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Facts
The assessee deposited Rs. 25 lakhs in cash into her HDFC bank account during the demonetization period. The Assessing Officer treated this as unexplained income and added it to her total income under Section 115BBE. The assessee claimed the funds were withdrawn from her Korean bank account and represented accumulated NRI funds.
Held
The Tribunal held that the assessee had substantially explained the cash deposit during the demonetization period by providing sufficient evidence of cash withdrawal from her Korean bank account. The lower authorities did not give any adverse comments on this evidence.
Key Issues
Whether the cash deposit made by the assessee during the demonetization period was sufficiently explained to be considered as income under Section 69A and consequently taxed under Section 115BBE.
Sections Cited
143(2), 143(3), 144C, 69A, 115BBE, 254(1)
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of Ld. CIT(A)/NFAC dated 21.05.2024 for assessment year (AY) 2017-18. The assessee has raised following grounds of appeal:
1. 1. (a) The notice issued u/s 143(2) of the Act, 1961 dated 27.09.2018 issued without jurisdiction is non-est. and bad in law. (b) The assessment order passed u/s 143(3) of the Act dated 20.11.2019 without jurisdiction and without issuing draft order u/s 144C of the Act is invalid, non-est and bad in law. 2 a) The Ld. NFAC erred in law and facts in confirming the addition of Rs 25,00,000/-, being the amount of cash deposited in HDFC bank u/s 69A of the Act without considering the details, documents and evidences submitted by the appellant. b) The Addition of Rs. 25,00,000/- u/s 69A of the Act is ultra vires the provision of the Act read with Article 22 of India Korea DTAA.
3. All the above grounds are independent and without prejudice to each other.
The Appellant craves leave to add, amend, delete and modify the above grounds of appeal.”
Brief facts of the case are that assessee is individual and filed her return of income for A.Y. 2017-18 on 17.08.2017 declaring income of Rs. 2,81,780/-. Case was selected for scrutiny on the issue of cash deposit during demonetization period. During the assessment, the assessing officer noted that assessee has made cash deposit of Rs. 25.00 lakhs with HDFC Bank. The assessing officer issued notice under section 133(6) to HDFC Bank seeking KYC details and details cash deposit during the period on 09.11.2016 to 30.11.2016. The HDFC Bank informed that assessee made cash deposit of Rs. 25.00 lakhs in her HDFC Bank account on 12.11.2016. The assessing officer was of the view that assessee has not offered such cash deposit in her income tax return nor offered income from her other activities i.e. business activities or otherwise. The assessing officer treated the cash deposit as unexplained money by taking view that she has not offered any acceptable and cogent explanation regarding source of such cash deposit. The assessing officer added Rs. 25.00 lakhs in the income of assessee and taxed at @60% under section 115BBE of the Act.
Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detailed statement of fact and her submission. In the statement of fact, assessee stated that she deposited the money from her Korean Bank account. The assessee was not maintaining books of account. She was having no source of income except income from other sources (interest). No fair and proper opportunity was given by assessing officer. The assessee was out of India for substantial period and on returning to India made her based in Ajmer Rajasthan and was migrated to Mumbai only a few months before assessment. The assessing officer has not given opportunity of hearing. The assessee provided details of bank account to the assessing officer. The assessee provided NRI Savings Bank Account on 15.02.2017. Further, the assessee in response to show cause notice by ld. CIT(A) filed her submission. The submission of assessee is recorded on page no. 11 to 14 of impugned order. The assessee in her submission submitted that she has withdrawn cash from her bank account in Shinhan Bank, Korea through ATM at HSBC Bank Andheri West, Mumbai. Bank statement was also furnished. The cash withdrawal through ATM was re-deposited in HDFC Bank. The cash deposit is not an income of assessee, in fact, it is withdrawal from own accumulated NRI funds. The assessee also submitted that section 69A is not applicable. The assessee was also having other savings as per the habit of ladies in India. The assessee made prayer to entire additions.
4. The ld. CIT(A) after considering the submission of assessee noted that assessee while filing return of income has declared income of Rs. 2,81,780/-. During assessment, the assessee furnished filer her submission. The assessing officer obtained information from HSBC Bank. The assessee made cash deposit during demonization period. The ld. CIT(A) further noted that on perusal of details, he finds that assessee received refund from Seoul Club on cancellation (surrender) of her membership. The assessee stated that she has no independent source of income and cash deposit includes refund from Seoul Club membership. The assessee has not furnished any evidence about creditworthiness of her spouse. The ld. CIT(A) held that submission of assessee are not completed and not acceptable and confirmed the addition. Further, aggrieved the assessee has filed present appeal before Tribunal.
I have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and have gone through the orders of lower authorities carefully. The ld. AR of the assessee submits that there is delay of 338 days in filing appeal before Tribunal. The assessee has filed her affidavit for seeking condonation of delay. The learned AR of the assessee submits that assessee was non-resident and due to long standing residence abroad she was not aware about income tax compliances. She was dependent on her tax consultant and was under bonafide belief that her tax consultant was taking care of her appeal. The tax consultant has not informed about the dismissal of appeal. When penalty notice was issued in June 2025, the assessee immediately approached another consultant who advised to file appeal against the dismissal order in quantum assessment. Copy of penalty notice is filed on record. And further enquiry from ITBA portal it was revealed that appeal of assessee was dismissed in May 2024. The delay in filing appeal is neither intentional not deliberate. The assessee has good case on merit and is likely to succeed if her appeal is heard on merit. On merit the learned AR of the assessee submits that entire cash deposit in the bank account during demonetisation period was from the cash withdrawal from her own bank account with Shinhan Bank, Korea. The assessee made cash withdrawal through ATM of HSBC Bank and furnished bank statement of Shinhan Bank, Korea as well as the translation of bank statement. The assessee furnished complete reconciliation of cash deposit. The assessee made total cash withdrawal of more than Rs. 29.83 lakhs and deposited only ₹ 25.00 lakhs during demonetisation period in the form of specified bank note (SBN). The assessing officer and the CIT(A) disregarded all the documentary evidences, which clearly substantiate the cash deposit. The assessee right from the beginning contended that she was not having independent source of income. The cash withdrawal and ultimate cash deposit was on account of cancellation/surrender of the Club membership and other, pat saving and money received from her husband. Entire amount withdrawal was l from her bank account. There was no other cash deposit in the account of assessee. The learned AR of the assessee prayed for allowing full relief to the assessee.
On the other hand the learned senior DR for the revenue supported the order of lower authorities. The learned senior DR for the revenue submits that before assessing officer the assessee has not furnished complete details, however before CIT(A)l the assessee has not furnished the details of source of income of her husband. On the plea of condonation of delay raised by learned AR of the assessee, the learned SR DR of the revenue submits that bench may take decision in accordance with law.
In short rejoinder submission the learned AR of the assessee submits that entire cash deposit was in fact from cash withdrawal which is clearly discernible from the bank statement furnished by the assessee along with its true English translation.
I have considered the rival submission of both the parties and have gone through the orders of lower authorities carefully. Firstly, I will consider the plea of condonation of delay in filing appeal by assessee. I find that the assessee has taken the plea that she had appointed tax consultant who has not informed about dismissal of appeal and that she has came to know about dismissal of appeal when notice of penalty was served. To support her contention the assessee has filed her affidavit and the copy of penalty notice. Considering the fact of the case I am satisfied that delaying filing appeal is neither intentional nor deliberate thus delaying filing appeal is condoned. Now adverting to merits of the case. There is no dispute about cash deposit during demonetisation period of ₹ 25.00 lakhs by assessee. I find that in response to show cause notice by assessing officer, the assessee filed a reply as recorded in paragraph 4.1 of assessment order. The assessee stated that cash deposited in bank account during demonetisation period was from cash accumulated from his previous withdrawal and was redeposit in bank. Before ld CIT(A), the assessee filed detailed written submission and explained that the cash was withdrawn through ATM of HSBC bank from her Shinhan Bank, Korea. The assessee also furnished the statement of her bank account along with its true English translation. I find that assessee has shown total cash would drover of Rs. 29,83,000/- from 6th July 2016 to 19th September 2016. Out of total cash withdrawal of about ₹ 30 lakhs (Approx), the assessee has made cash deposit in the form of specified banknote of ₹ 25.00 lakhs only. I find that despite furnishing sufficient evidence about the cash withdrawal from her bank account and deposited in her Indian bank account, the lower authorities have not given any adverse comment. On independent of consideration of fact I find that assessee has substantially explained the cash deposit during demonetisation period. Thus, ground No. 2 (a) of the appeal is allowed. Considering the fact that I have allowed relief on merit therefore adjudication on other grounds of appeal have become academic. 9. in the result appeal of the assessee is allowed Order was pronounced in the open Court on 10/10/2025.