R.RAJU, TRICHY V. INCOME TAX OFFICER, WARD-3(2), TRICHY

ITA 871/CHNY/2022

AI Insights

The case revolves around an appeal by R. Raju against the order of the CIT(A), National Faceless Appeal Centre, which sustained an addition of Rs. 3,13,000 to the assessee's income for the assessment year 2017-18. The addition was initially made by the AO, who was not convinced by the assessee's explanation regarding the source of large cash deposits during the demonetization period. The CIT(A) accepted part of the assessee's explanation but sustained the addition for Rs. 3,13,000 due to insufficient evidence. The Tribunal, after reviewing the evidence and arguments, concluded that the assessee had adequately explained the source of all the cash deposits and directed the deletion of the addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134914 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 30-10-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 69A

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी ’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं एवं ᮰ी जी. मंजुनाथ, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 871/Chny/2022 िनधाᭅरण वषᭅ / Assessment Year: 2017-18 R. Raju, 15, Geetha Nagar, Trichy – 620 017. [PAN: AUUPR-8131-K] v. Income Tax Officer, Ward -3(2), Tiruchirapalli – 620 015. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri. S. Keerthirajan, CA ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri. D. Hema Bhupal. JCIT सुनवाई कᳱ तारीख/Date of Hearing : 09.01.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 11.01.2023 आदेश /O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order passed by the learned CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 02.09.2022 and pertains to assessment year 2017-18. 2. The brief facts of the case are that, the assessee is an individual, filed his return of income for the assessment year 2017-18 on 01.08.2017, admitting total income of Rs. :-2-: ITA. No: 871/Chny/2022 5,12,000/-. The case was selected for limited scrutiny under CASS to verify large value cash deposits during the demonetization period as compared to returned income. During the course of assessment proceedings, the assessee explained before the AO, that source for cash deposits is out of maturity proceeds of fixed deposits in SBI, and also amount withdrawn out of maturity proceeds of insurance policy. The assessee had explained that the account is held with joint name along with his wife and she had deposited a sum of Rs. 7,50,000/- out of her source. The AO, however was not convinced with the explanation furnished by the assessee and according to AO, except to the extent of income returned in the impugned assessment year amounting to Rs. 5,12,000/-, the assessee could not explain source of balance cash deposit. Therefore, the AO addition towards cash deposits as unexplained money u/s 69A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 3. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the ld. CIT(A), the assessee had explained cash deposits out of known source of income, including cash deposits out of his wife income and :-3-: ITA. No: 871/Chny/2022 also cash deposits out of maturity proceeds of fixed deposits. The Ld. CIT(A) accepted explanation furnished by the assessee, in so far as cash deposits out of his wife account amounting to Rs. 7,50,000/- and thus, directed the AO to delete addition made towards cash deposits amounting to Rs. 7,50,000/-. The balance amount of Rs. 3,13,000/- has been sustained on the ground that, the assessee could not file necessary evidences. Being aggrieved by the Ld. CIT(A) order, the assessee is in appeal before us. 4. The Ld. Counsel for the assessee, submitted that the assessee is having sufficient source of income to explain cash deposits, but the CIT(A) disregarded evidence filed by the assessee and sustained additions. 5. The Ld. DR, on the other hand supporting the order of the Ld. CIT(A) submitted that, the assessee could not explain source for cash deposits except to the extent relief allowed by the AO as well as the CIT(A), therefore, no reason to give further relief to the assessee. :-4-: ITA. No: 871/Chny/2022 6. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The assessee has explained cash deposits made during the demonetization period out of amount received from maturity of fixed deposits in SBI and Canara Bank. The assessee had also furnished necessary evidence before the AO and argued that, he had received a sum of Rs. 10,29,337/- towards maturity of insurance policy from Reliance Insurance. He had withdrawn cash out of its known source of income and re-deposited during demonetization period when the old currency notes of Rs. 500 and Rs. 1000 have been withdrawn from circulation. We find that, the AO as well as CIT(A) never disputed fact that the assessee has furnished necessary evidence with regard to maturity proceeds of fixed deposits and insurance policy. However, disregarded evidence filed by the assessee only for the reason that cash has been deposited during demonetization period. In our considered view, even during demonetization period cash deposits can be accepted, if source is explained to cover up said cash deposits. In this case, since the assessee has established source for cash deposits out of known source of income, in our considered view, the CIT(A) ought to have accepted explanation furnished :-5-: ITA. No: 871/Chny/2022 by the assessee and deleted addition sustained to the extent of Rs. 3,13,000/-. Hence, we direct the AO to delete addition towards cash deposits amounting to Rs. 3,13,000/-, because the assessee has explained source for cash deposits. 6. In the result, appeal filed by the assessee is allowed. Order pronounced in the court on 11 th January, 2023 at Chennai. Sd/- (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /Vice President Sd/- (जी. मंजुनाथ) (G. MANJUNATHA) लेखासद᭭य/Accountant Member चे᳖ई/Chennai, ᳰदनांक/Dated, the 11 th January, 2023 JPV आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकर आयुƅ (अपील)/CIT(A) 4. आयकर आयुƅ/CIT 5. िवभागीय Ůितिनिध/DR 6. गाडŊ फाईल/GF