Assessee wins appeal as section 69 wrongly applied to cash deposits for loan repayment during demonetization

The ITAT Delhi allowed the assessee's appeal against addition under section 69 for unexplained investment. The assessee had deposited cash for home loan repayment during demonetization, with 75% of deposits being questioned. The tribunal held that since cash was deposited for loan repayment and not for acquiring movable/immovable property, section 69 (unexplained investment) was incorrectly applied. The assessee adequately explained cash sources through salary, partnership withdrawals, and family contributions. The AO applied wrong charging section and CIT(A) upheld without proper examination. Following Sarika Jain precedent, the addition was deleted as legally unsustainable.

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Issues Involved:
1. Condonation of Delay in Filing Appeal
2. Legality of Addition under Section 69 for Cash Deposit
3. Correctness of Cash Deposit Amount

Condonation of Delay in Filing Appeal:

The appeal faced a delay of 295 days. The Assessee argued that the delay was due to a lack of communication from the previous representative, Shri Gaurav Goel, who did not inform about the first appellate order. Upon discovering the dismissal of the first quantum appeal, the Assessee promptly filed the appeal. The Tribunal found the delay to be bona fide and condoned it, allowing the appeal for consideration.

Legality of Addition under Section 69 for Cash Deposit:

The Assessing Officer (AO) made an addition of Rs. 18,75,000/- under Section 69, considering it as unexplained investment. The Assessee contended that the cash deposits were made towards the repayment of a joint home loan account with his wife, and not as an investment. The Tribunal noted that the AO had incorrectly applied Section 69, which pertains to unexplained investments, whereas the deposits were for loan repayment. The Tribunal, referencing judgments from higher courts, concluded that the addition under Section 69 was unsustainable and invalid, directing the AO to delete the entire addition.

Correctness of Cash Deposit Amount:

The AO incorrectly noted the cash deposit as Rs. 25,00,000/- instead of Rs. 24,96,274/-. The Assessee provided documentary evidence showing that Rs. 12,91,883/- was deposited by him and the remaining Rs. 12,08,116/- by his wife. The Tribunal found the Assessee's explanation and evidence credible, establishing that the source of the cash deposits was properly explained. The Tribunal criticized the Ld. CIT(A) for upholding the addition without addressing the correct figures and sources, ultimately directing the deletion of the addition.

Conclusion:

The Tribunal allowed the Assessee's appeal, finding the delay in filing to be justified and the addition under Section 69 to be legally unsustainable. The Tribunal directed the AO to delete the entire addition, thereby resolving the issues in favor of the Assessee.

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