Income Tax Addition u/s 69A can't be based on Doubt: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal( ITAT ) has held that Income tax addition u/s 69A can't be based on doubt.

Ms Rano Jain, Adv. &Ms Mnsi Jain, CA  appeared for the appellant and Shri Om Parkash appeared for the respondent.

Narender Kumar, the assessee challenged the order of Commissioner of Income Tax (Appeals)-13, New Delhi for the assessment year 2010-11 on the ground that the validity of reopening of assessment under Section 147 of the Income Tax Act, 1961 as well as on the merits of the addition made of Rs.20,00,000 under Section 69A  read with section 115BBE of the Income Tax Act.  

The assessee is a resident individual who failed to file any return of income under Section 139(1) of the Income Tax Act. Subsequently, the Assessing Officer found that the assessee had deposited cash amounting to Rs.20,00,000 in his bank account. Noticing this, the Assessing Officer issued a letter to the assessee seeking information on the cash deposits.

The Assessing Officer reopened the assessment under Section 147 of the Income Tax Act in the absence of a response. In response to the notice issued under Section 148 of the Income Tax Act, the assessee filed his return of income on declaring income of Rs.3,866/-.

The assessee submitted that he had received the amount as a gift from his grandfather Shri Phool Singh and he furnished a copy of the gift deed along with the bank statement of Shri Phool Singh. The Assessing Officer was not convinced by the submission of the assessee and ultimately concluded that the source of the cash deposit of Rs.20,00,000 remained unexplained. Treating the said amount as undisclosed income, he added back under Section 69A read with section 115 BBE of the Income Tax Act.

It was evident that to verify the source of such cash deposits, the Assessing Officer issued a letter to the assessee seeking information, which remained non-complied. The Assessing Officer had tangible material in his possession to form belief regarding the escapement of income andthere was a complete lack of information from the assessee’s side to explain the source of such cash deposits.

A Coram of Shri Saktijit Dey, Judicial Memberobserved that when the donor is no more available due to his death, the assessee could have proved the fact of the gift through other corroborative evidence, which the assessee has tried to prove by furnishing a gift deed and bank statement of the donor.

It was held that before rejecting the evidence furnished by the assessee, the Assessing Officer has not conducted any inquiry either with the legal heir of late Phool Sing or from any other source regarding the creditworthiness of late Phool Singh and the availability of cash with him. The Assessing Officer has restricted his inquiry by issuing a single notice under Section 133(6) of the Income Tax Act.

The Tribunal held that the disputed addition has been made more on doubt and suspicion rather than based on evidence and thereby deleted the addition. Further held that the Assessing Officer was justified in reopening the assessment under Section 147 of the Income Tax Act and upheld the validity of reopening of assessment. 

To Read the full text of the Order CLICK HERE

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