VAKULA TIRUNAGARI,HYDERABAD V. ITO., WARD-9(3), HYDERABAD

ITA 1153/HYD/2024

AI Insights

The case involves Smt. Vakula Tirunagari, who appealed against the order of the CIT (A) confirming the addition of Rs.1,27,25,663 to her income for the Assessment Year 2017-18, which was deemed as unexplained cash deposits. The Assessing Officer had initially made this addition following a limited scrutiny under CASS, focusing on cash deposits and exempt income claimed. The CIT (A) partially relieved the assessee by deleting the addition related to agricultural income but sustained the addition concerning unexplained cash deposits. The Tribunal found that the Assessing Officer and CIT (A) had not adequately considered the assessee's explanations and evidence regarding the source of the deposits, including withdrawals and contra entries from fixed deposits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26874 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2017-2018
• Other Referred Cases: Shiv Charan Dass vs. State, (2015) 40 ITR (Trib) 467 (CHD), (2016) 157 ITD 262 (CHD)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL KUMAR
• Keywords: Set aside; Business income; Opportunity of being heard; Additional evidence; Corroborative evidences; Peak credit; Earning of tax free income
• Section: 144; 142(1); 69A

Judgement Text

" ITA No 1153 of 2024 Vakula Tirunagari Page 1 of 9 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.1153/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2017-18) Smt. Vakula Tirunagari Hyderabad PAN:AGJPT8158M Vs. Income Tax Officer Ward 9(3) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri Anil Kumar, CA राज̾ व Ȫारा/Revenue by:: Dr. Sachin Kumar, DR सुनवाई की तारीख/Date of hearing: 04/02/2025 घोषणा की तारीख/Pronouncement: 06/02/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President This appeal filed by the assessee is directed against the order dated 26/08/2024 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2017-18. 2. The assessee has raised the following grounds of appeal: ITA No 1153 of 2024 Vakula Tirunagari Page 2 of 9 GROUND I “1. The Facts and circumstances of the case and in law, the CIT Appeals erred in confirming the addition of Rs.1,27,25,663/- 2. The CIT Appeals not considered the submitted Cash Book, most of the cash deposits are made from the cash withdrawals during the year. The Assessee submitted before the learned commissioner of Income Tax (Appeals) that the assessing officer has looked towards the credit side of the Bank account and has totally ignored the debit side from where the withdrawal is there continuously and there are by way of self-cheques and the assessing officer has totally ignored the debit side which should be taken in to consideration. No Other assets were found against the assessee. The assessee has been withdrawing the amount and redepositing and again withdrawing and so on and so forth and the assessing officer has failed to consider the debit side. The copy of bank account and cash book was filed in support of the contention. 3. The assessee has stated specifically before CIT Appeals, that the amount was redeposited on withdrawal from the bank and sufficient cash was available, therefore it was the duty of the assessing officer to examine this fact. Further nothing is bought on record that the amount was utilised by assessee on withdrawal from Bank account. Considering the Facts of the case in the light of the decision of hon’ble Punjab and Haryana High Court in the case of Shiv Charan Dass(Supra), request to set aside the orders of CIT Appeals. Also refer (2015) 40 ITR (Trib) 467 (CHD), (2016) 157 ITD 262(CHD) 4. In Remand report submitted by the AO to CIT Appeals on 08.08.2024 which is very silent with regard to explanations made for additions to the extent of Rs.9489663/- and only mentioned with regard to opening balance of Rs.3650000/-as proper explanations are not enclosed. GROUD II 1. In the remand report submitted by AO on 08.08.2024, income tax officer raised only the query about the cash Book opening balance as on 1-4-2016 shown as Rs.36,50,000/-. And he was very silent with regard to ITA No 1153 of 2024 Vakula Tirunagari Page 3 of 9 balance of income addition made Rs. 94,89,663/- (Rs.13139663-Rs.3650000). 2. The Assessing Officer was not detected any defects in cash book submitted by us. Except opening balance. For Opening Balances, we have not submitted any information to the assessing officer as it is not pertaining to FY 2016- 17 and the assessing officer has not provided any opportunity for submitting the same. Further we want to inform you that the assessee and her spouse (who is diseased) are income tax assessees and the details also given for kind consideration.” 3. Facts of the case, in brief, are that the assessee is an individual and filed her return of income for the year under consideration on 21/07/2017 declaring total income of Rs.2,05,630/-. The case was selected for limited scrutiny under CASS to verify 2 issues; (i) cash deposits during the previous year relevant to A.Y under consideration and (ii) exempt income / agricultural income claimed by the assessee. The Assessing Officer issued notice u/s 142(1) calling the details of bank account, cash deposits in the Bank Account during the demonetization period along with source and evidences. Since there was no response or compliance on behalf of the assessee to the notices, the Assessing Officer proposed to complete the assessment ex-parte u/s 144 of the I.T. Act, 1961. The Assessing Officer has made additions on account of unexplained cash deposits of Rs.1,31,39,663/- as well as the agricultural income of Rs.4,14,000/-. 4. The assessee challenged the action of the Assessing Officer before the learned CIT (A) and explained the reasons for ITA No 1153 of 2024 Vakula Tirunagari Page 4 of 9 non-compliance of notices as her husband was having medical problems for the last one year. The assessee submitted copies of the bank account and other evidences in support of the source of deposits in the bank account. The learned CIT (A) called for a remand report from the Assessing Officer and consequently, passed the impugned order whereby the additions made by the Assessing Officer on account of agricultural income was deleted but the addition on account of unexplained cash deposits in the bank account was restricted to Rs.1,27,25,663/-. 5. Before the Tribunal, the learned AR of the assessee has submitted that during the course of proceedings before the learned CIT (A), the assessee submitted all the relevant details and evidences which were forwarded to the Assessing Officer for remand report. The Assessing Officer in the remand report reiterated the addition as made in the assessment order. The learned AR has further submitted that the learned CIT (A) has rejected the cash book submitted by the assessee to show the availability of the cash on account of opening cash balance, withdrawal from bank which is the source for deposits in bank account . The learned AR has further submitted that the remand report of the Assessing Officer has disputed only the availability of the opening balance of Rs.36,50,000/- but has not made any comments about the balance amount of Rs.94,89,663/-. He has also referred to the bank statement account placed at page Nos. 48 to 57 of the paper book and submitted that there are contra ITA No 1153 of 2024 Vakula Tirunagari Page 5 of 9 entries in the statement of account of fixed deposits made by the assessee which are subsequently closed and therefore, the contra entry of credit is appearing in the bank account cannot be considered as unexplained income. The Assessing Officer without considering these contra entries of fixed deposits and subsequent closer of the same has made the addition on account of the entire deposits in the bank account. He has further submitted that there are cash withdrawals as reflected in the bank account statement which were subsequently deposited. However, the Assessing Officer as well as the learned CIT (A) has not considered the availability of cash which is duly supported by the cash withdrawal from the bank account as well as in the cash book produced by the assessee. Thus, the learned AR has submitted that the learned CIT (A) has declined to accept the peak credit theory and confirmed the addition. 6. On the other hand, the learned DR has submitted that the assessee is the wife of ex-police officer who has expired in 2020. The learned CIT (A) has already granted relief to the extent of agricultural income as well as the land sold by the assessee. The assessee has shown only income under the head “income from house property” and income from other sources and therefore, not maintaining any books of account, whereas there is a deposit of more than Rs.1,31,00,000/- in the bank account of the assessee. The claim of the opening cash balance in hand is not acceptable without documentary evidence as the assessee has ITA No 1153 of 2024 Vakula Tirunagari Page 6 of 9 not shown any business income except the income from house property and other sources. The self-prepared cash book cannot be accepted without any supporting evidence or logical reason for having an opening cash balance of Rs.36,50,000/-. He has referred to the remand report as well as the order of the learned CIT (A) and submitted that the assessee has not given any details or evidence about the purpose of withdrawal of the cash and subsequent redeposits in the bank account. 7. We have considered the rival submissions as well as the relevant material available on record. The Assessing Officer has made an addition on account of unexplained cash deposits in Para 7 of the assessment order as under: “7. It is noticed from the return of income filed by the assessee for the relevant year, the assessee has declared income from other sources of Rs.38,505/- and income from house property (rental income) of Rs.1,70,844/- and other exempt income (agriculture) of Rs.4,14,000/-. However, on a perusal of bank account reveal that the assessee has deposited huge sums of cash throughout the year. It is not common in a case where the assessee has been derived incomes under the Heads “income from other sources” and “house property” and receiving lacks of rupees and able to deposit huge sums of money throughout the year. The assessee having deposited cash in the bank has to give the details along with evidence for such deposits. In the absence of any information furnished by the assessee despite affording several opportunities by this Office, and in the back ground that the assessee’s failure to discharge the primary onus of explaining the source of the cash deposit, the entire credits of Rs.1,31,39,663/- in the Bank of Maharashtra, Gayatri Nagar, Hyderabad with account No.68004070150 for the period 01.04.2016 to 31.03.2017 are treated as unexplained money u/s 69A r.w.s 115BBE of the I.T. Act, 1961. Addition: Rs.1,31,39,663/-“ ITA No 1153 of 2024 Vakula Tirunagari Page 7 of 9 8. Thus, the Assessing Officer has made addition for want of any explanation or documentary evidence to explain the source of the deposits in the bank account. The Assessing Officer has not restricted the addition to the extent of cash deposits but the entire credit in the bank account has been added as the income of the assessee. On appeal, when the assessee filed the bank account statement as well as the explanation about the availability of the cash which is supported by the cash book, the learned CIT (A) called for a remand report from the Assessing Officer. In Para 7 of the remand report, the Assessing Officer has made the following remarks: “7. On perusal of written submission of. the assessee, it is seen that the assessee is an agriculturist and the total transactions were done by her diseased husband who died on 2-6-2020. On verification of additional evidences and documentary evidences submitted by the assessee, it is seen that the assessee sold 3.18 acres on 7-11-2016 for Rs.4,14,000/-. On perusal of the cash book, it is seen that he opening balance as on 1-4-2016 is Rs,36,50,000/-. The assessee has not furnished any source/explanation for such a huge cash opening balance of Rs.36,50,000/-, being a house wife and an agriculturist. On verifying the bank statement of the assessee for the period 1-4-2016 to 31-03- 2017, it is observed that the assessee deposited huge amounts in her account but the assessee has failed to submit any documentary evidences in support of her deposits.” 9. Thus, the Assessing Officer has declined to accept the cash book and particularly, the opening balance of cash in hand of Rs.36,50,000/-. The learned CIT (A) after allowing relief on account of sale of land as well as agricultural income has sustained the addition to the extent of Rs.1,27,25,663/- and ITA No 1153 of 2024 Vakula Tirunagari Page 8 of 9 concurred with the comments of the Assessing Officer as made in the remand report. It is pertinent to note that the assessee has filed the bank account statement wherein the entries of CDR and subsequent closer of the same are reflected to the tune of Rs.25.00 lakhs as well as Rs.7.00 lakhs as on 8.6.2016 and 8.11.2016 respectively. A CDR of Rs.25 lakhs was made on 8/6/2018 which was closed on 8/8/2016 and therefore, the credit entry on account of closer of CDR is self-explanatory and does not require any further proof of said credit which is reflected in the bank account statement itself. Similarly, the FDs on 8/11/2016 of Rs.7.00 lakhs was immediately closed on the same date and both the entries are duly reflected. Therefore, the credit of Rs.7 lakhs on account of CDR closer is only a contra entry and not a fresh deposit but the CIT (A) has confirmed the addition without considering this fact. We further note that there are several cash withdrawals and subsequent deposits in the bank account. The addition made by the Assessing Officer and sustained by the learned CIT (A) without considering all these contra entries on account of CDR closer as well as withdrawal and deposit by the assessee herself resulting assessment of unrealistic income of the assessee. Thus, in the facts and circumstances of the case and particularly, the entries reflected in the bank account of the assessee on account of FDs and closer of the same which are part of the cash book prepared by the assessee. We are of the considered opinion that the matter be re-examined by Assessing Officer in light of the above observations. Hence, in the ITA No 1153 of 2024 Vakula Tirunagari Page 9 of 9 interest of justice, the impugned order of the CIT (A) is set aside and the matter is remanded to the record of the Assessing Officer for re-adjudication of the issue of addition on account of credits/cash deposits in the bank account of the assessee after giving credit on account of contra entries as well as the prior withdrawal by the assessee for making the deposits in the bank account. Needless to say, the assessee shall be given an opportunity of being heard before passing the fresh order. 10. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 6th February, 2025. Sd/- Sd/- (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 6th February, 2025 Vinodan/sps Copy to: S.No Addresses 1 Smt.Vakula Tirunagari, 1-2-78/1 behind fruit market, Kothapeta 500060, Telangana 2 Income Tax Officer Ward 9(3) Hyderabad 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "