2023 (11) TMI 323 - AT - Income Tax

Addition u/s 69A - large volumes of cash deposits in her bank account during the demonetization period compared to the declared income in her returns - assessee, being an old lady, had deposited a sum of Rs. 25 lakhs in her bank account after demonetization and after depositing the said amount in the bank account, she transferred the same to her daughter s account by way of cheque - HELD THAT - There is no cavil that the assessee was assessed to income tax for the last many years and the above side is not disputed by the Assessing Officer or by the ld.CIT(A). In fact, the ld.CIT(A) had reproduced the summary of ITRs from A.Ys. 2013-14 to 2017-18 - The grand total of all the net income for the 5 years roughly comes to Rs. 34 lakhs, which is more than the amount deposited by the assessee on 21/11/2016 i.e., 25 lacs. In our opinion, it is not expected for a person who is earning the income from rents to save and preserve the whole amount. In fact, some of the amounts must have been spent by the assessee either for herself or for the welfare of the family or on the education of the grandchildren etc. A balance is required to be drawn between the interests of the assessee as well as the interests of the revenue. Further during the period from 01.04.2016 to 21.11.2016, there was no debit entry in the bank account of the assessee, which clearly shows that the assessee did not have the active bank account even prior to the period of demonetization. Thus explanation given by the assessee merit consideration, and the amount deposited by the assessee in her account was required to be considered from her previous holdings. However, as pointed by the ld. DR, the whole amount deposited in the bank cannot be accepted to be explained. Considering the totally of the facts, social status of the assessee and the fact that the assessee had passed away, ends of the justice would met if the addition of Rs. 5,00,000/- is confirmed out of the addition of Rs. 25,00,000/- u/s 69 of the Act on estimation basis, and the remaining amount of Rs. 20 lakhs is deleted. Decided partly in favour of assessee.

Summary

Issues Involved:
The appeal concerns the addition of Rs. 25,00,000 as unexplained money under section 69A of the Income Tax Act, 1961, made by the Assessing Officer and upheld by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi.

Summary:

Issue 1: Addition of Rs. 25,00,000 as unexplained money
The appellant, an individual, declared a total income of Rs. 7,73,469 for A.Y. 2017-18, but the Assessing Officer added Rs. 25 lakhs as unexplained money deposited in the bank account. The appellant claimed the amount was from rental income earned over two decades. The Commissioner upheld the addition, citing lack of substantiation. The appellant argued that as an old lady not well-versed in banking, she saved cash for family needs. The Tribunal found the explanation partly credible, considering the appellant's history of income tax filings and social status. Ultimately, Rs. 5 lakhs of the addition was confirmed, and the remaining Rs. 20 lakhs were deleted, granting partial relief to the appellant.

Conclusion:
The Tribunal partially allowed the appeal, confirming Rs. 5 lakhs of the addition and deleting Rs. 20 lakhs, based on the appellant's explanation of the source of the deposited amount from rental income and her circumstances as an elderly individual.