Cash Deposit In Bank Account Made Out Of Sale Proceeds Received In Cash If Duly Explained, Is Not Unexplained Credit: Delhi ITAT

Accepting the explanation given by the assessee that he had received cash on sale of property to be believable which was faithfully deposited in the bank account within a short period, the Delhi ITAT provided relief to the assessee against the order of assessment passed u/s 143(3) of the Income Tax Act, 1961.

The Bench of M. Balaganesh (Accountant Member) observed that, “the explanation given by the assessee that source for cash deposit for Rs. 29 lakhs in the bank account is made out of sale proceeds received in cash is to be believe as there is no other source of income available to the assessee. Accordingly, I hold that there is no cash for making any addition on account of unexplained credits in bank account in respect of cash deposit of Rs. 29 lakhs in the instant case.” (Para 6)

As per the brief facts of the case, the assessee had submitted cash in his saving account. This information was obtained by the AO, who concluded that income of the assessee representing cash deposit in bank had escaped assessment warranting reopening of assessment.

The Coram noted that the assessee could not produce the confirmation from the buyer of the property that he had paid amount in cash for the property, and therefore, in the absence of confirmation, the lower authority concluded that there was no nexus between alleged receipt of sale consideration in cash and the cash deposit made in the bank account by the assessee.

The Bench noted the assessee in the return filed in response to notice u/s 148 of the Act had declared income of Rs. 5,27,050/- which is nothing but the salary income, and hence, it is proved beyond doubt that the assessee did not have any other source of income except salary which is only Rs. 5.27 lakhs.

While this is so, the Bench emphasized as to how the assessee could have made reinvestment in new property for Rs. 52,63,500/- would become point to ponder.

Considering this fact itself, the Bench held that the explanation given by the assessee that he had received Rs. 29 lakhs in cash on sale of property is to be believed and assessee faithfully had deposited the said sum in his bank account within short span of time.

“The salary income placed the sale consideration received of Rs. 43 lakhs (both cash and cheque portion) coupled with savings of the past of any enable the assessee to make investment of Rs. 52,63,500/- in the new property”, added the Bench.

Therefore, observing that it is proved beyond doubt that the assessee did not have any other source of income except salary, the ITAT partly allowed the appeal of assessee.

Counsel for Appellant/ Taxpayer: Ranjan Chopra

Counsel for Respondent/ Department: Om Prakash

Case Title: Siddharth Mehta verses ITO

Case Number: ITA No. 2656/Del/2023

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