2021 (9) TMI 974 - AT - Income Tax

Unexplained money u/s. 69A - explanation to source of income - AO observed that assessee was withdrawing pension to meet his family expenditure and the contention of the assessee that the sum as the accumulated withdrawals over a period of 6 to 7 years is not acceptable and not convincing - HELD THAT - As the assessee is an old aged person and therefore it is acceptable that he would keep certain cash with him to meet his personal and medical exigencies. The source of income of the assessee is stated to be his pension which is regularly deposited into his bank accounts and as observed from the bank statements, as soon as the pension is deposited, the assessee is withdrawing certain part of it to meet his personal needs. Therefore, it cannot be accepted that the entire withdrawals are kept aside by him which have since been deposited by him. The assessee's argument that provisions of sec. 69A are not applicable is also not acceptable because the assessee has not been able to explain the sources of the entire deposit of ₹ 10 lakhs into his bank account on a single day i.e. on 19.11.2016 after the announcement of de-monetization in November, 2016. In the interest of justice, the issue is set aside to the file of the A.O. with a direction to re-examine the issue and after allowing reasonable estimation of expenditure towards household medical expenses, over the years, the balance of withdrawals are to be treated as explained and only the unexplained portion to be treated as income u/s. 69A of the Act. The issue of interest u/s. 234A is also remanded to the AO. Assessee's appeal is partly allowed for statistical purposes.

Summary

Issues Involved:
1. Non-Speaking Order by CIT(A).
2. Validity of Assessment under Section 144.
3. Justification of Additions under Section 68 and Section 69A.
4. Applicability of Interest under Section 234A.

Issue-Wise Detailed Analysis:

1. Non-Speaking Order by CIT(A):
The appellant contended that the CIT(A) passed a non-speaking order without assigning specific reasons for confirming the demand. The CIT(A) merely extracted the submissions made by the appellant without duly considering them. The appellant argued that such an order should be quashed and relied on various judgments supporting the remand of matters where submissions were not fully considered. The appellant emphasized that the CIT(A) confirmed the assessment under Section 144 based on compliance history without appreciating the evidence and information on record.

2. Validity of Assessment under Section 144:
The appellant argued that the CIT(A) upheld the order under Section 144 due to poor compliance history. The appellant explained that the notice under Section 142(1) was issued on 13.03.2018, requiring the return to be filed by 31.03.2018. However, due to the short notice period, the appellant could not file the return but provided a summary of income and expenditure. The appellant contended that the AO proceeded with the assessment under Section 144 without considering the data available on record. The appellant argued that the CIT(A) failed to appreciate the evidence and information provided, leading to an unjust confirmation of the assessment under Section 144.

3. Justification of Additions under Section 68 and Section 69A:
The appellant challenged the additions under Sections 68 and 69A, arguing that the amounts were withdrawn from tax-paid income over several years. The appellant highlighted that he was a retired government employee with a habit of withdrawing cash for daily and emergency expenses, including house renovation. The appellant contended that the withdrawals over 6 to 7 years amounted to ?10,00,000, which was not abnormal. The appellant argued that the CIT(A) erroneously relied on Google Maps to dismiss the need for cash withdrawals and failed to consider the practicalities of digital payments before demonetization. The appellant also pointed out that the CIT(A) did not examine whether the cash deposits were recorded in the books of accounts, a crucial requirement under Section 69A. The appellant argued that the bank statements should not be equated with books of accounts for additions under Section 68.

4. Applicability of Interest under Section 234A:
The appellant contested the interest under Section 234A, amounting to ?2,24,800, calculated for 29 months. The appellant argued that interest under Section 234A applies only if there is an obligation to file a return under Section 139(1). The appellant cited a notification exempting individuals with income below ?5 lakhs from filing returns, subject to certain conditions. The appellant claimed to have met most conditions except for interest income slightly exceeding the limit. The appellant argued that if the due date for filing the return in response to the notice under Section 142(1) is considered, the interest liability should be for 20 months, not 29 months.

Conclusion:
The Tribunal found that the appellant, being an old-aged person, might keep cash for personal and medical exigencies. However, the appellant could not explain the entire deposit of ?10 lakhs on a single day after demonetization. The Tribunal remanded the issue to the AO to re-examine and allow reasonable estimation of household and medical expenses, treating only the unexplained portion as income under Section 69A. The issue of interest under Section 234A was also remanded for reconsideration. The appeal was partly allowed for statistical purposes.