Upendra Kumar vs ITO

This is an appeal by the assessee against order dated 15.03.2022 passed by the National Faceless Appeals Centre (NFAC), Delhi for the assessment year 2012-13.

The assessee has raised grounds both on the validity of reopening of assessment under section 147 of the Act as well as on the merits of the addition made of Rs.8,16,000.

Briefly, the facts are, the assessee is a resident individual. Based on information available in the system of the department, the assessing officer found that in the year under consideration, assessee had deposited cash amounting to Rs.11,73,000 in his saving bank account maintained with Axis Bank. Based on such information, the assessing officer reopened the assessment under Section 147 of the Act. Alleging that the assessee failed to comply with the notices issued under Section 148 and 142(1) of the Act, the assessing officer proceeded to complete the assessment ex parte under Section 144 of the Act, to the best of his judgment. While doing so, he added back an amount of Rs.11,73,000 under Section 69A of the Act.

Assessee contested the aforesaid addition before learned Commissioner (Appeals). While deciding the appeal, learned Commissioner (Appeals) granted partial relief to the assessee by restricting the addition to Rs.8,16,000.

At the time of hearing, learned counsel appearing for the assessee, on instructions, did not press the legal grounds challenging the validity of reopening of assessment and expressed his intention to argue on merits. Accordingly, the legal grounds raised by the assessee are dismissed.

As regards, the merits of the issue, it is the contention of learned counsel for the assessee that the assessee is a salaried employee working as a constable with Delhi Police. He submitted that assessee had earlier withdrawn cash from his bank account and given to his brother for medical treatment of mother. He submitted, the cash deposits made in the bank account were out of the cash withdrawals.

I have heard both the parties. On careful perusal of impugned order of learned Commissioner (Appeals), I find similar explanation was also furnished before the first appellate authority and the assessee also furnished the details of withdrawals made out of which cash was deposited in the bank account. It is a fact on record that the explanation of the assessee was not completely disbelieved by learned Commissioner (Appeals). In fact, to certain extent, he has accepted assessee’s claim that the deposits were made out of earlier withdrawals. He has disbelieved three deposits of bigger amounts made on 05.06.2011, 15.06.2011 and 16.08.2011.

In my view, when the assessee has furnished an explanation supported by evidence to claim that deposits were made out of earlier withdrawals, there is no reason why learned Commissioner (Appeals) accepted it partly and sustained part of the addition. This, in my view, is unreasonable and defies logic. This is so because, the explanation of the assessee either has to be accepted or rejected.

In view of the aforesaid, I delete the addition of Rs.8,16,000.

In the result, the appeal is allowed, as indicated above.