2023 (10) TMI 1027 - AT - Income Tax

Addition u/s 69 - cash deposited towards repayment of home loan being 75% of total cash deposit - AR submitted that the CIT(A) uphold the addition by merely mentioning that what has been stated by the Assessing Officer in the assessment order and simply by accepting the same in 2-3 lines - HELD THAT - As undisputedly the impugned cash deposit was made by the assessee on her own and on behalf of her wife to their joint home loan account as repayment of home loan. Thus it can be presumed that assessee has not made any investment for acquiring any movable or immovable property. Therefore, the allegation of unexplained investment cannot be made against the assessee invoking the charging section u/s 69. From the relevant part of assessment order, we note that the AO has made addition by mentioning charging section as 69 and CIT(A) has also upheld the same without any change or without addressing the grievance of the assessee in this regard. Thus reach to a logical conclusion that the complete cash book statement clearly explains the source of cash deposit to the bank account of assessee, wherein the assessee has not only included cash receipts as salary and capital withdrawal from two partnership firms and a cash salary and has also reduced the amount of drawings for household expenses. The copy of return of income of wife of assessee and father of assessee co-jointly established that the other family members of assessee are also earning and contributing towards household expenses. Thus understanding the source of cash deposit during demonetization to the bank account of assessee is properly explained by the assessee by way of self speaking documentary evidence and explanation. Secondly, the AO has made addition u/s 69 of the Act which pertains to unexplained investments, whereas the assessee has not made any investment either in movable or any immovable property during the relevant period by way of using cash amount. CIT(A) has upheld the part addition without mentioning any charging section and impliedly adopting section 69 of the Act in the line of assessment order. Respectfully following the case of Sarika Jain 2017 (7) TMI 870 - ALLAHABAD HIGH COURT , thus no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of Delay in Filing Appeal
2. Legality of Addition under Section 69 for Cash Deposit
3. Correctness of Cash Deposit Amount

Condonation of Delay in Filing Appeal:

The appeal faced a delay of 295 days. The Assessee argued that the delay was due to a lack of communication from the previous representative, Shri Gaurav Goel, who did not inform about the first appellate order. Upon discovering the dismissal of the first quantum appeal, the Assessee promptly filed the appeal. The Tribunal found the delay to be bona fide and condoned it, allowing the appeal for consideration.

Legality of Addition under Section 69 for Cash Deposit:

The Assessing Officer (AO) made an addition of Rs. 18,75,000/- under Section 69, considering it as unexplained investment. The Assessee contended that the cash deposits were made towards the repayment of a joint home loan account with his wife, and not as an investment. The Tribunal noted that the AO had incorrectly applied Section 69, which pertains to unexplained investments, whereas the deposits were for loan repayment. The Tribunal, referencing judgments from higher courts, concluded that the addition under Section 69 was unsustainable and invalid, directing the AO to delete the entire addition.

Correctness of Cash Deposit Amount:

The AO incorrectly noted the cash deposit as Rs. 25,00,000/- instead of Rs. 24,96,274/-. The Assessee provided documentary evidence showing that Rs. 12,91,883/- was deposited by him and the remaining Rs. 12,08,116/- by his wife. The Tribunal found the Assessee's explanation and evidence credible, establishing that the source of the cash deposits was properly explained. The Tribunal criticized the Ld. CIT(A) for upholding the addition without addressing the correct figures and sources, ultimately directing the deletion of the addition.

Conclusion:

The Tribunal allowed the Assessee's appeal, finding the delay in filing to be justified and the addition under Section 69 to be legally unsustainable. The Tribunal directed the AO to delete the entire addition, thereby resolving the issues in favor of the Assessee.