2024 (7) TMI 583 - AT - Income Tax

Addition u/s 69A r.w.s. 115BBE - unexplained money/ cash deposits in bank account - explanation of the assessee as regards the source of the cash deposit - cash deposits during the demonetization period by the assessee, a septuagenarian, having no business income during the subject year - AR stated that the assessee had operated her locker with SBI and on the same day deposited the amount therein kept a/w that as was available with her in the Savings bank account HELD THAT - As the cash deposit in assessee bank account during the demonetization period was sourced out of the past accumulated cash savings that were kept by her in her bank locker, and also the cash-in-hand available with her out of the cash withdrawals made from her bank accounts during the year under consideration. The fact that the assessee had operated her bank locker with State Bank of India, Branch Kutchery on 16.11.2016 (as certified by the bank), i.e. the date of the subject cash deposit in her bank account further inspires confidence as regards the veracity of her claim that the same was, inter alia, sourced out of her accumulated cash savings. Also, the assessee's claim for having kept the aforesaid substantial amount of her past accumulated cash savings in the bank locker and not depositing the same in her bank account is supported in the backdrop of the reason given by her. Apropos the assessee s claim that the cash deposit of Rs. 10 lac in her bank account on 16.11.2016 i.e during the demonetization period was, inter alia, sourced from the cash withdrawals made by her from her bank accounts, we find substance in the same. On a scrutiny of the bank accounts of the assessee, a/w her consolidated cash flow statement, we find that as per the assessee s version (ignoring the Op. balance of C.I.H of Rs. 18.92 lac) net of cash deposits/withdrawals of Rs. 4,11,000/- was available with her on 16.11.2016, i.e. the date on which cash was deposited by her in the bank account during the demonetization period. Although part of the cash withdrawals made in tranches over the year would not be fully available with the assessee on the subject date of deposit i.e 16.11.2016, but in the absence of any material which would irrefutably evidence the utilization of the entire amount of cash withdrawals, it can safely be concluded that part of the same was available with the assessee on the relevant date of deposit during the demonetization period. Thus, as the assessee had been practicing as a gynecologist and was in past running a hospital, the assessee is regularly filing her returns of income for the last many decades, that the return of income of the assessee from A.Y. 2012-13 onwards as are available on record reveals substantial income, the assessee is a septuagenarian aged 76 years with no such source of income based on which it could be concluded that she had garnered unexplained money during the subject year and cash available with the assessee out of the withdrawals made her from her bank accounts during the subject year, which have not conclusively been proved to have been utilized for incurring any expenditure or making any investment, it can safely be concluded that , no adverse inferences as regards the cash deposit of Rs. 10 lacs made in her bank account on 16.11.2016, i.e. during the demonetization period could be drawn. Decided in favour of assessee.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Justification of the addition of Rs. 10,00,000/- to the total income under Section 69A.
3. Applicability of Section 115BBE for the tax rate on the unexplained income.
4. Admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963.

Detailed Analysis:

Issue 1: Condonation of Delay in Filing the Appeal
The assessee's appeal was delayed by 37 days. The delay was attributed to multiple factors including the assessee's advanced age (76 years), lack of computer literacy, and personal hardships such as the death of close relatives and illness. The assessee mistakenly believed that no further action was required due to the "do not reply" email address from which the notice was received. The Tribunal found the reasons for the delay to be bona fide and not due to any lackadaisical conduct. Consequently, the delay was condoned.

Issue 2: Justification of the Addition of Rs. 10,00,000/- to the Total Income under Section 69A
The assessee had deposited Rs. 10,00,000/- in cash during the demonetization period. The Assessing Officer (A.O.) held this amount as unexplained money under Section 69A due to the lack of evidence supporting the source of the cash deposits. The assessee claimed the deposits were from cash withdrawals and accumulated savings. The CIT(Appeals) upheld the A.O.'s decision, stating that the assessee failed to substantiate the source of the cash deposits with credible evidence.

Upon appeal, the Tribunal considered the assessee's age, profession, and financial history. It was noted that the assessee had substantial income in previous years and had been regularly filing returns. The Tribunal also referenced CBDT Instruction No. 03/2017, which allows for a blanket acceptance of cash deposits up to Rs. 5 lakhs for individuals above 70 years of age without business income. Given the assessee's circumstances and the evidence provided, including the operation of a bank locker on the date of deposit, the Tribunal found the explanation plausible and vacated the addition of Rs. 10,00,000/-.

Issue 3: Applicability of Section 115BBE for the Tax Rate on the Unexplained Income
The assessee contested the tax rate applied under Section 115BBE, arguing that the rate of 60% was erroneously charged instead of 30%. The CIT(Appeals) clarified that the amendment increasing the tax rate to 60% was effective from 01.04.2017 and applicable for the assessment year 2017-18 onwards. The Tribunal upheld this view, referencing relevant case law, and confirmed that the higher rate was applicable for the entire previous year 2016-17 related to the assessment year 2017-18.

Issue 4: Admission of Additional Evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963
The assessee sought to admit additional evidence, including bank certificates, past income tax returns, and medical certificates, which were not available during the lower proceedings. The Tribunal found that these documents had a strong bearing on the case and were obtained after the appellate order. Considering the relevance and the timing of their acquisition, the Tribunal admitted the additional evidence.

Conclusion:
The Tribunal allowed the appeal, condoning the delay and vacating the addition of Rs. 10,00,000/- under Section 69A. The Tribunal also confirmed the applicability of the higher tax rate under Section 115BBE and admitted the additional evidence provided by the assessee. The appeal was decided in favor of the assessee based on the totality of facts and circumstances.

← Previous Next →