2022 (2) TMI 326 - AT - Income Tax

Addition u/s 69A - Unexplained cash deposits in bank account maintained by the Bank of Baroda during demonetization period - CIT-A restricted part addition - HELD THAT - From the perusal of the history of cash withdrawals starting from the financial year 2014-15, we find that assessee has been regularly withdrawing huge cash amount on various dates and there was hardly any credit balance left in his bank account. The funds flow statement as incorporated above clearly shows that each and every withdrawal has been mentioned and utilization thereof and the money being withdrawn from the bank account. Even after house-hold withdrawal, there was a huge amount available with the assessee in the form of cash. Under these facts and circumstances stated by the assessee, it cannot be held to be improbability that assessee did not have any availability of cash at the time of demonetisation. Also not brought on record whether assessee was carrying out any business or profession or was having income from undisclosed sources of income which can be said to be available with the assessee in the form of cash. If the assessee had no source of income apart from rental or pension income and some interest amount and same income earned regularly has been withdrawn regularly leaving very less cash in the bank account, that shows the pattern that the assessee was indeed in the habit of keeping the money in the form of cash probably looking the old age and various ailments as explained by him - explanation of the assessee to be reasonable and plausible and preponderance of probability is in the favour of the assessee and without any adverse material it cannot be presumed that the cash deposited by the assessee is out of some his undisclosed source. Accordingly, the addition as sustained by the CIT (Appeals) is deleted - Decided in favour of assessee.

Issues:
1. Addition made by the Assessing Officer on cash deposits during demonetization period.
2. Restriction of the addition by the CIT (Appeals) to a specific amount.
3. Consideration of the assessee's explanation for cash withdrawals and deposits.
4. Opportunity to represent the assessee and principles of natural justice.
5. Acceptance of additional evidence by the CIT (Appeals).
6. Evaluation of the adequacy of evidence provided by the assessee.

Issue 1: Addition made by the Assessing Officer on cash deposits during demonetization period:
The Assessing Officer noted cash deposits of ?63,63,000 during demonetization. The assessee explained that the cash was withdrawn due to illness and old age and was kept at home. The Assessing Officer added the entire amount under Section 69A/115BB of the Act.

Issue 2: Restriction of the addition by the CIT (Appeals) to a specific amount:
The CIT (Appeals) restricted the addition to ?44,13,000, considering cash withdrawals before demonetization. The CIT (Appeals) found that withdrawals from the account matched the deposit after demonetization, limiting the addition to the difference.

Issue 3: Consideration of the assessee's explanation for cash withdrawals and deposits:
The assessee, a senior citizen and retired government servant, explained the cash withdrawals were due to health reasons and habit of keeping cash at home. The Tribunal found the explanation reasonable, given the pattern of withdrawals and the source of income from pension and rental.

Issue 4: Opportunity to represent the assessee and principles of natural justice:
The CIT (Appeals) was criticized for passing the order under Section 250 of the IT Act without affording adequate opportunity to the assessee, violating principles of natural justice.

Issue 5: Acceptance of additional evidence by the CIT (Appeals):
The CIT (Appeals) was faulted for not appreciating additional evidence presented by the assessee, establishing the existence of HUF and funds withdrawn from 2014 to 2016.

Issue 6: Evaluation of the adequacy of evidence provided by the assessee:
The Tribunal found the assessee's explanation regarding cash withdrawals and deposits plausible, given the detailed history of transactions and the source of income. The Tribunal concluded that the addition made by the CIT (Appeals) was not justified and deleted the amount of ?44,13,000.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the reasoning behind the final decision of the Tribunal.

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