Naresh Kumar Sharma vs DCIT/ACIT

PER M. BALAGANESH, A. M.:

The Assessee Naresh Kumar Sharma (hereinafter referred to as ‘assessee) by filing the present appeal sought to set aside the impugned order dated 11.01.2023 passed by the Assessing Officer (AO) under section 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (for short ‘the Act’.

The only issue to be decided in this appeal is as to whether the Learned CITA was justified in confirming the addition made by the Learned AO in the sum of Rs 9,50,000/- on account of cash deposits in the facts and circumstances of the instant case.

We have heard the rival submissions and perused the materials available on record. The Learned AO noted that as per the information available with the Income Tax Department, the assessee had not filed any income tax return for the assessment year 2013-14. But as per ITD records, the assessee purchased mutual fund amounting to Rs 7,37,53,837; had made time deposits of Rs 2 crores ; had received other receipts of Rs 7,22,932 and had paid credit card bills amounting to Rs 10,79,081 during the year under consideration. Accordingly, notice under Section 148 of the Act stood issued to the assessee on 28-03-2021 for reopening the assessment after obtaining necessary approval of the Competent Authority under Section 151 of the Act. In response to the notice under Section 148 of the Act, the assessee filed its return of income on 18-10-2021, declaring total income of Rs 7,39,070. The Learned AO noticed that assessee had made cash deposits of Rs 9,50,000 on 3-12-2012 and 6-12-2012 in IndusInd Bank. The assessee was asked to explain the source of the said deposits. The assessee stated that he had withdrawn cash of Rs 10 lakhs from his HDFC NRE Account No. 06221060000028 on 28-06-2012, out of which he had deposited Rs 9,50,000 in December 2012. This response was not found satisfactory by the Learned AO and the Learned AO proceeded to treat the said cash deposits of Rs 9,50,000 as unexplained money under Section 69A of the Act and made an addition on this count alone in the assessment. This addition was upheld by the Learned CITA in first appeal.

At the outset, we find that the assessee had sought to explain the cash deposits out of cash withdrawals made during the same financial year. The assessee, being a non-resident, had also stated that he has a ailing mother in India and hence he had withdrawn cash from his NRE account and had kept the said cash with his mother for emergency medical treatment. Either way, the said cash balance available with the assessee was deposited on 3-12-2012 for Rs 5,00,000 and on 6-12-2012 for Rs 4,50,000 in IndusInd Bank account. It is not the case of the revenue that the cash withdrawn by the assessee on 28-06-2012 in the sum of Rs 10,00,000 had been utilized by the assessee for some other purpose. Hence the said withdrawal would certainly act as a cash source for explaining the cash deposits made during the financial year. The entire addition on account of cash deposits had been made only out of suspicion and surmise. The law is very well settled that suspicion, howsoever strong, cannot take the character of evidence. In the instant case, the assessee, being a non-resident, had arrived into India on 30-5-2012. The assessee had withdrawn the cash on 28-06-2012 from his HDFC NRE bank account. The assessee had departed from India on 8-07-2012. The assessee had again arrived into India on 2-12-2012. Cash balance available with the assessee out of earlier withdrawal made on 28-06-2012 was deposited on 3-12-2012 for Rs 5,00,000 and on 6-12-2012 for Rs 4,50,000. Hence, in our considered opinion, cash deposits in the bank account had been duly explained by the assessee out of explainable sources and out of cash withdrawals made during the same financial year. Hence, no part of the cash deposits could be treated as unexplained. Accordingly, we direct the Learned AO to delete the addition made in the sum of Rs 9,50,000 under section 69A of the Act. Accordingly, the Ground No.1 raised by the assessee is hereby allowed.

The Ground No. 2 raised by the assessee is challenging the chargeability of interest under section 234A / 234B / 234C of the Act. With regard to interest under section 234A of the Act, the Learned AO is directed to verify the due date for filing the income tax return in response to notice under section 148 of the Act and accordingly determine the chargeability of interest under section 234A of the Act. The levy of interest under section 234B of the Act would be consequential in nature. With regard to interest under section 234C of the Act, the law is very well settled that the same shall be charged only on the returned income and not on the assessed income.

In the result, the appeal of the assessee is allowed for statistical purposes.