2024 (11) TMI 150 - AT - Income Tax

Unexplained bank deposits - assessee is an Individual and is an aged lady. She is engaged in the business of selling religious items like Sandal wood, Janoi, Diva etc in a Parsi Temple - assessee submitted that she has voluntarily disclosed the Gifts amount as her undisclosed income under PMGKY Scheme in order to avoid any dispute and get peace of mind. HELD THAT - We notice that the assessee is an old lady and she was residing in a joint family consisting of her family and her husband s brother s family. It is noticed that the family of the assessee was small and consequently, the domestic expenses could be lower. Since the assessee is carrying on a business on small scale for the past several years, it cannot be denied that she could have saved money over the years. The assessee could not prove this claim with evidences, since she was not required to maintain books of accounts under the law. It is also possible that the said savings could be from her own business and other own sources and it may include money received from her husband also over the years. Accordingly, considering her age and the business activities carried on by her, we are of the view the claim of past savings of Rs. 7,20,000/- could be accepted. Assessee has voluntarily disclosed a sum under PMGKY scheme, which fact shows that money, which could not be explained was offered as income. The corollary is that the assessee was sure that her explanations with regard to the claim of past savings of Rs. 7,20,000/- would be accepted. Accordingly, we are of the view that the genuineness of her claim may be accepted. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the addition of Rs. 7,20,000/-. Balance amount it is claimed that the same has been inherited from her husband s brother s wife. The fact would remain that the said deceased lady was 87 years old when she died. It is stated that she was also carrying on a business on a small scale and it is possible that she could have also made savings over the years out of her income and out of the money given by her husband. The assessee has proved that she is the lone surviving heir of the deceased lady by furnishing the details of flat inherited from her. We also noticed that the assessee has voluntarily disclosed her unexplained money of Rs. 5,72,000/- under PMGKY scheme and we have held earlier that the said voluntary action of the assessee should also be considered while examining the veracity of the claim made by the assessee. Accordingly, we are of the view that the claim of inheritance of Rs. 7,80,000/- from her husband s brother s wife, in the facts and circumstances of the case, could not be brushed aside. Accordingly, we hold that the said explanation may be accepted. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the addition of Rs. 7,80,000/- also. Assessee appeal allowed.

Summary

Issues:
1. Addition of Rs. 15.00 lakhs relating to unexplained bank deposits challenged by the assessee.

Analysis:
The case involved the assessee, an aged lady engaged in selling religious items, challenging the addition of Rs. 15.00 lakhs as unexplained income due to bank deposits during demonetization. The Assessing Officer (AO) and the Ld CIT(A) had both upheld the addition, prompting the appeal. The assessee provided explanations for the deposits, including past savings, gifts, and inheritance, but the tax authorities did not accept them.

The Ld A.R argued that the assessee, not required to maintain accounts, accumulated savings over the years from business and husband's contributions. He emphasized the joint family's frugal lifestyle and the cash deposits due to demonetization. The Ld D.R supported the tax authorities' decisions.

Upon review, the Tribunal noted the assessee's age, joint family setup, and business nature. Considering the absence of account books, the Tribunal evaluated the explanations based on surrounding circumstances rather than strict evidence rules. It acknowledged the plausibility of the claimed past savings of Rs. 7,20,000, especially given the voluntary disclosure of Rs. 5,72,000 under the PMGKY scheme.

Regarding the inherited Rs. 7,80,000, the Tribunal accepted the explanation due to evidence of inheritance and the voluntary disclosure of unexplained income. Consequently, the Tribunal directed the AO to delete the additions of Rs. 7,20,000 and Rs. 7,80,000, allowing the assessee's appeal.

The judgment highlighted the importance of considering the assessee's circumstances, age, and business nature in evaluating income sources, especially in cases where account books are not mandatory. The voluntary disclosure under the PMGKY scheme played a crucial role in establishing the genuineness of the explanations provided by the assessee.