdrawn the amount of Rs. 13,59,000/- and out of this the assessee has stated that a sum of Rs. 3,09,000/- was utilized for domestic needs and rest of the amount was deposited in the bank account. I find that the authorities below have not given any cogent reason for not accepting the explanation offered by the assessee. In the absence of any evidence by the assessing authority that the amount which was available in the form of withdrawals from bank was utilized by the assessee for any other purpose, the addition cannot be sustained. Therefore, I hereby direct the Assessing Officer to delete the addition. Grounds raised by the assessee are allowed. 5 ITA no. 1598/Del/2022 8. The appeal of the assessee is allowed. Order pronounced in open court on 13 th December, 2022. Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI