SENTHIL THANGAM,DHARMAPURI vs. ACIT,CIRCLE-1, HOSUR
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA. G, HON’BLE
आदेश / O R D E R PER MANJUNATHA.G, AM: This appeal filed by the assessee is directed against the order of the
Commissioner of Income Tax (Appeals), Income Tax Department, National
Faceless Appeal Centre (NFAC), Delhi, dated 13.03.2023, and pertains to
assessment year 2017-18.
The brief facts of the case are that the assessee is an individual and
is a Medical Practitioner and runs hospital under the name and style of
M/s.Thangam Hospital. The assessee has filed its return of income for AY
2017-18 on 30.10.2017 declaring total income of Rs.53,81,550/-. The case
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was selected for scrutiny to verify the large cash deposits in the bank
account during demonetization period. During the course of assessment
proceedings, the AO noticed that the assessee has deposited a sum of
Rs.13,62,180/- and out of the same, cash deposited in Specified Bank
Notes (in short “SBNs") of Rs.4,62,500/-. The AO further noted that the
closing cash balance of the assessee as per books as on 08.11.2016 is at
Rs.6,89,638/-. Therefore, considering relevant facts, the AO has allowed
credit for cash deposits of Rs.2,55,000/- against opening balance towards
cash deposits on 12.11.2016 & 13.11.2016. The balance amount of cash
deposits of Rs.2,07,500/- has been added u/s.69A r.w.s.115BBE of the
Income Tax Act, 1961 (in short “the Act"), on the ground that the assessee
has deposited cash into bank in SBNs, beyond reasonable time. The
assessee carried the matter in appeal before the First Appellate Authority,
but could not succeed. The Ld.CIT(A) for the reasons stated in their
appellate order dated 13.03.2023, dismissed the appeal filed by the
assessee and upheld the additions made towards cash deposits u/s.69A of
the Act. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal
before us.
The Ld.AR for the assessee submits that the Ld.CIT(A) erred in
sustaining addition made towards cash deposits of Rs.2,07,500/- u/s.69A
of the Act, without appreciating the fact that as per the observations of the
AO itself, the assessee is having opening cash balance as on 08.11.2016
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and cash deposits into bank account is explained out of known source of
income.
The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A),
submits that the AO has allowed credit for opening balance wherever the
assessee has deposited within a reasonable period of time, but made
addition towards cash deposits beyond specified period, because, the
assessee could not explain the reasons for cash deposits in SBNs after
reasonable time. Therefore, there is no error in the reasons given by the
Ld.CIT(A) to sustain the additions made by the AO, and their orders should
be upheld.
We have heard both the parties, perused the materials available on
record and gone through orders of the authorities below. There is no
dispute with regard to the fact that the assessee has deposited a sum of
Rs.4,62,500/- in SBNs during demonetization period. It is also not in
dispute that the closing cash balance of the assessee as on 08.11.2016 is
at Rs.6,89,638/-. In fact, the cash deposits during demonetization period
in SBNs is less than the cash balance available with the assessee as on
08.11.2016 as per books of accounts. The AO is not disputing the above
facts, but made addition of Rs.2,07,500/- only on the ground that the
assessee has deposited cash in SBNs beyond reasonable period. In our
considered view, when the RBI has permitted the public to deposit in SBNs
in to bank account up to 31.12.2016, then, the AO cannot question the
period of deposit of cash when such cash deposits were made within the
ITA No.639/Chny/2023 :: 4 ::
time allowed by the RBI. In this case, the assessee has deposited cash in
SBNs on or before 31.12.2016 which is the last date for depositing cash
into bank account, and further, the assessee has also explained source for
cash deposits is out of opening cash balance available as on 08.11.2016.
Therefore, we are of the considered view that the AO and the Ld.CIT(A) are
completely erred in making addition towards cash deposits u/s.69A of the
Act. Hence, we direct the AO to delete addition made towards cash deposits
u/s.69A of the Act.
In the result, appeal filed by the assessee is allowed.
Order pronounced on the 28th day of June, 2023, in Chennai.
Sd/- Sd/- (वी. दुगा� राव) (मंजूनाथा.जी) (MANJUNATHA.G) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 28th June, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�/CIT 5. गाड� फाईल/GF 2. ��यथ�/Respondent 4. िवभागीय �ितिनिध/DR
