ITAT Accepts Appellant's Evidence, Removes Cash Deposit Addition

Case: Sudha Vs ITO (ITAT Delhi) 

Appeal Number: ITA No. 6239/Del/2018 

Date of Judgement/Order: 23/05/2023 

Assessment Year: 2008-09

Sudha vs ITO (IT) Delhi)

The Income Tax Appellate Tribunal (ITAT) in Delhi made a decision in a case involving Sudha and the Income Tax Officer (ITO). Sudha, who was the taxpayer or assessee, had appealed against an extra amount of money she deposited. She claimed that the additional cash came from her previous savings and agricultural activities.

Initially, the tax authorities considered the additional cash deposit as unexplained and added it to Sudha's total income. This led to an increase in the overall amount of money on which she had to pay taxes.

Analysis: The assessment made by the ld CIT(A) regarding the addition of Rs. 21,65,000/- as an unexplained cash deposit was successfully challenged by the assessee. The appeal was successful mainly due to the presentation of supporting evidence by the assessee, which demonstrated that the deposit was derived from previous savings, withdrawals, and agricultural activities. The ITAT recognized and accepted these pieces of evidence, leading to the dismissal of the addition. Additionally, the ITAT considered the fact that the ld CIT(A) had overlooked an affidavit provided by the assessee, which included a registered sale deed. 

This dismissal serves as an example highlighting the significance of providing substantial evidential backing when disputing assessments and additions under income tax laws.

ITAT DELHI ORDER

The assessee had filed the current appeal against the order of the ld CIT(A)-2, Noida dated 24th June 2018.

2. Following are things of appeal raised by the assessee-

(1) Considering the facts and circumstances of the case, the order of the Ld. CIT(A) is legally and factually flawed.

(2) The Ld. CIT(A) has made a legal error by partially affirming the Ld. AO's decision to add Rs. 21,65,000/- as an unexplained cash deposit in the appellant's case.

(3) The Ld. CIT(A) has made a mistake, both legally and based on the facts of the case, by upholding the Ld. AO's action of adding Rs. 16,75,000/- despite the submission of evidence in the form of an affidavit and a registered sale agreement that clearly states the source of this amount.

(4) The Ld. CIT(A) has made an error, both legally and considering the facts of the case, by upholding the Ld. AO's action of adding Rs. 4,90,000/- without adequately considering the arguments presented by the appellant.

(5) The Ld. CIT(A) has made a legal error by partially affirming the Ld. AO's decision to make an addition is solely based on presumptions rather than on factual grounds.

3. The case's background is as follows: According to the information received through AIR (Annual Information Return), the assessee had deposited a cash amount of Rs. 54,61,000/- into her bank account with Bank of India, Duhai. Due to non-compliance during the assessment proceedings, the Assessing Officer (AO) treated the entire cash deposit of Rs. 54,61,000/- as unexplained cash credit and included it in the assessee's total income.

4. The assessee submitted additional evidence to the ld. CIT(A), who then forwarded it to the Assessing Officer for examination. A remand report was provided to the assessee for the purpose of filing a rejoinder. After careful examination of the additional evidence, remand report, and rejoinder, the ld. CIT(A) upheld the addition of Rs. 21,65,000/-.

5. The cash deposits of Rs. 54,61,000/- have been explained as under: 

• On account of sale proceeds of land – Rs.10,25,000/- 

• On account of the deposit for the purchase of property by the husband – Rs.16,75,000/- 

• The balance amount of Rs.27,61,000/- out of past savings, withdrawals, and agricultural activities.

6. The recent ITAT Delhi ruling in the case of Sudha Vs ITO emphasizes the significance of maintaining appropriate documentation and presenting compelling evidence when resolving income tax assessment disputes. The decision further underscores the importance of considering income derived from previous savings and agricultural operations when evaluating total income, thereby promoting fairness and accuracy in tax assessments.

Also Read: Ways To Deposit Rs. 2000 Notes Without Attracting Income Tax Notice