2024 (6) TMI 63 - AT - Income Tax

Addition u/s 69A - Unexplained cash deposits in the bank account - assessee could not discharge her primary onus by explaining the sources for cash deposits so made - assessee s case was selected for limited scrutiny under CASS to examine the deposits made during demonetisaton period, whereas, the deposits which were made before demonetisation period were also taken into consideration for addition, which was beyond the scope of the limited scrutiny and therefore, the entire addition made is not justified - also as per assessee cash deposits made in her bank account during the demonetisation period are out of gifts received from her parents on the occasion of her birthday, marriage day etc - HELD THAT - It is evident from the bank statement filed that the assessee made cash deposits of Rs. 1,00,000/- and Rs. 4,00,000/- on 05.11.2016 and 08.11.2016 respectively before demonetisation period and cash deposit of more than Rs. 40,000/- from 25.11.2016 to 17.12.2016 during demonetisaton period. The Ld.CIT(A) has already granted partial relief of Rs. 2,50,000/-, relying on the CBDT Instruction No.03/2017 dated 21.02.2019, in case of an individual (other than minor) not having any business income, no further verification required to be made if total cash deposit is upto 2.5 lakhs. In case of taxpayers above 70 years of age, the limit is Rs. 5.0 lakh per person. The source of such amount can be either household savings / savings from past or amounts claimed to have been received from any of the source. Thus we are inclined to give further relief of Rs. 5,00,000/- for the cash deposits of Rs. 1,00,000/- and Rs. 4,00,000/- made on 05.11.2016 and 08.11.2016 before demonetisation period, since it was beyond the scope of the notice issued u/s 143(2) dated 21.09.2018 for which the assessee s case was selected for limited scrutiny under CASS to examine the deposits made during demonetisaton period and uphold the remaining addition of Rs. 3,30,000/- (8,30,000 5,00,000) as the assessee failed to establish the identity, genuineness and creditworthiness of the transactions during demonetisaton period, by filing proper evidences before me. Accordingly, the grounds raised by the assessee are partly allowed.

Summary

Issues involved:
The appeal against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2017-18.

Details of the Judgment:

1. The assessee, deriving income from saree designing, filed her return of income for A.Y. 2017-18, admitting total income at Rs. 3,54,500. The case was selected for limited scrutiny under CASS to examine cash deposits during demonetization. The Assessing Officer (AO) observed cash deposits of Rs. 10,80,000 from 05.11.2016 to 17.12.2016. The assessee failed to provide documentary evidence for the cash deposits, leading the AO to treat the entire amount as undisclosed income under section 69A of the Act.

2. The CIT(A) granted partial relief of Rs. 2,50,000 but confirmed the remaining addition of Rs. 8,30,000. The assessee appealed to the Tribunal, challenging the addition and raising concerns about the consideration of deposits made before demonetization.

3. The Tribunal considered the contentions and relevant evidence. The assessee claimed the cash deposits were from gifts received and withdrawals made before demonetization. The Tribunal noted that deposits made before demonetization were beyond the limited scrutiny scope. Relying on CBDT Instruction No.03/2017, the Tribunal granted further relief of Rs. 5,00,000 for pre-demonetization deposits and upheld the remaining addition of Rs. 3,30,000 due to failure in establishing the transactions' identity, genuineness, and creditworthiness.

4. The Tribunal partly allowed the appeal, providing relief for the pre-demonetization deposits and upholding the addition for the demonetization period. The order was pronounced on 11th January 2024.