2023 (11) TMI 635 - AT - Income Tax

Unexplained cash deposits in bank account - AO applied the provisions of sec 115BBE - Assessee was aged about 73 years - Assessee initially surrendered some amount as the source was not traceable - Later he produced the details and evidence of deposit - CIT(A) did not believe the version of the assessee - HELD THAT - As the assessee who traced out the details of the person from whom he received such amount and he also filed the affidavit of such person swearing to such a fact. He also filed the supporting evidence in the form of the bank withdrawal entry and explains that he lent this amount to one of his friends and received it in the relevant year. As a matter of fact, I do not find it to be something unusual. In all fairness, at that stage, he offered the same to tax since he was not recollecting the details. I doubt very much whether such an offer would be irrevocable even after the assessee traces out the source of such deposit and the evidence supporting the same. The act of refusing to look into the evidence produced by the assessee, who has never been found to be a tax evader, on the ground that it is an afterthought is nothing but an act of prejudice. Such evidence should have been examined and if any doubt arises on such examination, then the alternative view could have been taken by the authorities below. Assessee was aged about 73 years and his wife was 68 years of age. It would be difficult to believe that at such age, the pensioners will have another source of income. Moreover, this deposit of Rs. 4 Lakhs is long prior to the demonetization of Specified Bank Notes. It rules out the possibility of assessee depositing some other s money in his account. Human memory at that age is not infallible, and while appreciating the facts and circumstances, regard must be had to this fact. Lest, it would amount to penalizing the fading of memory at old age. This is not the purpose of law. Thus if we restore it to the file of AO we are afraid it will cause hardship to a senior citizen of about 80 years of age by now. It does not look reasonable, hence, we direct AO to delete this addition, in view of the plea that the total income of the assessee is less than the threshold limit. Grounds are accordingly allowed.

Summary

Issues involved:
The issues involved in the judgment include determination of unexplained cash deposits, application of section 115BBE of the Income Tax Act, credibility of the assessee's explanations, and the treatment of evidence provided by the assessee in relation to the disputed cash deposit.

Unexplained Cash Deposits:
The case involved unexplained cash deposits of Rs. 18,00,000 in the bank account of the assessee, a retired individual. The Assessing Officer accepted the explanation for a portion of the deposit but added Rs. 4,00,000 as 'income from other source' due to lack of explanation and documentary evidence provided by the assessee.

Application of Section 115BBE:
The Assessing Officer applied the provisions of section 115BBE of the Income Tax Act to the unexplained cash deposits. The section deals with taxation of income at a flat rate in cases where the Assessing Officer is not satisfied with the explanation provided by the assessee.

Credibility of Assessee's Explanations:
The Commissioner of Income Tax (Appeals) did not find the assessee's explanation regarding the unexplained cash deposit of Rs. 4,00,000 to be credible. The CIT(A) raised doubts about the memory of the assessee, who was a senior citizen, and refused to accept the affidavit of the debtor as evidence due to procedural reasons.

Treatment of Evidence Provided by Assessee:
The assessee provided evidence, including a bank withdrawal entry and an affidavit from the debtor, to support his explanation for the disputed cash deposit. The Judicial Member of the ITAT Hyderabad found the evidence to be genuine and concluded that the addition of Rs. 4,00,000 should be deleted as the total income of the assessee was below the threshold limit.

In conclusion, the ITAT Hyderabad allowed the appeal of the assessee, directing the Assessing Officer to delete the addition of Rs. 4,00,000 based on the genuine evidence provided by the assessee. The judgment emphasized the importance of considering the circumstances of the case, the age of the assessee, and the credibility of the explanations given, while ensuring fair treatment and avoiding prejudice in tax assessments.