Income Tax Officer vs Rajeev Kumar Mittal

PERS ANUBHAV SHARMA, JUDICIAL MEMBER:

This appeal preferred by the revenue against the order dated 09.06.2025 of Ld. National Faceless Appeal Centre (NFAC) Delhi (hereinafter referred to as the First Appellate Authority or 'the ld. FAA' for short) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1076843442(1) arising out of the assessment order dated 28.02.2023 u/s 147 r.w.s 144 r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') passed by NaFAC, for AY: 2018-19.

Heard and perused the records. Ld. DR relied the finding of ld AO while ld, AR relied the findings of Ld. CIT(A), and we have taken the same into consideration and have perused the records.

In the instant the appellant has not filed the return of income for A.Y 2018-19 and the AO has received information that, the appellant has withdrawn cash to the tune of Rs. 8,72,89,905/- during the F.Y 2017-18 relevant to A.Y 2018-19. In this connection, the appellant’s case was reopened by issuance of notice u/s 148 of the IT Act dated: 30.03.2022. However, since the appellant had not responded to any of the notices issued during the course of entire assessment proceedings and allegedly did not explain the source for the withdrawals from his bank account, the AO has added the entire cash withdrawals of Rs. 8,72,89,905/- as unexplained expenditure u/s 69C of the IT Act.

Ld. CIT(A) observes that this addition u/s 69C (unexplained expenditure) of the Act by the AO in with regard to cash withdrawal of Rs. 8,72,89,905/- from the assessee’s bank account who has not filed a return of income when considered in the light of provisions of Section 69C of the Act is not sustainable and relying the provisions of Section 69C which are in context to unexplained expenditure for which assessee offers no explanation about the source of such expenditure or the explanation offered by him is not satisfactory, the amount covered by such expenditure may be deemed to be the income of the assessee, benefitted the assessee.

We too are of considered view that cash withdrawal from a bank account by itself is not “expenditure”. It is just a movement of funds in the cash book. To rest a case for addition u/s 69C of the Act, ld. AO needs to bring evidence that the amount was actually spent on availing some services or acquiring interest in some sort of movable or immovable property. Non-filing of return cannot be basis of suspicion and addition under 69C as same still requires proof of actual “expenditure”. We fail to understand as to how the cash withdrawals from the bank account can be held as unaccounted expenditure. Rather, if the assessee had incurred any expenditure out of the withdrawals made from the bank account, the expenditure incurred was duly accounted for and could never have been treated as unexplained expenditure.

The grounds raised by department have no substance. The appeal is dismissed.