2022 (6) TMI 1333 - AT - Income Tax

Addition being cash deposit made into his bank account during the demonetisation period - HELD THAT - A.R. took us through the copies of bank account placed in the paper book. A perusal of the same would show that the assessee has withdrawn a sum from his bank account maintained with ICICI Bank on 05.06.2015. We notice that the assessee has withdrawn cash in small amounts in subsequent period also. Since the assessee is an aged person and retired from army it is quite possible that the assessee had kept the money in cash with him in order to meet medical emergencies. The assessee is a pensioner and there is no other material to show that the cash withdrawn earlier had been spent away. Accordingly explanation of the assessee that he has made the deposit out of the cash withdrawal made earlier is quite plausible. Accordingly sources for making deposits stand explained in this case. Appeal filed by the assessee is allowed

Summary

Issues:
Challenge to addition of cash deposit during demonetisation period.

Analysis:
The appeal was filed against the order confirming the addition of Rs.7,01,000/- deposited during the demonetisation period. The assessee, a retired army officer drawing pension, deposited the amount in two bank accounts. The explanation provided was that the cash was withdrawn earlier for emergency medical treatment due to a heart disease. The Assessing Officer (AO) rejected this explanation, citing free treatment facilities for army officers and subsequent deposits and withdrawals. The CIT(A) upheld the addition under Section 69A of the Income Tax Act, 1961.

Upon hearing the parties and examining the bank account details, it was observed that the assessee withdrew Rs.8,00,000/- on a specific date and made subsequent small cash withdrawals. Considering the assessee's age, retired status, and pensioner status, it was plausible that the cash was kept for medical emergencies. Lack of evidence showing expenditure of the earlier withdrawal supported the explanation that the deposit was made from the earlier withdrawn cash. Consequently, the Tribunal found the explanation reasonable and ordered the deletion of the addition of Rs.7,01,000/-.

In conclusion, the Tribunal allowed the appeal, setting aside the CIT(A)'s order and directing the AO to remove the addition. The decision was pronounced in an open court on 1st June 2022.