Cash deposits of Rs. 95,000 adequately explained through bank withdrawals and declared income, no addition warranted under sections 234B and 234C

ITAT Delhi held that cash deposits totaling Rs. 95,000 were adequately explained by the assessee. Rs. 50,000 was supported by cash withdrawals from the same bank account on 24.11.2016, while remaining Rs. 45,000 was justified by other income of Rs. 6.78 lakhs earned in cash and declared in the return for AY 2016-17. No addition was warranted as the source of cash deposits was properly substantiated. Interest under sections 234B and 234C was addressed as consequential matters.

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Issues involved:
The judgment involves issues related to the validity of the order passed by the Commissioner of Income Tax (Appeals) under various sections of the Income Tax Act, 1961, including jurisdiction, legality, natural justice, and compliance with statutory conditions.

Validity of Order Passed by CIT(A):
The Assessee raised multiple grounds of appeal challenging the order passed by the CIT(A). These grounds included contentions regarding the legality and adequacy of the order, violation of natural justice principles, jurisdiction of the Assessing Officer, initiation of assessment post search, and compliance with statutory conditions. The Assessee argued that the order was unlawful and should be quashed due to various procedural and jurisdictional irregularities.

Validity of Assessments and Additions:
The judgment also addressed the validity of assessments made by the Assessing Officer under section 153A r.w.s. 143(3) of the Act. The Assessee contended that the additions made without incriminating material, approval under section 153D, and in violation of circular No. 19/2019 issued by CBDT were invalid. The judgment examined the legality of the assessments and the grounds raised by the Assessee regarding the procedural compliance and legality of the additions made.

Cash Deposit Additions and Interest Charges:
Specifically, the judgment focused on the addition of Rs. 95,000 on account of cash deposits in the bank account and the charging of interest under sections 234B and 234C of the Income Tax Act. The Assessee provided explanations regarding the source of cash deposits, and the Tribunal found that the cash deposits were duly explained by the Assessee. Consequently, the Tribunal allowed the grounds related to the cash deposit additions. Regarding interest charges, the Tribunal clarified the applicability of interest under sections 234B and 234C based on the returned and assessed income.

Conclusion:
After considering the rival submissions and perusing the available materials, the Tribunal partially allowed the appeal of the Assessee. The Tribunal dismissed certain grounds as not pressed, while allowing the grounds related to cash deposit additions and interest charges. The judgment was pronounced in the open court on 30.11.2023.

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