2021 (10) TMI 1139 - AT - Income Tax

Addition u/s 69A - Cash deposits during the demonetization period - Assessee submitted that the savings were out of accumulated savings in the form of pin money and minor cash gifts received by her from her parents and in-laws on the occasion of birthdays, anniversaries etc. - HELD THAT - CIT(A) grant relief to ₹ 50,000/- and upheld the addition to the extent of ₹ 2,00,000/-. Before us, assessee has submitted that the deposits to be out of accumulated savings and out of the cash gifts received by her on the occasion of birthdays and anniversaries. It is also a fact that assessee's husband is an income tax payer working for an MNC. in view of the CBDT Circular vide Instruction No. 03/2017 dated 21st February 2017 and relying on the decision of SMT. UMA AGRAWAL BABA KAPUR SUNARAN KA MOHALLA VERSUS I.T.O 1 (3) GWALIOR, M.P. 2021 (6) TMI 712 - ITAT AGRA , the explanation of the assessee about the source of cash deposits cannot be brushed aside without there being any evidence to the contrary.- Decided in favour of assessee.

Summary

Issues:
Cash deposits during demonetization period treated as unexplained income under section 69A of the Income Tax Act - Relief granted by CIT(A) only to the extent of ?50,000 - Appeal challenging the addition of ?2,00,000 upheld by CIT(A) - Assessee's explanation regarding the source of cash deposits - CBDT Circular exempting verification for deposits up to ?2.50 lakh during demonetization period - Assessee's contention of savings from household expenses and cash gifts received - Husband of the assessee being a regular taxpayer - Decision based on the Agra Tribunal case of Smt. Uma Agrawal.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC) regarding the Assessment Year 2017-18. The case involved cash deposits of ?2,50,000 during the demonetization period, which the Assessing Officer treated as unexplained income under section 69A of the Act. The assessee claimed that the cash deposits were from accumulated savings and minor cash gifts received from family and friends. The CIT(A) granted partial relief, upholding an addition of ?2,00,000. The assessee appealed, arguing that the deposits were from legitimate sources and referring to a CBDT Circular exempting verification for deposits up to ?2.50 lakh during demonetization. The husband of the assessee was a regular taxpayer, and the assessee relied on a decision from the Agra Tribunal in a similar case.

During the appeal, the assessee reiterated that the cash deposits were from accumulated savings and minor gifts, supported by the CBDT Circular exempting verification for such deposits during demonetization. The assessee's husband being a regular taxpayer was also highlighted. The Department, however, supported the lower authorities' decision. After considering the submissions and evidence, the Tribunal found that the assessee's explanation for the source of cash deposits was credible, especially in light of the CBDT Circular and a relevant decision from the Agra Tribunal. Consequently, the Tribunal directed the deletion of the addition of ?2,00,000 upheld by the CIT(A), thereby allowing the assessee's appeal.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the credibility of the explanation provided by the assessee regarding the source of cash deposits, supported by the CBDT Circular and a precedent from the Agra Tribunal. The decision highlighted the importance of considering all evidence and relevant guidelines in such cases to ensure fair treatment and accurate assessment of income.