Smt. Gloria Eugenia Rynjah Banerji vs ITO

Court/Forum: ITAT

Bench: Delhi Bench ‘B’, New Delhi, Sh. N. K. Billaiya, Accountant Member and Sh. Yogesh Kumar US, Judicial Member

Order Date: 2023-08-16

Outcome: Revenue

Sections: Section 68, Section 69

Core Ratio

Additions cannot be deleted merely on technical grounds if the factual matrix is not commensurate with human probability.

Outcome

The appeal of the assessee was dismissed, and the addition made by the AO under Section 68 was upheld by the ITAT.

Favourability

Revenue

Core Issue

The central legal question was whether the addition under Section 68 was justified given that the assessee did not maintain any books of account and the cash was deposited in the bank account.

Facts of the Case

The assessee claimed that the cash deposits in her bank account were from the sale proceeds of land in Meghalaya, which were kept by her cousin since 1989. The AO questioned the genuineness of this claim and made an addition under Section 68.

Arguments by Assessee

The assessee argued that Section 68 does not apply as she does not maintain books of account and the source of cash was explained as sale proceeds of land.

Arguments by Revenue

The Revenue argued that the explanation provided by the assessee was not credible, and the manner of cash deposits was suspicious.

Key Sections & Provisions

Section 68 - Unexplained cash credits; Section 69 - Unexplained investments.

Ratio Decidendi

The ITAT held that the peculiar facts of the case, including the unexplained delay and manner of cash deposits, did not justify any relief for the assessee, even if the AO mentioned Section 68 instead of Section 69.

Court Reasoning & Analysis

• The Tribunal found the explanation of cash deposits not credible.
• The delay in transferring money from Meghalaya to Delhi was unexplained.
• The pattern of depositing cash in amounts less than Rs. 50,000 was suspicious.
• The Tribunal upheld the AO's addition due to lack of credible evidence from the assessee.

Key Observations

• The factual matrix is not commensurate with human probability.
• Additions cannot be deleted merely on technical grounds.

Related Issues

• Application of Section 68 when no books of account are maintained
• Justification of cash deposits under Section 69

Important Passages

• On such unbelievable facts the additions cannot be deleted merely on technical ground that the AO mentioned section 68 instead of section 69 of the Act.

Not Decided / Remanded

No issues were explicitly left open or remanded.

Practical Takeaway

Practitioners should ensure credible evidence is provided for cash deposits to avoid additions under Sections 68 or 69.

Supporting Judgments

• Commissioner of Income Tax vs P. Mohanakala (SC) — The opinion of the Assessing Officer that the explanation offered by the assessee is not satisfactory constitutes prima facie evidence against the assessee.
• Principal Commissioner of Income Tax (Central) - 1 vs NRA Iron & Steel Pvt. Ltd. (SC) — The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors to t
• ACIT vs Double Plus Software P. Ltd. (ITAT) — Section 68 applies when a sum is credited in the books of an assessee, and the assessee fails to prove the genuineness and creditworthiness of the transaction.
• Sumati Dayal vs Commissioner of Income-Tax, Bangalore (SC) — The apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real, and the taxing authorities are entit
• Sri Mangilal Jain vs The Income Tax Officer (HC) — The assessee must prove not only the identity of the creditor but also their creditworthiness and the genuineness of the transaction beyond any reasonable doubt
• Maxopp Investment Ltd vs Commissioner of Income Tax, New Delhi (SC) — Section 14A mandates the disallowance of expenditure incurred in relation to exempt income, applying the principle of apportionment.

Contrary Judgments

• DCIT, CC-1(2), Kolkata vs M/s Chaman Metallics Ltd (ITAT) — Once the assessee has submitted documents relating to identity, genuineness of the transaction, and credit-worthiness, the AO must conduct an inquiry before inv
• Vijay Kumar Ahuja vs ACIT (ITAT) — Outstanding trade creditors cannot be added to income if they are genuine and relate to past transactions.
• Commissioner of Income Tax vs M/s. Manjunatha Cotton and Ginning Factory (HC, 2012) — The imposition of penalty under Section 271(1)(c) requires clear evidence of concealment or inaccurate particulars, which was not established in this case.
• Assistant Commissioner of Income-tax vs M/s Chiripal Poly Films Ltd. (ITAT) — The DCF method is an acceptable method for share valuation under Rule 11UA, and the onus under Section 68 is discharged if the assessee provides sufficient docu
• Abhijeet Enterprise Ltd vs Income-tax Officer, Wd-2(2), Kolkata (ITAT) — Section 68 cannot be invoked for liabilities arising from credit purchases where no actual cash is received.
• Dy. CIT Central Circle – 1(4), Kolkata vs Femina Stock Management Company Ltd. (ITAT) — The assessee successfully discharged its burden of proof under Section 68 by providing sufficient evidence of the identity, creditworthiness, and genuineness of