2025 (2) TMI 600 - AT - Income Tax

Addition u/s 69A - unexplained deposit - Addition invoking the provisions of Section 115BBE - HELD THAT - It is pertinent to note that the assessee is staying in USA alongwith her daughter who is a widow. The assessee received pension as she retired from Town Planning Valuation Department. Assessee being a patient with heart problem keeps the cash in hand for the medical emergencies and the cash in hand has been explained by the assessee through her pension details as well as the consideration of the property/flat sold at a particular period. Thus the assessee has in detail explained the cash deposits which was totally ignored by the AO as well as by the CIT(A). Hence appeal of the assessee is allowed.

Summary

The appeal in this case was filed by the Assessee against an order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18. The main issues raised by the Assessee were related to the addition of cash deposits in the bank account and alleged unexplained deposits under Section 69A of the Income Tax Act, 1961. The Assessee also challenged the computation of demand under Section 115BBE of the Act.The Notice under Section 142(1) of the Income Tax Act, 1961 was issued to the Assessee, calling for the preparation of a true and correct return of income for the Assessment Year 2017-18. The Assessee failed to comply with the notice, and it was discovered that the Assessee had deposited a significant amount of cash in her bank account during the demonetization period. The Assessing Officer deemed the cash deposits as unexplained/undisclosed money and taxed it under Section 115BBE of the Act at a rate of 60%. Additionally, the Assessing Officer made an addition for undisclosed Long Term Capital Gain.The Assessee contended that the cash deposits were related to withdrawals made prior to demonetization, as the Assessee was a retired pensioner with health issues requiring cash for medical emergencies. The Assessee explained that the cash deposits were from the sale of property and furniture, and were in line with her financial transactions.After considering the arguments from both parties, the Tribunal found that the Assessee had provided detailed explanations for the cash deposits, which were not considered by the Assessing Officer or the CIT(A). The Tribunal noted that the Assessee's pension income, property sale proceeds, and medical condition justified the cash deposits. As a result, the appeal of the Assessee was allowed.In conclusion, the Tribunal ruled in favor of the Assessee, finding that the cash deposits were adequately explained by the Assessee's circumstances and transactions. The Tribunal emphasized that the Assessee's explanations were reasonable and sufficient to justify the cash deposits, overturning the decisions of the lower authorities.