2022 (10) TMI 113 - AT - Income Tax

Unexplained cash deposits - whether impugned cash deposits to the joint bank account of the assessee and her mother belonged to the assessee? - department alleges that the impugned deposits have been made by the assessee, whereas the assessee has successfully demonstrated that these deposits have been made by her mother out of cash withdrawals made by her on 15.01.2009, much earlier than the dates of impugned deposits - HELD THAT - It is of the opinion that only because the assessee now has been mentioned as joint account holder of the bank account to which the impugned cash deposit has been made, the additions cannot be made and sustained in the hands of the assessee, keeping aside other relevant evidences, which clearly reveal that the mother of the assessee had withdrawn an amount of Rs.50 lakh from her bank account and the impugned three deposits have been made to the same bank account by her mother out of the amount withdrawn earlier. CIT(A) was not correct and justified in confirming the addition of Rs.6,70,000/- in the hands of the assessee by taking cognizance of an agreement to sell dated 27.08.2009 which was not accepted by the assessee, but, was accepted by the mother of the assessee - CIT(A) has misinterpreted the relevant documentary evidence relied by the assessee and, therefore, part addition sustained by the ld.CIT(A) is also not sustainable and the AO is directed to delete the same. - Decided in favour of assessee.

Summary

Issues:
1. Validity of notice u/s 148
2. Initiation of proceedings u/s 148 and assessment based on notice
3. Addition of Rs. 670,000 in assessment

Validity of notice u/s 148:
The appeal challenged the presumption of service of notice u/s 148 based on the AO's remand report. The appellant argued that the notice was never served, even by affixture or speed post, and thus should be quashed. The Tribunal considered this argument and concluded that without proper service, the notice u/s 148 deserved to be invalidated.

Initiation of proceedings u/s 148 and assessment based on notice:
The appeal contested the validity of proceedings initiated u/s 148 and subsequent assessment, claiming they were illegal and void ab initio. The Tribunal noted that the AO issued the notice without tangible material or valid reasons, solely based on assumptions. The appellant argued that the addition of Rs. 670,000 was made on unfounded presumptions without evidence. The Tribunal agreed, finding the proceedings initiated without proper application of mind to be illegal and directed the deletion of the addition.

Addition of Rs. 670,000 in assessment:
The appellant's counsel argued that the cash amount deposited was by the appellant's mother, not the appellant, and thus no addition should be made in the appellant's hands. The Tribunal examined the bank statements, confirming withdrawals and subsequent deposits by the mother, not the appellant. The AO's decision to add Rs. 670,000 was based on incorrect assumptions. The Tribunal found that the deposits were made by the mother much earlier than the impugned dates, and the addition in the appellant's hands was unjustified. The Tribunal directed the AO to delete the sustained addition of Rs. 670,000.

In conclusion, the Tribunal allowed the appeal, finding the notice u/s 148 invalid, the proceedings initiated illegal, and the addition of Rs. 670,000 baseless. The Tribunal emphasized that the deposits were made by the appellant's mother, not the appellant, and directed the AO to delete the addition.