2022 (8) TMI 303 - AT - Income Tax

Addition u/s 69A as unexplained cash deposits in bank account which the assessee deposited on account of demonetization - HELD THAT - As observed from the record that the assessee as meticulously given case flow statement giving different date wise cash available is supported by the bank statement placed on record. The assessee has also placed on record the affidavit of his mother supported by the withdrawal made by her mother from her bank accounts all these evidences, the Revenue failed to establish any fault or contrary finding to this bulk of papers and merely the addition sustained on account of suspicious reasons. We also find force in the argument of assessee that the assessee has deposited the demonetization money at one instant only proves that the assessee is having these much of cash and on account of demonetization she has not choice but to deposit in Bank. In these observations, ground No. 2 raised by the assessee is allowed. Unexplained credit entries in bank account u/s 69 - At the time of hearing of the appeal before ld. CIT(A) assessee requested time to submit the evidence but the same were not placed on record on account of corona virus - HELD THAT - Considering the additional evidence placed on record the contentions raised by the assessee that the credit is already explained based on the evidence placed on record. Since, we have based on the argument of the ld. AR of the assessee admitted that these additional evidences but since these evidence were not placed before the AO we deem it fit to set aside this issue to the file of the Assessing Officer to verify the veracity of the record and contention raised by the assessee. Giving sufficient opportunity to the assessee. The AO is directed to decide whether based on the evidences placed on record the addition of Rs. 2,00,000/- is required to be added or not and with this observation the ground no. 3 raised by the assessee is allowed for statistical purposes. Deduction u/s 80C made in respect of HDFC life insurance - HELD THAT - CIT(A) did not deal this issue as assessee has not placed on record a petition under Rule 46A but assessee contended that details are already in bank statement. Considering the overall facts we also feel that let this issue also be verified by ld. AO based on the evidence the assessee has placed on record. Thus, this ground No. 5 is also allowed for statistical purposes.

Issues Involved:
1. Legality and jurisdiction of the assessment order.
2. Addition of Rs. 15,00,000/- under Section 69A for unexplained cash deposits during demonetization.
3. Addition of Rs. 2,00,000/- under Section 69A for unexplained credit entries.
4. Addition of Rs. 1,01,075.30 under Section 56 for unexplained interest income.
5. Deduction under Section 80C for HDFC Life Insurance.
6. Invocation of Section 115BBE for computing tax liability.

Detailed Analysis:

1. Legality and Jurisdiction of the Assessment Order:
The assessee did not press this ground during the hearing, and it was not considered for adjudication.

2. Addition of Rs. 15,00,000/- under Section 69A for Unexplained Cash Deposits:
The assessee argued that the cash deposits were from sources such as stridhan, cash gifts, and withdrawals from NRE/NRO accounts. The assessee provided a detailed cash flow statement and supporting documents, including affidavits and bank statements. The lower authorities rejected these explanations, citing the implausibility of keeping large cash amounts for extended periods and the lack of supporting evidence for the claims of stridhan and gifts. The Tribunal, however, found the assessee's explanations credible, supported by consistent cash flow statements and affidavits. The Tribunal noted that the addition was based on suspicion without contrary evidence from the Revenue. The addition of Rs. 15,00,000/- was deleted.

3. Addition of Rs. 2,00,000/- under Section 69A for Unexplained Credit Entries:
The assessee contended that the credit entry of Rs. 2,00,000/- was a repayment from M/s Ganesham Silks, supported by a cheque and earlier bank statements. The lower authorities had sustained the addition due to the lack of timely evidence. The Tribunal accepted the additional evidence and remanded the issue to the Assessing Officer for verification, directing a fresh examination of the evidence provided.

4. Addition of Rs. 1,01,075.30 under Section 56 for Unexplained Interest Income:
The assessee did not press this ground during the hearing, and it was dismissed as not pressed.

5. Deduction under Section 80C for HDFC Life Insurance:
The assessee claimed a deduction for HDFC Life Insurance premium, supported by policy documents. The lower authorities disallowed the deduction due to the absence of a Rule 46A petition and lack of evidence that the policy was an approved investment under Section 80C. The Tribunal remanded the issue to the Assessing Officer for verification of the evidence provided by the assessee.

6. Invocation of Section 115BBE for Computing Tax Liability:
Since the addition of Rs. 15,00,000/- under Section 69A was deleted, the issue of invoking Section 115BBE became infructuous and was not adjudicated.

Conclusion:
The appeal was partly allowed. The Tribunal deleted the addition of Rs. 15,00,000/- under Section 69A, remanded the issue of Rs. 2,00,000/- under Section 69A and the deduction under Section 80C to the Assessing Officer for fresh verification, and dismissed the ground related to unexplained interest income as not pressed. The issue of invoking Section 115BBE was rendered infructuous.

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