2023 (3) TMI 1234 - AT - Income Tax

Addition of cash deposit and invoking of section 115BBE - DR submitted the assessee did not filed return of income and what was the reason for keeping such huge cash at home was not properly explained therefore the addition is sustainable and Ld. CIT(A) was right in confirming the same - assessee submitted that the cash in hand and cash withdrawn from the banks was partly utilized and partly kept by the assessee for emergency purposes and when the demonetisation was announced then the assessee was compel to deposit cash in hand to her bank - HELD THAT - When the assessee suffering with serious diseases requiring emergency treatment at any time in super speciality hospital then it is incumbent upon the assessee to have sufficient financial resources ready in hands to meet any unforeseen serious situation. In such a position if a super senior citizen widow lady having no other means of income is keeping cash in hand then it would not be taken as doubtful conduct of assessee attracting the rigor of taxing provisions to such amount. Obviously after declaration of demonetization the assessee was compel to redeposit the cash amount with her bank and such a situation AO was not correct in treating the cash deposit as assessee s income from undisclosed sources. Therefore authorities below were not justified in making addition in the hands of assessee. Accordingly ground no. 1 of assessee is allowed. Interest on FDR received by the assessee and widow pension - Amount was admittedly received by the assessee during FY 2016-17 pertaining to A.Y. 2017-18 and hence the Assessing Officer is entitled to take in to consideration these amounts. The factum of payment of interest on the loan taken by the assessee against FDR cannot be held as adjustable with the FDR interest received by the assessee. Therefore grounds no. 2 and 3 of assessee are dismissed. The AO is directed to recalculate tax liability of assessee, if any, accordingly.

Summary

Issues Involved:
The issues involved in this case are:
1. Addition of cash deposit of Rs. 10,00,000/- invoking section 115BBE.
2. Addition of FDR interest of Rs. 95,076/- without reducing interest expenditure of Rs. 61,192 on loan against FDR and invoking provisions of section 115BBE.
3. Addition of Rs. 1,00,000/- on widow pension and invoking section 115BBE.

Issue 1: Addition of Cash Deposit:
The appellant, a super senior citizen widow lady suffering from serious illnesses, appealed against the addition of cash deposit of Rs. 10,00,000/- under section 115BBE. The appellant's counsel argued that the cash withdrawn from banks and the cash in hand were used for emergency purposes, especially considering the appellant's health condition. The counsel emphasized that the appellant did not have any other source of income and the cash deposit should not be presumed to be from undisclosed sources. The tribunal noted the appellant's health condition, the cash received from her deceased husband, and the cash withdrawals from banks. It was held that the addition made by the Assessing Officer was unjustified, and the appellant's appeal on this ground was allowed.

Issue 2 & 3: FDR Interest and Widow Pension:
Regarding the FDR interest of Rs. 95,076/- and widow pension of Rs. 1,00,000/-, it was acknowledged that these amounts were received by the appellant during the relevant financial year. However, the interest paid on a loan against the FDR could not be adjusted with the FDR interest received. Therefore, the tribunal dismissed the appellant's appeal on these grounds. The Assessing Officer was directed to recalculate the tax liability accordingly.

Conclusion:
In conclusion, the tribunal partly allowed the appeal of the appellant, directing the Assessing Officer to delete the addition of cash deposit while upholding the additions related to FDR interest and widow pension. The order was pronounced in the open court on 17.03.2023.