2024 (1) TMI 110 - AT - Income Tax

Addition on account of cash deposit - HELD THAT - The return of income for the assessment year 2016-17 was filed by the assessee on 27.03.2017 declaring total income of Rs. 7,09,329/- under the head income from other sources which included other income offered in the sum of Rs. 6,78,529/-. Admittedly this other income of Rs. 6,78,529/- was earned by the assessee only in cash and that the same was not credited in the bank account of the assessee. The assessee during the year made cash deposits on the following dates in IDBI Bank Assessee also made cash withdrawals on 24.11.2016 from the same bank account amounting to Rs. 50,000/- which sum is definitely available as a source for explaining cash deposits. Hence, to this extent the assessee would be automatically eligible for credit. With regard to the remaining sum of Rs. 45,000/- of cash deposits, as stated earlier, we find that assessee had duly offered the other income of Rs. 6.78 lakhs earned in cash, which itself explains the source for making cash deposit of Rs. 45,000/-. Hence, we hold that the entire cash deposits of Rs. 95,000/- stands duly explained by the assessee and the there is no scope for making any addition. Interest u/s 234B which is consequential in nature and does not require any specific adjudication. Interest u/s 234C of the Act, the law is very well settled that the same shall be charged only on the returned income and not on the assessed income.

Summary

Issues involved:
The judgment involves issues related to the validity of the order passed by the Commissioner of Income Tax (Appeals) under various sections of the Income Tax Act, 1961, including jurisdiction, legality, natural justice, and compliance with statutory conditions.

Validity of Order Passed by CIT(A):
The Assessee raised multiple grounds of appeal challenging the order passed by the CIT(A). These grounds included contentions regarding the legality and adequacy of the order, violation of natural justice principles, jurisdiction of the Assessing Officer, initiation of assessment post search, and compliance with statutory conditions. The Assessee argued that the order was unlawful and should be quashed due to various procedural and jurisdictional irregularities.

Validity of Assessments and Additions:
The judgment also addressed the validity of assessments made by the Assessing Officer under section 153A r.w.s. 143(3) of the Act. The Assessee contended that the additions made without incriminating material, approval under section 153D, and in violation of circular No. 19/2019 issued by CBDT were invalid. The judgment examined the legality of the assessments and the grounds raised by the Assessee regarding the procedural compliance and legality of the additions made.

Cash Deposit Additions and Interest Charges:
Specifically, the judgment focused on the addition of Rs. 95,000 on account of cash deposits in the bank account and the charging of interest under sections 234B and 234C of the Income Tax Act. The Assessee provided explanations regarding the source of cash deposits, and the Tribunal found that the cash deposits were duly explained by the Assessee. Consequently, the Tribunal allowed the grounds related to the cash deposit additions. Regarding interest charges, the Tribunal clarified the applicability of interest under sections 234B and 234C based on the returned and assessed income.

Conclusion:
After considering the rival submissions and perusing the available materials, the Tribunal partially allowed the appeal of the Assessee. The Tribunal dismissed certain grounds as not pressed, while allowing the grounds related to cash deposit additions and interest charges. The judgment was pronounced in the open court on 30.11.2023.