The Delhi bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition under Section 69A of the Income Tax Act, 1961 due to mere whims and fancies of the Assessing Officer and ignoring the sustainable vital evidence produced by the assessee.
The assessee is a senior citizen lady aged 67 years and for the relevant period, she filed a return of income which was selected for scrutiny and in the assessment orders under Section 143(3) of the Income Tax Act.
The Assessing Officer made an addition of Rs. 12,07,000/- under Section 69A of the Income Tax Act without basis and justified reason merely on his whims and fancies and by ignoring the sustainable vital evidence filed by the assessee in the form of a copy of cash ledger drawn by the Chartered Accountant of the assessee.
The counsel submitted that the assessee has been filing returns of income for more than 20 years and the details of returned income from AY 2011-12 to 2016-17 i.e., immediately preceding seven years shows that the assessee had shown returned income of more than Rs. 24 lakhs during immediately preceding seven years which is almost double in comparison to the cash deposited by the assessee to her bank account.
It was further submitted that the entire gamut of the facts proves that the assessment order was passed with the pre-determined mindset and thus it is not tenable in law.
In the case of CIT vs. Kulwant Rai reported as 291 ITR 36 (Del.) the counsel submitted that when the Assessing Officer rejecting the cash flow statement submitted by the assessee on the ground that the assessee must have spent the amount withdrawn from the bank for some other purposes and no material is on record to show that money was not available with the assessee then addition cannot be held as sustainable.
The Departmental Representative supported the orders of the authorities below and submitted that the assessee has failed to explain the source of cash deposit to her bank account therefore the addition was rightly made and partly upheld by the Commissioner of Income Tax (Appeal) [CIT(A)].
The Single member bench comprising of Chandra Mohan Garg (Judicial member) held that merely, because the assessee was holding big amount of cash in her hand, the accumulation of cash from declared income, cash rental and salary income cannot be disbelieved unless the Assessing Officer establishes that the assessee had used the amount of the income accrued to her during earlier period, for some other purposes and there was no cash in hand at the time when the cash by deposited to her bank account.
The Assessing Officer was not correct in making addition under Section 69A of the Income Tax Act and the CIT(A) was also not justified in upholding the addition to the extent of Rs. 9 lakhs ignoring the entire facts and circumstances, cash flow statement and income shown and returned by the assessee. Therefore, the sole grievance of assessee was allowed and Assessing Officer is directed to delete the addition of Rs. 9 lakhs as upheld by the CIT(A).
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