RAJEEV MAHINDRU,LUDHIANA V. DEPUTY COMMISSIONER OF INCOME TAX,CC-3, LUDHIANA

ITA 1091/CHANDI/2024

AI Insights

The case revolves around an appeal by Rajeev Mahindru against the order of the CIT(A)-5, Ludhiana, which confirmed the addition of \\u20b950,000 to the assessee's income for the Assessment Year 2021-22. The addition was initially made by the Assessing Officer, who was not satisfied with the explanation provided by the assessee regarding the source of a cash deposit of \\u20b950,000 made in March 2021. The assessee argued that the deposit was from earlier cash withdrawals, supported by a cash flow statement and bank statements. However, both the Assessing Officer and the CIT(A) found the explanation insufficient, leading to the appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714595 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Other Referred Cases: Punjab & Haryana High Court
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA DHAR
• Assessee Lawyers: K.J. SHALLEY
• Keywords: Salary income

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “B” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 1091/Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2021-22 Rajeev Mahindru, ShopNo. 21,Dana Mandi, Ludhiana बनाम DCIT, Central Circle-3, Ludhiana ˕ायी लेखा सं./PAN NO: AJQPM8612D अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Sh. K.J. Shalley, Advocate राजˢ की ओर से/ Revenue by : Smt. Priyanka Dhar, Sr. DR सुनवाई की तारीख/Date of Hearing : 04/08/2025 उदघोषणा की तारीख/Date of Pronouncement : 05/08/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order dt. 28.08.2024 of the Ld. CIT(A)-5, Ludhiana pertaining to Assessment Year 2021-22. 2. The grounds of appeal raised by the assessee are as under:- 1. That the Ld. CIT(Appeals) has erred in confirming the addition of Rs. 50000/- without considering the facts of the case that the Assessing Officer has not applied his mind and having no independent satisfaction. 2. That on the facts and in the circumstances of the case Ld. CIT(Appeals) Ludhiana has also erred in law by confirming Printed from counselvise.com 2 the addition of Rs. 50000/- by holding that cash flow was filed during assessment proceedings before the Ld. A.O. pertains to preceding year. 3. That the Appellant craves leave to add, amend or alter any grounds of Appeal before the Appeal is heard and disposed off. 3. The brief facts of the case are that the assessee is an individual deriving income from salary and share of profit from partnership firms. The return of income for the relevant assessment year was filed on 14.03.2022 declaring total income of ₹11,06,710/-. During the course of scrutiny proceedings, the Assessing Officer noticed a cash deposit of ₹50,000/- in March 2021 and called upon the assessee to explain the source thereof. In response, the assessee submitted that the deposit was out of earlier cash withdrawals made in the preceding financial year, supported by a cash flow statement and bank statements. 4. However, the Assessing Officer was not satisfied with the explanation and observed that the cash deposit was made after a gap of more than 15 months from the date of withdrawal, without any reasonable justification. Accordingly, the sum of ₹50,000/- was treated as unexplained cash and added to the income of the assessee under section 69/69A of the Act. Feeling aggrieved by the order the assessee filled the appeal before Ld. CIT(A) . Printed from counselvise.com 3 5. However, the Ld. CIT(A) confirmed the addition on the ground that the explanation offered was not supported by documentary evidence and the assessee failed to establish a direct nexus between the cash withdrawal and the subsequent deposit. 6. Now the assessee is before us on the grounds mentioned hereinbefore. 7. Before us, the Ld. AR submitted that the lower authorities failed to appreciate the fact that the cash deposit of ₹50,000/- was duly explained as being out of withdrawals made from the bank in the earlier financial year. It was submitted that the cash flow statement covering Financial Years 2018–19 to 2020–21 was placed on record, which clearly demonstrated the availability of sufficient cash in hand. It was further argued that the assessee is not maintaining books of account, and the deposit in question was within the reasonable financial capacity of the assessee. It was also emphasised that no addition had been made in earlier assessments for similar withdrawals and the Department had accepted the past cash position. Reliance was placed on principles of consistency and judicial discipline, submitting that once withdrawals are established, the onus shifts to the Revenue to prove that such cash was not available. It was contended that the addition was unjustified both in fact and in law and deserves to be deleted. Printed from counselvise.com 4 8. On the other hand, the Ld. Sr. Departmental Representative supported the findings of the authorities below and submitted that the explanation furnished by the assessee lacked credibility. It was argued that a gap of more than 15 months between withdrawal and redeposit raises serious doubts about the genuineness of the explanation. It was submitted that no documentary evidence, such as cash book, contemporaneous records, or corroborative entries was furnished to establish the continuity of cash in hand. The Revenue emphasised that the cash flow statement filed was unaudited and self-prepared, and thus, could not be relied upon to explain the source of deposit. It was thus prayed that the addition made under section 69/69A, being justified in the facts of the case, should be sustained. 9. We have heard the rival contentions and perused the record. The only issue involved in the present appeal is whether the cash deposit of ₹50,000/- made by the assessee in March 2021 can be treated as explained. From the material placed on record, it is evident that the assessee had made cash withdrawals in the earlier financial year, which have not been disputed. A cash flow statement demonstrating the availability of cash on hand was also submitted during the assessment proceedings. Though the deposit was made after a gap of time, there is no finding by the Assessing Officer that the cash so withdrawn was utilised elsewhere or was not available with the assessee. Printed from counselvise.com 5 10. In our considered view, once the source of the funds has been established and the withdrawals from bank account are not in dispute, the benefit of the doubt must go in favour of the assessee, particularly when the amount involved is nominal. The assessee is not found to be engaged in any undisclosed business activity. The principles of preponderance of probabilities, as laid down in several judicial pronouncements, support the explanation offered by the assessee. 11. The Hon’ble Punjab & Haryana High Court, in similar circumstances, has held that a cash deposit cannot be disbelieved merely because of the time gap between withdrawal and deposit, and further held that withdrawals made even four years earlier cannot be presumed to be unavailable at the time of subsequent deposit, in the absence of any evidence to the contrary. The legal position is clear that once the assessee discharges the initial onus of showing the source of cash deposit, the burden shifts to the Revenue to disprove the explanation with positive evidence, which is lacking in the present case. 12. The amount involved in the present case is relatively small. The assessee has filed detailed cash flow workings, backed by bank statements, and there is no evidence on record to suggest any attempt to conceal income. Given the facts of the case and the settled legal position laid down by the jurisdictional Printed from counselvise.com 6 High Court, we are of the considered view that the assessee has satisfactorily explained the cash deposit of ₹50,000/-, and the addition made under section 69/69A is unsustainable. 13. Accordingly, we direct deletion of the impugned addition. The addition of ₹50,000/- solely on account of the time gap, in absence of contrary evidence, is not justified. 14. We, therefore, hold that the assessee has satisfactorily explained the source of the cash deposit and the addition made under section 69/69A is liable to be deleted. 15. In the result, the appeal of the assessee is allowed. Order Pronounced in the open Court on 05/08/2025. Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER rkk आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 5. गाडŊ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "