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Judgment
ORDER
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : This captioned appeal has been filed by the learned Commissioner of Income Tax (Appeals)/NFAC, Delhi (hereinafter referred as ‘CIT(A)/NFAC’) order dated 17.12.2025 arising from the assessment order dated 19.12.2022 under section 143(3) read with section 144B of the Income-tax Act, 1961 (hereinafter referred as ‘the Act’) for the Assessment Year 2021-22.
Brief facts of the case are that the assessee is an individual residing in Delhi. The assessee had filed return of income for A.Y. 2021-22 on 18.02.2021 declaring a total income of Rs. 73,408/-. Thereafter, the case was selected for scrutiny under the CASS. The primary reasons for selection included significant cash deposits in bank accounts and substantial investments in mutual funds/securities that appeared disproportionate to the returned income.
During the assessment proceedings, it was observed that the assessee had made cash deposits totaling Rs.18,74,000/- in her Punjab National Bank (PNB) and Canara Bank accounts. Additionally, the assessee had made investments in various financial instruments amounting to Rs.31,78,340/-. The assessee claimed to be a housewife with no independent source of income, asserting that the cash deposits were gifts from her children, Vandana and Himanshu, and the investments were sourced from the maturity of past Fixed Deposits (FDs). The Assessing Officer found the explanations regarding the "gifts" and the "source of investments" to be unsubstantiated by credible evidence. Consequently, the AO treated the cash deposits Rs. 18,74,000/- and investments in property of Rs. 31,78,340/- as unexplained and completed the assessment u/s 143(3) r.w.s 144B on 19.12.2022, determining the total income at Rs. 51,25,748/-. Aggrieved, assessee was in appeal before the learned CIT(A)/NFAC who upheld the additions.
Aggrieved, assessee is now in appeal before the Tribunal with the following grounds:
“1.That having regard to the facts and circumstances of the case, assumption of jurisdiction in passing of the impugned assessment order by Ld. AO u/s 143(3)/144B dated 19-12-2022 is illegal, bad in law and nullity in the eyes of law as the mandatory notice u/s 143(2) has not been issued in terms of CBDT instruction dated 23-06-2017 and in view of judgment Sajal Biswas vs ITO in ITA 1244/Kol./2023, Date of order 26-03-2025. Kolkata ITAT.
2.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making aggregate addition of Rs.18,74,000/- on account of cash deposits in bank account by treating it as alleged unexplained money u/s 69A and taxing the same u/s 115BBE and that too by recording the incorrect facts and findings and in violation of principles of natural justice and without appreciating/considering the submissions and evidences filed by the assessee.
3.That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making aggregate addition of Rs.18,74,000/- on account of cash deposits u/s 69A/115BBE, is bad in law and against the facts and circumstances of the case.
4.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.31,78,340/- on account of investment made in purchase of immovable property by treating it as alleged unexplained investment u/s 69 and taxing the same u/s 115BBE and that too by recording the incorrect facts and findings and in violation of principles of natural justice and without appreciating/considering the submissions and evidences filed by the assessee.
5.That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.31,78,340/- by treating it as alleged unexplained investment u/s 69/115BBE, is bad in law and against the facts and circumstances of the case.
6.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234A of the Income Tax Act, 1961.
7.That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
The ld Counsel of the assessee submitted that the cash deposit of Rs.18,74,000/- represents part of the total cash of Rs.22,14,500/-received by assessee from her son Sh. Himanshu and daughter Ms. Vandana as well as from her own withdrawals from Canara bank during the relevant year. Hence there was sufficient funds available with the assessee for making such cash deposit in his bank account. The ld AR submitted that copies of the bank statements of Sh. Himanshu (son) and Ms. Vandana (daughter) were furnished before the AO, evidencing cash withdrawals by Sh. Himanshu showing cash withdrawal of Rs. 3,74,000/- and Ms. Vanadana Rani showing cash withdrawal of Rs. 11,76,000/-. Also furnished was assessee's Canara bank statement for the relevant year showing cash withdrawals amounting to Rs.7,20,000/-. The ld AR further submitted a reconciliation statement of cash deposits in assessee's bank account showing date-wise details of cash received from Ms. Vandana, Sh. Himanshu, and cash withdrawals from her own Canara Bank account, demonstrating that during the year the assessee received Rs.22,70,000/- and deposited Rs.22,14,500/-.
The ld AR stated that the assessee, being a senior citizen and heart patient, is financially supported by her children, who withdraw their salaries and hand over the same to her; further, due to ongoing matrimonial litigation, the daughter was required to maintain minimal bank balances, and accordingly, the amounts so received were deposited by the assessee in her bank account for household needs and future security. Further, the assessee had closed her FDs during FY 2020-21 and received the proceeds in her Canara Bank account, from which cash of Rs.7,50,000/- was withdrawn and subsequently deposited in the PNB account; The ld AR stated that thus, the total cash deposits of Rs.22,14,500/- stand duly explained out of receipts from her children and FD proceeds aggregating to Rs.23,00,000/-.
The ld AR submitted that Ld. AO has proceeded on incorrect factual premises. The withdrawal by Ms. Vandana has been erroneously taken at Rs.3,65,000/- as against the correct amount of Rs.11,76,000/-, and the cash deposits have been considered at Rs.22,43,500/- instead of Rs.22,14,500/-. Therefore, cash deposits of Rs. 22,14,500/- are fully explained out of Rs.3,74,000/- (Sh. Himanshu), Rs.11,76,000/- (Ms. Vandana) and Rs.7,20,000/-(assessee's own withdrawals from Canara Bank), aggregating to Rs.22,70,000/-. In this regard, reliance is also placed on the decision wherein it has been held that in the absence of any contrary evidences of the use of cash withdrawn, the explanation that the cash deposited is out of the cash withdrawn from the bank on earlier occasions cannot be bruised aside.
ACIT vs. Baldev Raj Charla & Ors., (2009) 121 TTJ 0366
Moongipa Investment Ltd vs. ITO, (2013) 30 taxmann.com 113
Jaya Aggarwal vs. ITO, (2018) 302 CTR 0241
Om Parkash Nahar vs. ITO [2022] 135 taxmann.com 377 (Delhi - Trib.)
Rajesh Mangla vs. DCIT [2024] 162 taxmann.com 324 (Delhi - Trib.) [21-02-2024]
Mahesh Chittubhai Patel vs. ITO [2024] 160 taxmann.com 1523 (Surat-Trib.)
Inderpal Singh Chawla vs. ITO [2024] 168 taxmann.com 572 (Raipur -Trib.)[09-10-2024]
The ld AR further countered the ld. AO assumption that the assessee's children did not have sufficient income to gift an amount of Rs.22,14,500/- to the assessee, by submitting that the Ld. AO has erred in equating returned income with creditworthiness, ignoring the fact that availability of funds stands duly evidenced from bank withdrawals of the donors.
With respect to addition of Rs. 31,78,340/- on account of investment made in purchase of immovable property by treating it as alleged unexplained investment u/s 69, it is submitted that a total consideration of Rs.71,66,826/- was paid to Hitkari Welfare Society in 22 installments, out of which 9 installments aggregating to Rs.36,21,248/- were made during the relevant year. In this regard, it is submitted that the assessee made payments of Rs.36,21,248/-during the year out of Rs.34,84,614/- received on maturity of her own fixed deposits. The ld AR furnished the details of FD maturities, inter alia, date of maturity, amount received and FD numbers, aggregating to Rs.34,84,614/- (PB 75-76).
Per contra, the ld DR relied on the orders of the AO and the CIT(A).
We have heard the rival submissions and have carefully perused the materials on record. We find that the assessee has been successfully able to show and explain the source of cash deposited in her bank accounts as being cash received from her son and daughter and her own withdrawals. With respect to the investment in property, the assessee is successful in explaining the source of investment as being from her own FDs maturity amount. We are of considered view therefore, that the addition made on account of bank deposit and investment in property is unwarranted and are accordingly deleted. Ground 1 to 5 are allowed.
In the result, the appeal of the assessee in ITA 231/Del/2026 is allowed.