Ayub Khan Vs. The ITO

Parties Involved

Facts Summary

The assessee deposited cash of Rs. 30,85,000/- in bank during the year but did not file return for the year. Assessee was asked to explain but he did not reply. Case was reopened for reassessment u/s 147. In reply to notices, the assessee appeared and filed return showing income of Rs. 1,57,440/- including agricultural income of Rs. 81,400/-. Assessee claimed that he gave loans to some people in the past and those people have returned money during March, 2011 of FY 2010-11 which was the source of his cash deposits. AO issued summons and recorded statement of these persons. There were ten persons. 1 allegedly took loan 10 years back, 2 took in 2007, 2 took in 2008, 3 took loan in 2009 and 2 took in 2010. Amounts were Rs. 50,000/- to Rs. 1,50,000/-. 7 out of 10 were drivers, 2 were farmers and 1 was para teacher. All of them allegedly repaid money of Rs. 15,45,000/- in January, February and March, 2011. They stated on oath that they used to get Rs. 8,000/- to 10,000/- as salary in 2010-11 and in 2018 they got Rs. 12,000/- as salary. None paid any interest to assessee. Assessee allegedly gave loan without security. AO has said that these people were men of no means. While it was improbable that the assessee gave his hard-earned money without any security to men of no means (and hence less chance of recovery) without interest is a story not humanly probable, the claims of repayment by these men during FY 2010-11 is strange and more improbable. There was no explanation as to how t…

Legal Issues

• 1. The Ld. CIT(A) has erred in sustaining the order passed by Ld. AO which is bad in law and bad on facts and is contrary to the principles of natural justice.
• 2. The Ld. CIT(A) has erred in sustaining the addition u/s 69 A for Rs. 30,85,000/- for alleged unexplained cash deposits in bank.
• 3. The Ld. CIT(A) has erred in sustaining interest charged u/s 234A, 234B and 234C of the Act.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

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