Taxpayer Yet to Prove Source of Deposit from Property Sale to Father: ITAT Remands Cash Deposit Matter for Verification [Read Order]

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has remanded the to the file of the Assessing Officer (AO) for fresh adjudication in the case involving addition of ₹42,20,000 made as unexplained income after the assessee failed to prove the source of a cash deposit in his bank account during the Financial Year 2012-13.

Ranjit Singh (assessee), not filed his Return of Income for the relevant Assessment Year (AY) 2013-14, which led the case to be reopened under Section 148 of the Income Tax Act. The assessment was completed ex parte under Section 144/147, and the entire cash deposit of ₹42,20,000/- was treated as income from other sources under Section 69 of the Income Tax Act.

Aggrieved by the ex parte assessment, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which was also dismissed due to non-prosecution and failure to submit necessary documents, confirming the addition.

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Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT. The assessee presented a crucial piece of evidence that was a sale deed executed between himself and his father Milkha Singh, for a total consideration of ₹42.90 lakhs.

The assessee contended that the cash deposit of ₹42,20,000 was made on the very same date as the property sale and therefore, the source was duly explained. It was also submitted that the deposit was made into a joint bank account of the assessee and his father.

The bench comprising Lalit Kumar, (Judicial Member) reviewed the case and noted that the orders from the lower authorities, including the CIT(A), were passed ex parte because the assessee had failed to appear or submit the documents.

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The Tribunal observed that while the sale deed offers an explanation, the assessee still needs to satisfy the AO on key points, specifically whether the Assessee was the sole owner of the amount and whether the Assessee was duly authorized by his father to deposit the entire sale amount in his personal bank account, especially considering it was a joint account.

The tribunal observed that the assessee needed to submit all documents to prove the source and his entitlement to the amount of ₹42.20 lacs. The bench deemed it appropriate to provide a final opportunity to the assessee and set aside the orders of the lower authorities.

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The Tribunal directed the Assessing Officer to examine the newly filed documents afresh and conduct a detailed verification. The appeal of the Assessee was allowed for statistical purposes.

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