Facts of the Case

The assessee, Shiya Sharan Roy, Patna, did not file a return of income under Section 139 for Assessment Year 2019-20. The case was selected under the Risk Management Strategy as a non-filer, and proceedings were initiated under Section 148A. The Assessing Officer issued notice under Section 148 after passing an order under Section 148A(d). During assessment proceedings, it was noticed that the assessee had made a time deposit of ₹5,50,000 in his bank account. The assessee explained that the amount was received through NEFT dated 26.06.2018 from his late father, who had sold agricultural land for consideration of ₹15,00,000. The Assessing Officer issued notice under Section 133(6) to the bank and confirmed the NEFT credit. However, the Assessing Officer treated the amount as unexplained and made an addition under Section 69A. The CIT(A), NFAC confirmed the addition.

Issues Involved

Whether addition under Section 69A can be sustained when the source of the bank time deposit is explained through identifiable NEFT transfer, and whether the Assessing Officer was justified in treating the amount as unexplained money despite confirmation of the source.

Petitioner’s Arguments

The assessee submitted during assessment proceedings that the time deposit of ₹5,50,000 was made out of funds received through NEFT from his father, who had sold agricultural land. It was contended that the source of the funds was clearly identifiable and verifiable through banking channels, and therefore the provisions of Section 69A were not applicable.

Respondent’s Arguments

The Revenue relied upon the orders of the Assessing Officer and the CIT(A) and contended that the assessee failed to satisfactorily explain the source of the time deposit despite multiple opportunities.

Court Order / Findings

The ITAT Patna observed that it was an undisputed fact that the amount of ₹5,50,000 was received by the assessee through NEFT, which was confirmed by the bank statement obtained by the Assessing Officer under Section 133(6). The Tribunal noted that the Assessing Officer himself acknowledged that the funds were received through banking channels and were utilised for making the time deposit. The Tribunal further observed that the Assessing Officer did not dispute the fact that the amount was received from the father’s bank account out of sale proceeds of agricultural land. In view of these facts, the Tribunal held that the source of the amount stood explained and therefore the addition under Section 69A was unjustified and unsustainable in law.

Important Clarification

The Tribunal clarified that where the source of funds is clearly identifiable through banking channels and supported by confirmation obtained by the Assessing Officer himself, the provisions of Section 69A cannot be invoked merely on suspicion or technical grounds.

Final Outcome

The appeal filed by the assessee was allowed. The addition of ₹5,50,000 made under Section 69A of the Income-tax Act for Assessment Year 2019-20 was deleted in full.

 

Link to download order https://www.mytaxexpert.co.in/uploads/1769148750_SHIYASHARANROYPATNAVS.ASSESSMENTUNITINCOMETAXDEPARTMENTDELHI.pdf  

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