2022 (9) TMI 1599 - AT - Income Tax

Addition of cash deposited in an account held with Punjab National Bank - HELD THAT - Considering the status of the assessee and his wife, the explanation of assessee that an amount of Rs. 60,000 was received from his wife out of her past savings is believable. Accordingly, we hold that the addition of Rs. 60,000 u/s 69A of the Act is unjustified. Accordingly, we delete the addition. Addition of cash deposited in the bank account during the demonetization period - CBDT vide Instruction No. 3/2017 dated 21.2.2017 has issued standard operating procedure to be followed by the assessing officer in verification of cash transaction relating to demonetization. In the facts of the present appeal, undisputedly, assessee is a salaried person having no business income. Further, the cash deposited during the demonetization period, does not exceed the threshold limit of Rs. 2.50 lacs in terms with the CBDT Instruction noted above. The CBDT instruction being beneficial to assessee, has to be applied. Thus, we delete the addition made under Section 69A of the Act. Assessee appeal allowed.

Summary

Issues:
1. Addition of cash deposited in Punjab National Bank account.
2. Addition of cash deposited in Canara Bank account during demonetization period.

Analysis:
1. The first issue pertains to the addition of Rs. 60,000 representing cash deposited in an account held with Punjab National Bank. The Assessing Officer added this amount under Section 69A of the Income-Tax Act, 1961, as he rejected the assessee's explanation regarding receiving the cash from his wife. The Tribunal noted that the assessee's wife is an Income-Tax assessee who regularly files her returns. Considering this, the Tribunal found the explanation plausible and deleted the addition of Rs. 60,000.

2. The second issue involves the addition of cash deposited during the demonetization period in the Canara Bank account. The Assessing Officer added Rs. 2,23,000 to the assessee's income under Section 69A of the Act, as he was not fully convinced by the explanation provided by the assessee. The Tribunal referred to a CBDT Instruction stating that no verification is required if total cash deposits during demonetization do not exceed Rs. 2.50 lakhs for individuals with no business income. As the assessee fell within this threshold limit and the CBDT instruction was beneficial, the Tribunal deleted the addition of Rs. 2,23,000.

In conclusion, the Tribunal allowed the appeal, deleting the additions made by the Assessing Officer in both instances. The Tribunal's decision was based on a thorough analysis of the facts, legal provisions, and relevant instructions issued by the CBDT.