2022 (7) TMI 688 - AT - Income Tax

Addition u/s 69A - cash deposits in saving bank account - appellant has made cash deposit soon after the demonetization - as per assessee cash deposit relates to the past savings and part of the amount received from sundry debtors and loans and advances and submitted a list of persons with name their addresses and against their names the amounts were reported - HELD THAT - It is common in our society that old ladies sometimes keep cash with them for various reasons including for medical emergencies. The assessee in the instant case is an old lady and deriving income from pension. Assessing Officer in the instant case has given a credit of Rs.2,50,000/- only and made the addition of Rs.4,72,523/- by treating the past withdrawals from the Bank A/c as not available to the assessee. However, nothing has been brought on record that the assessee had spent any huge amount for acquisition of any asset or for performing of any functions such as marriage etc., in the family by spending huge money. Therefore, in our opinion, there is some force in the argument of assessee that the part of Rs.9,94,862/- which was withdrawn from the Bank in the past two years will be available to the assessee for making the deposit of Rs.7,60,000/- during the demonetization period. Therefore, the Assessing Officer as well as the CIT (A)-NFAC, are not justified in accepting only Rs.2,50,000/- as available and thereby sustaining the balance amount of Rs.4,72,523/-. Accordingly, we set aside the order of the CIT(A)-NFAC and direct the Assessing Officer to delete addition made him. The grounds raised by the assessee are accordingly allowed.

Summary

Issues:
Appeal against addition under section 69A of the Income Tax Act for A.Y. 2017-18.

Analysis:
1. Delay in filing appeal: The appeal filed by the assessee was delayed by 93 days, attributed to the pandemic situation. The assessee submitted a condonation application, which was accepted after considering the reasons for delay. The appeal was admitted for adjudication upon condonation of the delay.

2. Assessment of unexplained cash deposit: The Assessing Officer noted a cash deposit of Rs.11,14,477 in the assessee's bank account and sought explanations. The assessee provided details attributing the deposit to past savings, loans, and advances. While a portion was accepted, Rs.7,60,000 remained unexplained. The Assessing Officer held that only Rs.2,50,000 was accounted for, adding Rs.4,72,523 as unexplained money under section 69A.

3. CIT(A)-NFAC decision: The CIT(A)-NFAC upheld the addition, emphasizing the need for a satisfactory explanation for cash deposits post-demonetization. The CIT(A) considered the age and pension status of the assessee but confirmed the Assessing Officer's decision, stating that only Rs.2,50,000 could be explained out of the total deposit.

4. Tribunal's decision: The Tribunal considered the arguments of both parties and the facts of the case. Acknowledging the age and pension status of the assessee, the Tribunal found merit in the contention that the withdrawn amount of Rs.9,94,862 from the bank in the past two years could have been used for the deposit during demonetization. Consequently, the Tribunal set aside the CIT(A)-NFAC's decision and directed the Assessing Officer to delete the addition of Rs.4,72,523. The appeal by the assessee was allowed.

In conclusion, the Tribunal overturned the CIT(A)-NFAC's decision and directed the deletion of the addition made by the Assessing Officer under section 69A of the Income Tax Act. The Tribunal's decision was based on the argument that the withdrawn amount from the bank in the past could have been utilized for the cash deposit during demonetization, considering the age and circumstances of the assessee.