Rakesh Rathi, New Delhi V. ITO, Ward-58(5), New Delhi

ITA 1790/DEL/2022

AI Insights

The case involves an appeal by Rakesh Rathi against the order of the Ld. NFAC, New Delhi, which confirmed the addition of Rs. 14,00,000 as unexplained cash credit in the assessee's bank account for the Assessment Year 2011-12. The addition was initially made by the Assessing Officer under sections 147/143(3) of the Income Tax Act, following a reopening of the assessment under section 148. The primary contention was whether the cash deposits in the assessee's bank account were adequately explained. The Tribunal examined the evidence presented, including bank passbooks and affidavits, and concluded that the sources of the deposits were legitimate gifts from the assessee's father and sister, thus no addition was warranted.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122072 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 13-12-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 07-08-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M.K BHATT
• Keywords: Gift; Principle of natural justice; Reason to believe
• Section: 147; 69A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC: NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA No.1790/Del/2022 Assessment Year: 2011-12 Rakesh Rathi, C/o M K Bhatt & Co., Chartered Accountants, G-7(Basement), Preet Vihar, New Delhi 110092 PAN AGRPR8529C vs. ITO Ward 58(5), New Delhi (Appellant) (Respondent) For Assessee : Shri M.K Bhatt, FCA Shri Malav Goswami, Advocate For Revenue : Shri Om Prakash, Sr DR Date of Hearing : 14.12.2022 Date of Pronouncement : 02.03.2023 ORDER PER CHANDRA MOHAN GARG, J.M. This appeal filed by the assessee is directed against the order dated 11.07.2022 of the Ld. NFAC, New Delhi, relating to Assessment Year 2011-12. ITA No.1790/Del/2022 Rakesh Rathi Page 2 of 8 2. The grounds of appeal raised by the assessee read as under:- 1.That the CIT (Appeals) has erred in law and on fact, in confirming the order of assessment under section 147/143(3) of the Act, which is bad in law, wrong on facts and against the principles of natural justice. 2. That the CIT (Appeals) has erred in law and on fact, in confirming the order of assessment under section 147/143(3) of the Act, in sustaining the reopening action under section 148, where reasons recorded for the reopening of the assessment are silent on the following vital issues: a. Contents of information available to AO and b. Mere cash deposits are treated to be equivalent to income escaping assessment. 3. That the CIT (Appeals) has erred in law and on fact, in confirming the order of assessment under section 147/143(3) of the Act, in initiating proceedings under section 147 of act in holding that there existed relevant material which could lead to formation of requisite "Reason to Believe" 4. That the CIT (Appeals) has erred in law and on fact, in confirming the order of assessment under section 147/143(3) of the Act, in making the addition of Rs. 14,00,000/- as ITA No.1790/Del/2022 Rakesh Rathi Page 3 of 8 unexplained cash credit under section 69A of the act while detailed finding in his assessment order under Para 6, 7, 8 and 8.1 are in relation to identity of creditor/donor, the capacity of the creditor/donor only to advanced money and genuiness of the transaction, which not at all, are the main indigents of section 69A of the act. The CIT (Appeals) has confirmed the additions with the concluding remark by considering the same parameters as in case of AO. 5. That the CIT (Appeals) has erred in law and on fact, in confirming the order of assessment under section 147/143(3) of the Act, in making the addition of Rs. 14,00,000/- as unexplained cash credit under section 69A of the act ignoring the submission of the appellant wherein it was stated that the said sum was deposited in the bank out of the cash gifts received from his father amounting to Rs. 5,00,000/- on dated 01-03-2011 and Rs. 9,00,000/- from his sister on dated 17-02- 2011, who withdraw the money from their bank account maintained in the same bank and same branch. 6. That the CIT (Appeals) has erred in law and on fact, in confirming the order of assessment under section 147/143(3) of the Act, in making the addition of Rs. 14,00,000/- as unexplained cash credit under section 69A of the action the basis of examination of source of the source of the donors ignoring the vital facts that a sum of Rs. 5,00,000/- which was ITA No.1790/Del/2022 Rakesh Rathi Page 4 of 8 stated to be deposited by the father in his bank account on dated 06-01-2011 was out of the earlier cash withdrawal from the same account amounting to Rs.10,00,000/- and a sum which was stated to be deposited by the sister in her bank account on dated 17-02-2011 was out of the FD mature and other sum received through the banking channel only. 7. That the CIT (Appeals) has erred in law and on fact, in confirming the order of assessment under section 147/143(3) of the Act, in making the addition made of Rs.14,00,000/- towards cash deposited in bank account under section 69A of the act without appreciating the fact that the appellant had duly discharged the onus by proving the source of cash deposit in the bank accounts by filing Bank statement, IT and confirmation letters of gifts from the parties, along with affidavit which is not disputed and hence, the addition of Rs.14,00,000/- is without any justification and liable to be deleted. 3. The learned counsel of the assessee submitted that does not want to press legal ground no. 1 to 3, therefore the same are dismissed has not pressed. 4. The learned counsel submitted that the Assessing Officer has made an addition of Rs. 14 lakh on account of cash deposit to the bank account maintained with Corporation Bank viz. Rs. 9 lakh on ITA No.1790/Del/2022 Rakesh Rathi Page 5 of 8 17.02.2018 and Rs. 5 lakh on 01.03.2018 whereas the bank passbook of sister of assessee Smt. Jyoti Rathi and father of assessee Shri Ganshyam Dass Rathi clearly reveals that the amounts so deposited by the assessee were out of cash withdrawal by sister and father of the assessee from their respective bank accounts. He drew our attention towards paper book pages 15 to 22 of assessee’s paper book and submitted that the copies of bank passbook of assessee, his sister Smt. Jyoti Rathi and his father Shri Ganshyam Dass Rathi clearly reveals the source of cash despotised by the assessee to his bank account therefore the addition made by the AO and confirmed by the Ld. CIT(A) may kindly be deleted. 5. Replying to the above the Ld. Senior Departmental Representative oppose to the contention of assessee and relied on the orders of the authorities below. 6. On careful consideration of rival submissions, I note that the Assessing Officer has made addition in the hands of assessee on account of cash deposited to the bank account of assessee maintained with Corporation Bank. The first deposit of Rs. 9 lakh ITA No.1790/Del/2022 Rakesh Rathi Page 6 of 8 was made on 17.02.2018 and second deposit of Rs. 5 lakh was made on 01.03.2018 these facts are clearly discernable from the copy of the passbook of assessee bank account with Corporation Bank. Further from the copy of the bank passbook pertaining to Smt. Jyoti Rathi, I also note that the sister of assessee has withdrawn Rs. 12,30,000/- on 17.02.2011 and thus I am agree with the contention of the Ld. AR that the amount of Rs. 9 lakh despotised by the assessee to his bank account was from the amount withdrawn by the sister of assessee from her bank account on the very same date i.e. 17.02.2011, therefore the source of first deposit is properly explained and copy of PAN and affidavit along with confirmation given by sister of assessee Smt. Jyoti Rathi again confirm the fact that she has having PAN number and bank account which shows her identity, capacity and creditworthiness and genuineness of transaction of gift to his brother that is assessee. 7. Regarding second deposit from the copy of passbook of father of assessee Shri Ganshyam Dass Rathi available at pages 8 and 9 of assessee paper book reveals that the father of assessee has ITA No.1790/Del/2022 Rakesh Rathi Page 7 of 8 withdrawn Rs. 5 lakh on 01.03.2011 from his bank account maintained with Corporation Bank and on the very same date the same amount of Rs. 5 lakh was deposited by the assessee to his bank account. The copy of bank passbook, Aadhar Card, affidavit and confirmations of gift given by the father of assessee Shri Ganshyam Dass Rathi clearly reveals the identity capacity and creditworthiness and genuineness of transaction of gift from the father to son therefore no addition is called for in the hands of assessee on this account. The copy of ITR acknowledgment of Smt. Jyoti Rathi available at pages 36 and 37 and copy of ITR acknowledgment of Shri Ganshyam Dass Rathi available at page 38 of paper book clearly reveals that these persons filing Income Tax Return with the Department therefore their identity cannot be doubted. 8. In view of above I am inclined to hold that the assessee has successfully demonstrated and substantiated the source of cash deposit of Rs. 14 lakh to his bank account therefore no addition is called for in this regard therefore grounds of assessee on merits are allowed and the AO is directed to delete the addition. ITA No.1790/Del/2022 Rakesh Rathi Page 8 of 8 9. In the result appeal of the assessee is partly allowed. Order pronounced in the open court on 02.03.2023. Sd/- (CHANDRA MOHAN GARG) JUDICIAL MEMBER Dated: 02 nd March, 2023. NV/- Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR // By Order // Asstt. Registrar, ITAT, New Delhi