PRASHANTH PARAMAHANS MANIK ,BANGALORE V. INCOME TAX OFFICER, WARD-5(3)(3), BENGALURU

ITA 1716/BANG/2024

AI Insights

The case involves an appeal by Prashanth Paramahans Manik against the order of the National Faceless Appeal Centre (NFAC), which confirmed an addition of Rs. 25,55,000 to the assessee's income as 'Unexplained Investment' under section 69 of the Income Tax Act for the assessment year 2017-18. The addition was based on cash deposits in the assessee's bank account. The Tribunal examined the sources of these deposits, which included cash gifts from the assessee's mother-in-law and wife, and found them to be legitimate and well-documented. The Tribunal's decision was influenced by the evidence provided, which included bank statements and gift deeds, demonstrating that the cash deposits were from legitimate sources.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126155 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GANESH R GALE; STANDING COUNSEL DEPT
• Assessee Lawyers: ZAIN AHMED KHAN
• Keywords: Set aside; Opportunity of being heard; Unexplained investment; Gift; Principle of natural justice; TDS
• Section: 143(2); 48; 11; 69; 234B; 80C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No. 1716/Bang/2024 Assessment Year: 2017-18 Prashanth Paramahans Manik, 1198, Sri Sai Nivas, 9th B-Cross Road, Yelahanka New Town, Bangalore – 560 064. PAN – BFOPM 6385 N Vs. The Income Tax Officer, Ward – 5(3)(3), Bengaluru. . APPELLANT RESPONDENT Assessee by : Shri Zain Ahmed Khan, CA Revenue by : Shri Ganesh R Gale, Standing Counsel for Dept. (DR) Date of hearing : 19.02.2025 Date of Pronouncement : 23.04.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 31/05/2024 in DIN No. ITBA/NFAC/S/250/ 2024-25/1065318810(1) for the assessment year 2017-18. 2. The assessee has raised the following grounds of appeal: 1. The orders of the lower authorities are opposed to law, facts and circumstances of the case. ITA No.1716/Bang/2024 Page 2 of 6 . 2. The orders of the lower authorities are passed in haste, without providing sufficient and reasonable opportunity of being heard. 3. The orders of the lower authorities are passed against the principles of natural justice and is liable to be quashed. 4. The case of the Appellant was transferred to the Ld. AO without following the process laid down under section 127 of the IT Act. 5. Upon transfer of the case to the Ld. AO, the Ld. AO erred in not issuing notice u/s. 143(2) of the IT Act. 6. The Ld. AO erred in not issuing show cause notice proposing the addition to be made in the assessment order. 7. Without prejudice to the above grounds, the Ld. AO erred in bringing to tax a sum of Rs. 25,50,000 as \"Unexplained Investment' u/s. 69 of the I.T. Act and the Ld. CIT(A) erred in confirming the same. 8. The Ld. AO erred in ignoring the submissions of the Appellant regarding the source of cash deposits and concluding the assessment based on conjunctures and surmises. 9. The Ld. AO erred in taxing the additions under the provisions of section 11 5BBE of the IT Act. 10. The Ld. AO erred in levying interest u/s. 234B of the Act” 3. The assessee through ground numbers 1 to 6 of the appeal challenges the validity of the assessment order passed under section 143(2) of the Act. 4. The relevant facts are that the assessee is an individual and deriving income under the head salary. For the year under consideration, the assessee declared income of ₹ 14,53,010/- after claiming deduction under section 80C and 80D of the Act. The return of income filed by the assessee was selected for scrutiny under CASS and notice under section 143(2) of the Act dated 16th August 2018 was issued by the office of the assistant commissioner of income tax circle-1 Thane Maharashtra. 5. Subsequently, the case of the assessee was transferred to AO ward (6)(3)(4) Bangalore and thereafter further transferred to ITO ward (5)(3)(2) Bangalore as on 10th July 2019. ITA No.1716/Bang/2024 Page 3 of 6 . 6. The ITO ward (5)(3)(2) Bangalore passed the assessment vide order dated 29th December 2019 wherein addition of Rs. 25.55 Lakh was made under section 69 of the Act against the cash deposit in the bank account. 7. The aggrieved assessee preferred an appeal before the learned CIT(A) challenging the validity of the assessment as well as validity of addition made on merit. 8. The learned CIT(A) found that the assessee was provided with several opportunities, but the assessee failed to file any submission or documentary evidence even after 4 years of filing of appeal. Accordingly, the learned CIT(A) held that the assessee failed to substantiate his appeal and confirmed the finding of the AO. 9. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before me. 10. The learned AR for the assessee before me among other submissions contended that the source of cash deposit was duly explained by furnishing the bank statements of the mother-in-law wherefrom the cash was withdrawn and deposited in the bank account of the assessee. Accordingly, no addition is warranted in the given facts and circumstances. 11. On the other hand, the learned DR before me vehemently supported the order of the authorities below. ITA No.1716/Bang/2024 Page 4 of 6 . 12. I have heard the rival contentions of both the parties and perused the martials available on record. At the outset, I note that in the bank account of the assessee, there were cash deposits aggregating to Rs. 25.55 as on 23rd June 2016 and 18th January 2017 which are detailed as below: S. No. Date of deposit Amount 1. 23-06-2016 Rs. 1,00,000/- 2 23-06-2016 Rs. 14,20,000/- 3. 23-06-2016 Rs. 8,30,000/- 4. 18-01-2017 Rs. 1,30,000/- 5. 18-01-2017 Rs. 75,000/- Total Rs. 25,55,000/- 12.1 With regard the sources of the impugned deposit, the assessee submitted that the cash amounting to Rs. 25 was received from mother in-law, Smt. Sharadamma K and cash of Rs. 2 lakh was received from wife Smt. Ramanjulu Rekhashree as a gift. The assessee in support of his contention has provided gift deed from both as well bank statement of Smt. Sharadamma K. The bank statement of Smt. Sharadamma K clearly shows cash withdrawal of Rs. 25 lakhs as on 23rd June 2016 through 3 self cheques. However, the explanation and evidence provided by the assessee was not accepted by the AO for the reason that there was a credit of Rs. 16.90 Lakh in the bank of Smt. Sharadamma K just before the withdrawal. The AO held that source and genuineness of impugned credit of Rs. 16.90 Lakh was not explained. In this regard, I find impugned credit in the bank of Smt. Sharadamma K was received on account of agreement to sale of land property to one Shri Lokesh. This fact can be verified from the copy of the agreement to sale placed ITA No.1716/Bang/2024 Page 5 of 6 . on page 48 of the paper book. Hence, the source and genuineness of credit of Rs. 16.9 lakh in the bank account of Smt. Sharadamma K gets established. Accordingly, the sources of cash deposit on 23rd June 2016 in the assessee’s books of account also gets established from the fact that there were cash withdrawal from the bank of Smt. Sharadamma K which she has given to the assessee (her son-in-law). 12.2 It is also important to note that the assessee has returned the amount received from his mother in-law on the same day through cheque which can be verified from the bank statement of the assessee and from the bank statement of Smt. Sharadamma K placed at pages 7 to 21 of the paper book. I note that AO held repayment amount as payment towards the cost of the property purchased by the assessee over and above the disclosed price. In this regard I find that the Smt. Sharadamma K has transferred a land property in the name of assessee and his wife through sale deed dated 21st January 2017 for a consideration Rs. 65.7 Lakh. The consideration was paid through DD of Rs. 65 lakhs dated 11-12-2017, Rs, 4300 through cash and rest was deducted as TDS. I find there is no material whatsoever suggesting the assessee paid on-money to his mother-in-law toward consideration of the property. In my considered opinion, the view taken by the AO is mere surmise and conjecture and addition based on such surmises and conjecture cannot be sustained. 12.3 Coming to the cash deposit of Rs. 2,05,000/- as on 18th January 2017, I find that impugned cash deposit was utilized for stamp duty charges in connection with the purchase of land property. Regarding the source for the gift from the wife Smt. Rekhashree R., I find that she is a ITA No.1716/Bang/2024 Page 6 of 6 . tax paying assessee and regularly filing return of income wherein declared income around Rs. 5 lakhs. 12.4 Therefore, considering the overall facts and circumstances the source and genuineness of cash deposit of Rs. 25.55 lakh by the assessee is clearly established. Accordingly, I hereby set aside the finding of the learned CIT(A) and direct the Ao to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. 12.5 Coming to the legal ground raised by the assessee, I find that the assessee gets benefit on the merit of the assessment, therefore I am not inclined to give finding on legal ground raised by him. Hence, the legal grounds raised by the assessee are hereby dismissed as infructuous. 13. In the result, the appeal of the assessee is hereby partly allowed. Order pronounced in court on 23rd day of April, 2025 Sd/- (WASEEM AHMED) Accountant Member Bangalore Dated, 23rd April, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "