LATE SHRI RAM BABU GUPTA,FIROZABAD V. INCOME TAX OFFICER, WARD-2(2)(1), FIROZABAD

ITA 322/AGR/2025

AI Insights

The case involves Shri Surya Kant Gupta, the legal heir of Late Shri Ram Babu Gupta, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 10,89,500 as unexplained money due to cash deposits in a bank account. The assessee, a retired state government employee from the Education Department, had declared income from pension and a bangle business. The Income Tax Officer (ITO) disbelieved the assessee's explanation regarding the source of the cash deposits from the bangle business and added the amount as undisclosed income. The Tribunal, after examining the cash flow statements and the circumstances, concluded that the assessee had sufficient cash balance to account for the deposits and reversed the ITO's decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775628 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 18-06-2025
• Other Referred Cases: S.R. Venkataratnam Vs. CIT, S.M.I.L.E Microfiber Vs. ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Assessee Lawyers: SAHIB P. SATSANGI
• Section: 144; 142(1); 69; 133(6); 44AD

Judgement Text

" Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER (Through Virtual Hearing) ITA No.322/AGR/2025 (Assessment Year: 2017-18) Shri Surya Kant Gupta Legal heir of Late Shri Ram Babu Gupta 274, Gali No. 1, Pameshwar Gate, Firozabad – 283203 Vs. Income Tax Officer, Ward-2(2)(1), UP PAN: AIDPG6713H Assessee by : Shri Sahib P. Satsangi, CA Revenue by: Shri Anil Kumar, Sr. DR Date of Hearing 20/08/2025 Date of pronouncement 12/09/2025 O R D E R 1. The appeal in ITA No.322/AGR/2025 for AY 2017-18 arises out of the order of the ld. Commissioner of Income Tax (Appeals)/ JCIT(A), Gurugram [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. 109/16-17/CIT(A)- 14/,New Delhi dated 01.01.2019 against the order of assessment passed u/s 144 of the Income-tax Act, 1961 dated 31.03.2016 (hereinafter referred to as ‘the Act’) by ITO, Ward-41(2), Delhi (hereinafter referred to as ‘ld. AO’). 2. Though the assessee has raised several grounds before me, the only issue to be decided in this appeal is as to whether the ld JCIT(A) was justified in confirming the addition of Rs. 10,89,500/- made on account of cash deposit in Canara Bank Account as unexplained money u/s 69A read with Section 115BBE of the Act in the facts and circumstances of the instant case. 3. I have heard the rival submissions and perused the material available on record. The assessee is an individual having retired from State Govt. Service in Printed from counselvise.com ITA No.322/AGR/2025 Shri Surya Kant Gupta Page | 2 Education Department deriving income from pension. The return of income for AY 2017-18 was filed on 07.03.2018 declaring total income of Rs. 2,67,306/-. The case was picked up for limited scrutiny to verify the cash deposit made in the bank account. The notice u/s 143(2) of the dated 08.08.2018 and notice u/s 142(1) of the Act dated 28.01.2019 stood issued to the assessee. The assessee filed another return of income on 11.02.2019 declaring total income of Rs. 3,19,380/- which include income from bangle business on presumptive basis u/s 44AD of the Act. The ld AO noticed that the assessee had deposited cash of Rs. 10,89,500/- during the year under consideration. During the course of assessment proceedings, the ld AO sought to examine the veracity of bangle business being carried out by the assessee. The assessee submitted that he is engaged in bangle business and income thereon have been offered u/s 44AD of the Act. In support of the said business, the assessee furnished purchase invoices dated 05.05.2016 issued by M/s Astha Bangle, Lohiya Nagar, Jalesar Road, Firozabad and invoice dated 08.02.2017 issued by M/s AM Sandeep Bangle Store, Pamashwar Gate, Firozabad. Notice u/s 133(6) of the Act stood issued to these parties which were returned unserved by the postal authorities. Thereafter the Inspector attached to the office of the ld AO was deputed to conduct full enquiry. The Inspector in his report dated 20.11.2019 stated that those firms exist in the given address. Despite this, the ld AO concluded that the assessee had not proved the existence of glass bangle business being carried out and disbelieved the sale proceeds of glass bangles as a source for making the cash deposits. The ld AO accordingly completely ignored the second return filed by the assessee on 11.02.2019 offering additional income and proceeded to complete the assessment by taking the original return of income of Rs. 2,67,040/- and added the cash deposits made in Canara Bank Account in the sum of Rs. 10,89,500/- as undisclosed income u/s 69A read with Section 115BBE of the Act. Printed from counselvise.com ITA No.322/AGR/2025 Shri Surya Kant Gupta Page | 3 4. Before the ld NFAC/ JCIT(A), the assessee explained that he had two bank accounts i.e. Saving bank account No. 2167101009157 in Canara Bank and Saving Bank Account No. 10834120815 in State Bank of India and furnished details containing date wise withdrawals of cash and deposits made in the bank account during the FYs 2015-16 and 2016-17 together with cash flow statement for both the years. The cash flow statement submitted by the assessee for both the years are reproduced herein:- The cash flow statement for the F.Y 2015-16 is reproduced as under:- Particulars Amount Particulars Amount Opening Balance on 01.04.2015 61,250 Cash deposit in Canara Bank 67,500 Cash withdrawals from Canara Bank 5,72,400 House hold withdrawals 72,000 Cash withdrawals from SBI 36,500 Closing Balance on 31.03.2016 5,30,650 6,70,150 6,70,150 The cash flow statement for the F.Y 2016-17, relevant to the A.Y. 2017-18 is reproduced as under. Particulars Amount Particulars Amount Opening Balance on 01.04.2016 5,30,650 Cash deposit in Canara Bank 10,89,500 Cash withdrawals from Canara Bank 9,34,700 Cash deposit in SBI 4,87,000 Cash withdrawals from SBI 2,90,500 House hold withdrawals 75,000 Closing Balance on 31.03.2017 1,04,350 17,55,850 17,55,850 5. From the above, it could be seen that the assessee has sufficient cash balance for making cash deposits in the bank account. In fact the assessee had made cash deposits of Rs. 10,89,500/- in Canara Bank and cash deposits of Rs. 4,87,000/- in State Bank of India. Both these deposits were out of available cash balance emanating out of cash withdrawals from the bank account. Hence, even if the assessee’s explanation given before the ld AO that there was some sale proceeds of bangles is to be disbelieved, still I find that assessee is having sufficient cash balance as a source for making the cash deposits which is evident from the aforesaid table. I hold that onus is on the revenue to prove with cogent evidence that the cash withdrawals made by the assessee earlier were utilized by Printed from counselvise.com ITA No.322/AGR/2025 Shri Surya Kant Gupta Page | 4 the assessee and that the same is not available as a cash source for explaining the cash deposits made in the bank account. My view is further fortified by the decision of the Hon’ble Karnataka High Court in the case of S.R. Venkataratnam Vs. CIT reported in 127 ITR 807 (Kar). 6. In view of the above and respectfully following the decision of the Hon’ble Karnataka High Court (supra), I hold that no part of the cash deposit made in the bank account remains unexplained by the assessee. Hence, there is no case for making any addition by treating the cash deposits as unexplained money u/s 69 read with Section 115BBE of the Act. In any event, I find that the Hon’ble Madras High Court in the case of S.M.I.L.E Microfiber Vs. ACIT in WP(MD) No. 2078 of 2020 and WMP (MD) No. 1742 of 2020 order dated 19.11.2024 had held that enhanced rate of tax at the rate of 60% prescribed by the amended section 115BBE of the Act could be imposed by the revenue only for the transactions commencing from 01.04.2017 onwards and not upto 31.03.2017. Accordingly, grounds raised by the assessee are allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 12/09/2025. -Sd/- (M. BALAGANESH) ACCOUNTANT MEMBER Dated: 12/09/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "