2025 (7) TMI 1572 - AT - Income Tax

Addition u/s 69A - deposits made in the Saving Bank Account - assessee has contended that account with HDFC Bank was a joint account with his mother who was the primary account holder and the assessee is secondary account holder and the money was deposited by his mother and not by the assessee - assessee has contended that his mother has sold agriculture land and these amounts were received as advance qua the sale proceeds HELD THAT - The mother of the assessee has received sufficient money for sale of her alleged agriculture land which was stated to be deposited in the bank account. The assessee has demonstrated full details of the payments received under the Sale Agreement which was ultimately reflected in the Sale Deed. Thus the mother of the assessee was having sufficient source for explaining the deposits in the bank account. The assessee has not been doing any other business which could have generated this much of money to him and the AO could be goaded to disbelieve the version put-forth by the assessee. We are satisfied that assessee has explained the source of deposits in the bank being sale proceeds of agriculture land sold by his mother. Accordingly no addition is sustainable. We allow this ground of appeal of the assessee and delete the addition. Re-opening of assessment - We find that it is not discernable that assessee has filed original return of income within due date u/s 139(1) of the Act. AO has received an information that a huge cash of more than Rs. 1.48 Cr has been deposited in the bank account of the assessee which is not in consonance with the income of the assessee because return was not available. There was no other choice with the AO to examine whether deposits in the bank account are from explained source or from unexplained source. Hence he has to reopen the assessment. Therefore we do not find any error regarding re-opening of the assessment. It is upheld. Appeal of the assessee is partly allowed.

Summary

ISSUES:

Whether the reopening of assessment under Section 148 of the Income Tax Act, 1961 was justified in the absence of a return filed under Section 139(1) within the due date and on the basis of information regarding unexplained bank deposits.Whether the addition of Rs. 1,26,00,000/- under Section 69A of the Income Tax Act, 1961, representing cash deposits in the assessee's bank account, was justified when the assessee claimed the deposits were sale proceeds of agricultural land belonging to the deceased mother.

RULINGS / HOLDINGS:

The reopening of assessment under Section 148 was upheld as the assessee had not filed the original return of income within the due date under Section 139(1), and the AO received credible information about substantial unexplained cash deposits, warranting examination of the source of such deposits.The addition of Rs. 1,26,00,000/- under Section 69A was deleted as the assessee satisfactorily explained the source of deposits as sale proceeds of agricultural land sold by his mother, substantiated by a handwritten sale agreement, registered sale deed, and corresponding bank statements, demonstrating a "sufficient source" for the deposits.

RATIONALE:

The Court applied the provisions of Section 148, which permits reopening of assessment if the AO has reason to believe income has escaped assessment, particularly where no return was filed within the prescribed time under Section 139(1), and credible information about unexplained deposits exists.Under Section 69A, unexplained cash credits can be added to income unless the assessee can satisfactorily explain the nature and source of such credits. The Court relied on documentary evidence including the handwritten Agreement, registered Sale Deed, and bank statements to establish the source of deposits as legitimate sale proceeds, thereby negating the addition.No dissent or doctrinal shift was noted; the decision reaffirmed established principles regarding reopening assessments and additions under unexplained cash credits.