INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Cash deposited in assessee's bank account - Sale of property belong to father of assessee

Assessee, a student doing her Ph.D, filed her return of income for assessment year 2010-11 declaring income of Rs. 1,88,350. She was a GPA holder for her father R who was in judicial custody. In the course of assessment proceedings, AO called for, inter alia, the bank accounts and on examination thereof observed that there were cash deposits to the extent of Rs. 16,80,500 made in her Bank account with Corporation Bank. The assessee explained that aforesaid cash deposits in her Bank account represented the cash component of the consideration received for sale of her father's immovable property. It was submitted that the father of assessee was in judicial custody and the assessee had sold the property which was in the name of the father by taking GPA from her father. It was further submitted that amounts totaling to Rs. 77 lakhs was received in cheque and Rs. 16,80,500 was received in cash and the entire amount was deposited in Banks. The AO, however, did not accept the explanation put forth by the assessee and treated the cash deposit amounting to Rs. 16,80,500 as 'unexplained investment' in the hands of the assessee and brought the same to tax in the assessee's hands. The assessment was accordingly completed under section 143(3). CIT(A), however, rejected the assessee's contentions and upheld the addition made by the AO. Held: The assessee had provided an explanation that the cash deposits represent the amounts received as part of the consideration for sale of immovable property sold by her father; again a fact borne out by the records and not controverted by the AO. Assessee had also submitted a copy of the return of income filed by her father, wherein the entire sale consideration of Rs. 93,80,500 (i.e., comprising both cheques amounting to Rs. 77 lakhs plus the cash component of Rs. 16,80,500) was shown. The recitals in the sale deed dated 7-6-2010 clearly establish that the sale was done by the father and assessee was only a GPA holder. Taking into account the factual matrix and the circumstances of the case, the inference of the AO that the cash deposits amounting to Rs. 16,80,000 in the assessee's bank account in Corporation Bank constitutes unexplained investment by the assessee in the present case was, not tenable. The explanation furnished by the assessee in this regard was proper and plausible and ought to have been accepted, but was rejected without substantial reasons. Merely because the assessee's father did not file the return of income within the due date specififed under section 139(1), it cannot be held that the cash component of the consideration on sale of property should be assessed in the hands of the assessee, as had been held by the CIT(A).

Followed:Ramawathi v. ITO [ITA No. 701/JP/2014 [ITAAt Jp Benhc]. Relied:CIT v. P.K. Noorjahan (1999) 237 ITR 570 (SC) : 1999 TaxPub(DT) 80 (SC).

REFERRED : Gyan Chand Agarwal v. Addl. CIT [ITA No. 266/JP/2017] & [ITAT-Jaipur Bench].

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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