2022 (10) TMI 1024 - AT - Income Tax

Unexplained cash deposited in the bank - Addition of Cash deposit in the Bank invoking section 69A - HELD THAT - Considering the amount of cash withdrawn by the assessee during the period from 30.06.2015 to 09.10.2015 the source of which is not in dispute. We find merit in the contention of assessee that the assessee was withdrawing the cash from Bank and keeping it at home and subsequently when the demonetization scheme was announced, the assessee deposited the amount left over with him in the Bank account. Thus hold that the cash withdrawn by the assessee during the period 30.06.2015 to 09.10.2015 is sufficient to explain the source of the alleged cash deposited in the Bank - Therefore, delete the addition made under section 69A of the Act by setting aside the finding of the ld. CIT(Appeals) and allow the appeal of the assessee.

Summary

Issues:
1. Addition of cash deposit in the bank under section 69A of the Income Tax Act, 1961.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs.11,17,300 out of the total addition of Rs.15,31,000 made by the Assessing Officer under section 69A of the Act. The assessee, a retired Government employee, disclosed a total income of Rs.8,11,230 for the assessment year 2017-18. The Assessing Officer noted a significant cash deposit during demonetization compared to the returned income, leading to scrutiny assessment. The assessee explained the source of cash deposit as retirement proceeds and cash withdrawals. The Assessing Officer, unsatisfied, added Rs.15,31,000 as undisclosed income, later partly reduced by the Commissioner of Income Tax (Appeals) to Rs.11,17,300.

The assessee contended that the cash withdrawals were due to fear of online fraud and health issues, supported by bank statements showing substantial cash withdrawals. The Departmental Representative argued against the validity of holding a large cash amount and questioned the ability of the assessee to deposit cash while being ill. The Tribunal noted the assessee's status as a retired Government employee with pension as the sole income source. Records indicated the assessee's illnesses and fear of online fraud, leading to cash hoarding. Notably, a substantial sum withdrawn during a specific period was deposited post-demonetization, explaining the source of the deposited cash. The Tribunal found merit in the assessee's explanation, deleting the addition of Rs.11,17,300 under section 69A, disagreeing with the Commissioner's selective relief approach.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner's finding and deleting the addition of Rs.11,17,300. The Tribunal accepted the explanation provided by the assessee regarding the source of cash deposits, emphasizing the withdrawals made during a specific period. The judgment highlighted the importance of considering the entirety of the assessee's financial transactions and circumstances to determine the legitimacy of cash deposits, especially during unique events like demonetization.