2022 (8) TMI 246 - AT - Income Tax

Unexplained money u/s. 69A - cash deposited during the demonetization period - HELD THAT - The cash loan of Rs. 50,00,000/- said to be received by the assessee from Ramesh Corporation is being clearly reflecting in the bank account of the assessee and the assessee had withdrawn Rs. 50,00,000/- on 02.01.2014. The assessee submission of redeposit of a sum of Rs. 37,00,000/- in her bank account of Bank of Baroda is also reflecting in the bank statement. So, the remaining cash in hand of Rs. 12,78,000/- in which the assessee made deposit of Rs. 12,75,000/- during the demonetization period. The assessee s explanation that the demonetized currency notes of Rs. 500/- and Rs. 2000/- available with the assessee as cash in hand were being deposited during the demonetization period. Thus the same cannot be treated as not properly explained by the assessee. As it can be seen from the bank statement, the source of withdrawal of the money is being clearly demonstrated and their deposit of money on various occasions is also established by the assessee through her bank account. The same cannot be doubted by the Assessing Officer as unexplained money. As relying on SHAILESHKUMAR RASIKLAL MEHTA 2013 (11) TMI 1600 - GUJARAT HIGH COURT and MANOJ INDRAVADAN CHOKSHI 2014 (8) TMI 1042 - GUJARAT HIGH COURT we have no hesitation in allowing the grounds raised by the assessee and the impugned addition made by the Assessing Officer u/s. 69A is hereby deleted. - Decided in favour of assessee.

Summary

Issues:
1. Addition of unexplained cash deposits during demonetization period under section 69A of the Income Tax Act, 1961.
2. Justification of cash deposits by the assessee.
3. Application of judicial precedents in determining the legitimacy of cash deposits.

Detailed Analysis:
Issue 1:
The appeal was filed against the order passed under section 143(3) of the Income Tax Act, 1961, regarding the assessment year 2017-18. The assessee's cash deposits during the demonetization period were under scrutiny, leading to an addition of unexplained money under section 69A of the Act. The assessing officer found the cash deposits suspicious and added them as unexplained income, resulting in a tax demand.

Issue 2:
The assessee claimed to have received a loan of Rs. 50,00,000 from her employer in 2013, which was withdrawn in 2014 to meet anticipated family needs. Subsequently, cash deposits were made in the bank account from 2015 to 2016, leading to an opening cash balance. During the demonetization period, cash was deposited in the bank, which the assessee explained as old demonetized currency notes. Despite providing explanations and supporting documents, the assessing officer added the cash deposits as unexplained.

Issue 3:
In the appeal before the tribunal, the assessee relied on judicial precedents to support the legitimacy of the cash deposits. Citing previous court judgments, the assessee argued that the source of income was explained, and subsequent withdrawals did not require further justification. The tribunal considered the evidence presented, including bank statements and loan details, and concluded that the cash deposits were adequately explained. Relying on the judicial precedents, the tribunal held that the addition made by the assessing officer under section 69A was unjustified and deleted the same.

In conclusion, the tribunal allowed the appeal, stating that the cash deposits were adequately explained by the assessee, in line with the judicial precedents cited. The addition of Rs. 12,75,000 under section 69A was deemed unwarranted and was consequently deleted.