2023 (10) TMI 444 - AT - Income Tax

Addition of demonetized cash deposit - assessee is a non-resident and filed his return of income - assessee s case was selected for scrutiny assessment for verification of cash deposit made by him i.e., demonetization cash in the savings bank account maintained with ICICI Bank, R.A - CIT(A) considered the explanation of the assessee and availability of funds, restricted the addition of unexplained demonetized cash deposit as compared to addition made by AO - HELD THAT - Taking into consideration the entire withdrawal of the family and also giving weightage to family expenses, demonetized cash deposit of Rs. 15 lakhs is explained in the absence of any proof that the assessee has spent the entire available funds of Rs. 42,38,100/- for personal needs. CIT(A) has already accepted 50% of cash deposit and balance was treated as unexplained but there is no reason given that how the assessee has spent the above amount of family withdrawals. Even otherwise that the assessee has withdrawn this amount of Rs. 15 lakhs in March, 2015 and credence should be given to the same. We accept the cash deposit of Rs. 15 lakhs as explained and delete the balance addition confirmed by the CIT(A) and allow the appeal of assessee.

Summary

Issues involved:
The only issue in this appeal is the addition of demonetized cash deposit by the Commissioner of Income Tax (Appeals) and the subsequent appeal by the assessee challenging the same.

Summary:

Issue 1 - Addition of demonetized cash deposit:
The assessee, a non-resident, filed a return of income for the assessment year 2017-18, admitting total income at Rs. 2,10,880/-. The assessment was framed by the Income Tax Officer, Chennai, under section 143(3) of the Income Tax Act, 1961, based on demonetized cash deposit of Rs. 15.08 lakhs in the savings bank account. The AO treated the cash deposit as unexplained and taxable under section 115BBE. The CIT(A) restricted the addition to Rs. 7.54 lakhs, considering the explanation and availability of funds. The Tribunal noted the family withdrawals totaling Rs. 42,38,100/-, including a withdrawal of Rs. 15 lakhs in March 2015, before demonetization. The Tribunal accepted the cash deposit of Rs. 15 lakhs as explained, deleting the balance addition of Rs. 7.54 lakhs confirmed by the CIT(A) and allowed the appeal of the assessee.

Separate Judgment:
The Tribunal, after considering the facts and circumstances of the case, accepted the explanation provided by the assessee regarding the demonetized cash deposit, leading to the deletion of the balance addition confirmed by the CIT(A).

This judgment highlights the meticulous consideration of evidence and financial transactions to determine the legitimacy of a demonetized cash deposit, ultimately resulting in the allowance of the assessee's appeal.