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TMI Blog2022 (11) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... their past savings, therefore assessee should be allowed a blanket exemption of Rs. 5,00,000/- in view of instructions of CBDT, as the wife of the assessee did not have any other operational bank account and hence she has deposited her household savings in the same bank account of Axis bank where she is also a nominee - CBDT Instructions also clearly states that only the amount above the cut-off may require verification. Therefore, assessee is entitled to claim a blanket exemption of Rs. 5,00,000/- (Rs.2,50,000/- assessee himself and Rs.2,50,000/- for wife) in view of instructions of CBDT. Assessee is regular in filing his Return of Income for more than nine years and has already shown his books of accounts and submitted the same to the Assessing Officer to show that he has sufficient cash balance to justify cash deposit during demonetization and hence no adverse view should be drawn in absence of any finding that the cash withdrawn is used for any unaccounted income or any unaccounted asset. Demonetization was a compulsion event and hence it has to be viewed differently from normal cash deposits. We also note that submission was furnished by the assessee to assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 10.09.2018 and duly served upon the assessee. Subsequently, notice 142(1) of the Act cum questionnaire was issued on 28.08.2019 09.11.2019 and served upon the assessee. In response to these notices issued, the assessee furnished his reply/ submission/explanation enclosing I.T. Return, computation and statement sowing cash on hand on 01.04.2016. The assessing officer examined the details submitted by the assessee. 4. During the course of assessment proceedings, it was observed by the assessing officer that assessee has deposited cash amounting to Rs.10,20,000/- during demonetization period. All the deposited amount was denomination notes (old notes) during 09.11.2016 to 31.12.2016. The assessee was asked to explain the cash deposit. In response, the assessee replied to the assessing officer that cash deposited out of his cash on hand, withdrawal and past savings. However, assessing officer, rejected the contention of the assessee and held that assessee failed to explain the cash deposit with documentary proof/evidence. Therefore, assessing officer treated Rs.10,20,000/- as unexplained cash credits and added to the total income of the assessee. 5. Aggrieved by the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts. III. Copy of Bank Passbook is already submitted in our earlier submission dated 03.09.2019 via acknowledgment number 03091911539213. IV. During the year under consideration assessee is salaried employee with HK HUB Diamonds LLP. Copy of Form 16 is submitted in our earlier submission. V. During the year under consideration, assessee has deposited cash amount in bank account out of earlier income, cash withdraw from bank and past savings. During the year under consideration assessee is salaried person and received salary income through banking channel and withdraws cash from bank out of salary received. However, cash deposits are duly accounted for in the books of the assessee on the credit side of the cash flow statement. Assessee is also assessed to tax and regularly filed his income tax return since long time. I have mentioned herewith information of Gross total income. Income tax paid and cash on hand available at the end of the respective financial year of last 9 years:- VI. Details of the Cash Deposits in Bank are as under: VII. This point is not applicable as assessee is not doing any business activity for FY. 2015-16 2016- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saving bank account in her name, therefore assessee`s wife deposits her pin money, savings, gift received from father-in- law and estreedhan received from father-in-law etc. 9. Taking into account, the facts narrated above, we note that Instruction issued by the CBDT should be considered, vide Press Release dated 18.11.2016 and Guidelines for Verification of Cash deposit during demonetization to the AO vide Instruction No. 3/2017[ F.NO. 225/100/2017/ITA-II] dated 21.2.2017 and annexure thereof issued under section 119 of Income Tax Act, which are discussing and providing a blanket exemption of Rs. 2,50,000/- per person. In the Press release dated 18.11.2016 also, it was stated that: It was announced by the Government earlier that small deposits made in the banks by artisans, workers, housewives, etc. would not be questioned by the Income Tax Department in view of the fact that present exemption limit for Income Tax is Rs.2.5 lakh . 10. The relevant excerpts of Instruction No. 3/2017[F.NO. 225/100/2017/ITA-II] dated 21.02.2017, in Annexure- Source Specific General Verification Guidelines states as follows: 1 Cash out of earlier income or savings: In case of an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may require verification. Therefore, assessee is entitled to claim a blanket exemption of Rs. 5,00,000/- (Rs.2,50,000/- assessee himself and Rs.2,50,000/- for wife) in view of instructions of CBDT. 13. So far the balance amount is concerned, it is Rs.5,20,000/- ( 10,20,000- Rs.5,00,000). Against the additional amount deposited of Rs. 5,20,000/-, if we weigh the same against the criteria mentioned in the said Instruction of CBDT to support the same, that is: (i) income earned during past years and its source, (ii) filing of Return of Income and income shown therein, (iii) cash withdrawals made by the assessee. We note that assesses succeeds on all these above three criteria because he is regularly filing return of income (ROI) and has already made a chart during assessment proceedings of last nine years showing total gross income of Rs.21,67,215/- and further the cash withdrawals of Rs.9,35,000/- in immediate three years is more than sufficient to cover the amount of Rs.5,20,000/-. The ld Counsel has also explained that due to the nature of service/source and social needs being fulfilled by employer and staying in joint family with elder brother, the drawings are negl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cash in bank accounts and if nothing incrementing is found contrary then addition u/s 68 of such cash sale would tantamount to double taxation. Particularly, in the said judgement, the Tribunal remarked that it was observed that the intention of the Legislature behind introduction of section 115BBE was not to bring to tax genuine cash credits already offered to tax as income by the Assessee at higher tax rates. Such an interpretation would lead to recurring attempts on the part of the Revenue Authorities to reject genuine explanations offered by the Assessee with respect to sums credited/offered as income in its books as unsatisfactory solely to extort higher rates of taxes thereon u/s 115BBE of the Act. The A.O in exercising his powers u/s 68 of the Act is not vested with unfettered powers to reject any explanation as being not to his satisfaction merely on the basis of surmises and conjecture. The AO is bound under law to act reasonable and just while framing any satisfactory opinion surrounding the explanation offered by the taxpayer. From the facts of the case at hand, it is clear that the A.O has acted unreasonably and capriciously in rejecting the genuine explanations of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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