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Judgment
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short 'the CIT(A)'] dated 26.09.2025, for Assessment Year 2019-20.
Shri C.S Anand, appearing on behalf of the assessee submitted that the Assessing Officer (AO) has made addition of the interest income u/s.69A of the Income Tax Act, 1961(hereinafter referred to as 'the Act'). The AO in assessment order has observed that on the interest income received from the bank, TDS amounting to Rs.96,816/- has been deducted. Once it is accepted that it is an interest income from the bank on which TDS has been deducted, no addition of such income could have been made u/s.69A of the Act. The assessee carried the issue in appeal before the CIT(A). The CIT(A) without appreciating the facts confirmed the addition made by AO. He further submitted that AO has taxed the total income determined at the maximum marginal rate instead of applying slab tax rate.
Per contra, Shri Manoj Kumar representing the department submitted that the assessee neither participated in assessment proceedings nor furnished any submissions before the CIT(A). The ld. DR supporting the impugned order prayed for dismissing appeal of the assessee.
Both sides heard, orders of the authorities below examined. The solitary issue in the instant appeal is taxability of interest income u/s.69A of the Act. It is an undisputed fact that the assessee has earned interest income on Term Deposits with Canara Bank during the period relevant to assessment year 2019-20. The AO has made enquiries from the Bank u/s. 133(6) of the Act. The Bank has confirmed that Term Deposits are from rollover of old term deposits. The AO has not raised any doubt over the source of term deposits. The bank has deducted tax at source Rs.96,816/-on interest income. The AO made addition of the interest income received by the assessee u/s.69A of the Act.
A bare reading of provisions of section 69A of the Act would show that the addition under said section can be made only where the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money which is not recorded in the books of account, if any maintained by him for any source of income, and no explanation about the nature and source of acquisition of money is explained or explanation offered to the AO is not to the satisfaction of the AO. In the instant case, the Assessing Officer has not doubted the source of Term Deposits in the bank. Once, the source of deposits in the bank have been accepted by the AO, interest on such term deposits could not have been added u/s.69A of the Act. Thus, the said addition is directed to be deleted. Hence, the addition of interest u/s.69A of the Act is liable to be deleted.
The next grievance of the assessee is that the AO has taxed interest income on maximum marginal rate instead of slab rate. Considering entire facts of the case, I deem it appropriate to restore the issue back to the file of AO for re-examination and apply tax rate on taxable income, if any, in accordance with law.
In the result, appeal of the assessee is allowed, in the terms aforesaid.