2021 (9) TMI 1082 - AT - Income Tax

Addition u/s. 69A r.w.s. 115BBE - cash deposits in bank account - assessee argued that notice u/s. 143(2) was issued by the wrong Assessing Officer - HELD THAT - As during the course of hearing, no contention with regard to the above said issue was raised, hence, the ground relating to the technical issue that no notice u/s. 143(2) was issued by the correct Assessing Officer is rejected. Addition u/s 69A - There was no unexplained asset or investment unearthed by the department. The assessee had filed cash flow statement and also cash book for the period 01.04.2013 to 13.11.2016 before the A.O. It is an admitted fact that the assessee's grandmother is suffering from cancer. Evidence for the cancer treatment for assessee's grandmother is placed on record - in all probabilities, some amount of cash would have been kept by the assessee to meet the medical emergencies. In facts of the case, the credit of ₹ 1,50,000 given by the CIT(A) is insufficient. I direct the Assessing Officer to grant a further credit for a sum of ₹ 3.5 lakh being cash deposit out of past withdrawals. In other words, the A.O. is directed to tax u/s. 69A r.w.s. 115BBE of the I.T. Act, a sum of ₹ 4 lakh. Therefore, the sum of ₹ 5 lakh is treated as explained being cash deposit out of withdrawals made in the past. Appeal filed by the assessee is partly allowed.

Summary

Issues:
Condonation of delay in filing appeal before ITAT; Justification of addition made by AO under section 69A r.w.s. 115BBE of the I.T. Act; Assessment of cash deposits in bank account during demonetization period.

Condonation of Delay:
The appeal addressed the delay in filing due to the Covid-19 pandemic and subsequent extensions of timelines by the Hon'ble Supreme Court and CBDT Circular No. 10 of 2021. The Tribunal noted that the appeal was filed after the extended timelines and stated that there was no delay in filing, disposing of the appeal on merits.

Justification of Addition under Section 69A r.w.s. 115BBE:
The key issue revolved around the addition of ?9 lakh by the Assessing Officer under section 69A r.w.s. 115BBE of the I.T. Act regarding cash deposits in the bank account. The assessee, a salaried employee, explained the source of the deposit during demonetization, attributing it to savings from past withdrawals for emergency medical treatment of his grandmother. The CIT(A) partially allowed the appeal, reducing the addition to ?7.5 lakh. The Tribunal further analyzed the case, considering the evidence presented, such as cash flow statements and the grandmother's medical condition. It directed the AO to tax only ?4 lakh, treating ?5 lakh as explained cash deposit from past withdrawals, ultimately partly allowing the appeal.

Assessment of Cash Deposits during Demonetization:
The Tribunal assessed the case thoroughly, acknowledging the salaried income of the assessee and the absence of undisclosed income or assets. It considered the medical emergency situation of the grandmother and the cash flow evidence provided. The Tribunal concluded that a portion of the cash deposit was justified as explained, directing the AO to tax only ?4 lakh, thereby partially allowing the appeal.

This detailed analysis of the judgment highlights the issues of delay condonation, addition under section 69A r.w.s. 115BBE, and the assessment of cash deposits during demonetization, providing a comprehensive understanding of the legal proceedings and outcomes.