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2023 (3) TMI 213 - AT - Income TaxAddition u/s 115BBE - cash has been deposited out of unexplained sources - AR submitted that the section 115BBE is not a charging section but this section simply provides mechanism for levying of tax in a case there is addition made u/s. 68, 69, 69A, 69B, 69C and 69D - HELD THAT - AO has not mention any section under which additions have been in the hands of assessee and he merely mentioned that the cash has been deposited out of unexplained sources and same is added to the return income of assessee in terms of section 115BBE of the Act. Further from the careful reading of findings recorded by the Ld. CIT(A) in para 5 it is also clear that the Ld. CIT(A) has not mentioned any section under which the addition has been confirmed - As decided in SMT. SUDHA LOYALKA, C/O M/S RRA TAXINDIA 2018 (7) TMI 1892 - ITAT DELHI non-mentioning the precise provision of law makes the impugned addition bad in law. Cash deposit during demonetization - HELD THAT - Undisputedly there was a opening cash of Rs. 2,74,580/- as on 01.04.2016, the assessee received rent of Rs. 3,20,000/-, tuition fee of Rs. 1,20,100/- and there were bank withdrawals of Rs. 5,54,000/- up to demonetization i.e. 25.11.2016. The said amounts comes to Rs. 12,68,680/- and the amount deposited by the assessee during pre-demonetization and during demonetization period was Rs. 12,10,000/- leaving the cash balance of Rs. 58,680/- as on 25.11.2016. These facts have not been controverted by the Ld. Senior Departmental Representative in any manner. Therefore in my consider opinion the addition of Rs. 7 lakh confirm by the CIT(A) is not sustainable under the said facts and circumstances as the assessee has successfully demonstrated the source of cash deposited by her to her bank account. Therefore the grounds of assessee on merits are allowed and AO is directed to delete the addition.
Issues:
1. Addition of Rs. 7,00,000/- upheld by Ld. CIT(A) without identifying precise section. 2. Justification of invoking provisions of section 115BBE of the Act by AO. 3. Source of cash deposit during demonetization and pre-demonetization period. 4. Adequacy of explanation for cash deposited to bank account. 5. Interpretation of factual position based on cash flow statement and bank account statement. Issue 1 - Addition of Rs. 7,00,000/-: The appeal challenged the addition of Rs. 7,00,000/- upheld by the Ld. CIT(A) without specifying the exact section under which the addition was made. The Ld. AR argued that section 115BBE is not a charging section but a mechanism for levying tax in certain cases, and since no addition was made under specific sections like 68, 69, 69A, 69B, 69C, or 69D, invoking section 115BBE was unjustified. The AR relied on a judgment highlighting the importance of mentioning the precise provision of law for any addition to be legally valid. Issue 2 - Provisions of Section 115BBE: The Ld. Senior Departmental Representative supported the AO's decision to invoke section 115BBE due to the lack of explanation from the assessee. However, the tribunal noted that the AO failed to specify the section for the additions, rendering the application of section 115BBE questionable. The absence of a clear reference to the relevant sections raised doubts about the legality of the addition under section 115BBE. Issue 3 - Source of Cash Deposit: The AR contended that the cash deposited during demonetization and pre-demonetization period stemmed from rental income, tuition fees, and bank withdrawals, with a detailed breakdown provided. The AR argued that the source of the deposited cash was adequately explained through various income sources and transactions, supported by documentary evidence and cash flow statements. Issue 4 - Explanation for Cash Deposits: The Ld. Senior Departmental Representative maintained that the assessee failed to explain the source of cash deposits, advocating for the confirmation of the addition. However, the tribunal carefully analyzed the income computation, cash flow statement, and bank account details, concluding that the assessee had satisfactorily demonstrated the source of cash deposits. The tribunal highlighted the absence of any rebuttal to the documented income sources and transactions, leading to the decision that the addition was not justified. Issue 5 - Interpretation of Factual Position: After reviewing the facts and circumstances, including income sources, cash flow statements, and bank transactions, the tribunal found that the assessee had adequately accounted for the cash deposits. The tribunal emphasized the uncontested nature of the presented facts, leading to the conclusion that the addition of Rs. 7,00,000/- was not sustainable. Consequently, the tribunal directed the AO to delete the addition, partially allowing the appeal based on the demonstrated source of cash deposits. In conclusion, the tribunal's detailed analysis and interpretation of the legal provisions and factual evidence led to the partial allowance of the appeal, highlighting the importance of specifying the precise legal basis for any additions and the necessity of providing a clear explanation for cash deposits.
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