2022 (3) TMI 127 - AT - Income Tax

Addition u/s 69A - large cash deposit on the bank account during the year - Hon ble Prime Minister/Finance Minister in the Parliament has given assurance that during the demonetization period, that if a housewife deposits up to an amount of ₹ 2.50 Lacs, then the same should not be scrutinized - HELD THAT - This Tribunal (Agra) in the case of Smt. Uma Agrawal vs. ITO. 2021 (6) TMI 712 - ITAT AGRA has held that as per of the CBDT Circular instruction no. 03/2017 dated 21.12.2017 and the assurance given by the Hon ble PM in the floor of the Parliament which has been discussed at para 12 of this decision (Smt. Uma Agrawal supra) has held that if a house wife deposited up to ₹ 2.50 lacs in her bank account (and in case of senior citizens aged above 70 years the upper limit of ₹ 5 lacs) during demonetization period then the same should not be scrutinized and has to be accepted. - Decided in favour of assessee.

Summary

Issues:
- Appeal against the addition made under section 69A of the Income Tax Act, 1961 of ?2.40 Lacs.
- Interpretation of CBDT Instruction no. 03/2017 dated 21.12.2017 regarding cash deposits during demonetization period.
- Dismissal of appeal by the Ld. CIT(A) and confirmation of addition by the AO.
- Whether the addition of ?2.40 Lacs in the hands of the assessee was justified.

Analysis:
1. Appeal against Addition under Section 69A:
The appellant, an individual businessperson, contested the addition of ?2.40 Lacs made by the AO under section 69A of the Income Tax Act, 1961. The AO noted a large cash deposit in the appellant's bank account during demonetization. The appellant explained that the account belonged to his mother, who deposited the money after her husband's demise. The appellant, a joint account holder, assisted his mother in managing the funds. The appellant relied on a CBDT circular stating that deposits up to ?2.50 Lacs by housewives during demonetization should not be scrutinized. Despite this, the AO made the addition, leading to the appeal.

2. Interpretation of CBDT Instruction:
The appellant's representative argued that the CBDT Instruction no. 03/2017 dated 21.12.2017, which exempts certain cash deposits from scrutiny during demonetization, should apply in this case. Citing a similar decision by a Co-ordinate Bench, the representative contended that deposits by housewives up to ?2.50 Lacs (?5 Lacs for senior citizens) during demonetization should be accepted without scrutiny. The Tribunal agreed with this interpretation, emphasizing the binding nature of CBDT instructions on income tax authorities.

3. Dismissal of Appeal by Ld. CIT(A):
The Ld. CIT(A) dismissed the appellant's appeal, upholding the addition made by the AO. The Ld. CIT(A) noted the lack of evidence to support the appellant's claim that the account belonged to his mother. Consequently, the Ld. CIT(A) concluded that the appellant was maintaining the account, justifying the addition. However, the Tribunal disagreed with this assessment based on the evidence presented and legal interpretations.

4. Justification of Addition in Assessee's Hands:
After hearing both parties and reviewing the evidence, the Tribunal allowed the appeal of the assessee. Relying on the CBDT circular and a previous decision, the Tribunal concluded that the addition of ?2.40 Lacs in the hands of the assessee was not justified. The Tribunal emphasized the exemption provided in the circular for certain cash deposits during demonetization, leading to the allowance of the appeal and the decision in favor of the assessee.

In conclusion, the Tribunal's decision favored the assessee, highlighting the importance of CBDT instructions and legal interpretations in determining the tax treatment of cash deposits during specific periods like demonetization.