2022 (5) TMI 360 - AT - Income Tax

Addition u/s 69A read with section 115 BBE - house hold expenses - assessee deposited in cash in bank accounts during the period of demonetization - assessee during the period of demonetization had deposited cash in saving bank account in Vijaya Bank and Assessing Officer had added back the entire amount by rejecting the explanation of the assessee that some of the deposits were made out of earlier cash withdrawal which were kept with his brother Shri Anil Singh - HELD THAT - A total addition of Rs. 17,57,130/- was made by the Assessing Officer. Before the Ld. CIT(A) the assessee explained the sources of cash deposits which were out of receipt from his brother and out of withdrawals from the bank account. The Ld. CIT(A) while agreeing the submissions of the assessee has allowed substantial relief to the assessee but upheld an addition of Rs. 2.00 lacs by holding that there must be some expenditure which the assessee must have used for household expenses. While holding so, it has escaped the attention of Ld. CIT(A) that in the position of cash as on 18.11.2016 the assessee had already reduced an amount of Rs. 2,92,872/- as withdrawals of household expenses therefore further sustenance of Rs. 2.00 lacs on account of assumed household expenses is not justified and therefore delete the same. Appeal of assessee allowed.

Summary

Issues:
Appeal against CIT(A) order confirming addition of cash deposits during demonetization period.

Analysis:
The appeal was filed against the CIT(A) order confirming the addition of Rs. 2,00,000 being the amount deposited in cash in bank accounts during demonetization. The assessee contended that the addition was made on whims and fancies without any basis and should be deleted. The AR submitted that some deposits were made from earlier cash withdrawals kept with the assessee's brother. The CIT(A) appreciated the facts, allowed the claim, and restricted the addition to Rs. 2.00 lacs, considering household expenses. The AR argued that the assessee had already deducted Rs. 2,92,870 for household expenses, making the sustained addition unjustified. The DR argued against further relief, noting that substantial relief had already been granted.

The ITAT examined the case and found that a total addition of Rs. 17,57,130 was made by the Assessing Officer. The assessee explained the sources of cash deposits, including receipts from the brother and withdrawals from the bank account. The CIT(A) acknowledged the submissions but upheld an addition of Rs. 2.00 lacs, assuming household expenses. However, the ITAT observed that the assessee had already reduced Rs. 2,92,872 for household expenses from the cash position on 18.11.2016. Consequently, the further sustenance of Rs. 2.00 lacs for assumed household expenses was deemed unjustified, leading to the deletion of the same. As a result, the appeal filed by the assessee was allowed, overturning the CIT(A) order.