HIRABHAI KARSHANBHAI SOLANKI,RAJKOT vs. INCOME TAX OFFICER WARD 2(2)(3), RAJKOT

Brief facts of the case are that information was received from the ITBA system/Insight Portal that the assessee had undertaken certain financial transactions during Financial Year 2018–19 relevant to Assessment Year 2019–20, namely cash deposits of Rs.2,50,000/- and cash withdrawals of Rs.62,33,000/- in Bank of Baroda. Despite such financial transactions, the assessee had not filed the return of income for the year under consideration. Proceedings under section 148A(b) of the Income Tax Act were initiated. The assessee did not comply with the notices issued and in absence of any explanation from the assessee, an order under section 148A(d) of the Act was passed and notice under section 148 was issued. During the course of assessment proceedings, several opportunities were granted to the assessee. In response, the assessee filed return of income and submitted that he is a retired Government teacher and amounts deposited in his bank account represented retirement benefits received upon superannuation. The assessee also furnished a table containing details of credit entries in the bank account and copies of bank statements. However, according to the Assessing Officer, the assessee could not furnish sufficient documentary evidence to substantiate his claims. The Assessing Officer observed that an amount of Rs.11,00,000/- credited in the bank account was not properly explained. Consequently, the said amount was treated as unexplained money under section 69A of the Act and taxed under section 115BBE. Further, the assessee claimed deductions under Chapter VI-A amounting to Rs.1,99,690/-, comprising:  Deduction under section 80C : Rs.1,22,190/-  Deduction under section 80TTA : Rs.2,500/-  Deduction under section 80U : Rs.75,000/-.

Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A), who granted partial relief under Chapter VI-A restricted the deductions to the extent of Rs.1,74,120/- and relief of Rs.23,070/- has been granted.

Still aggrieved, the assessee is in appeal before us. During the course of hearing, the learned Authorised Representative submitted that the amount of Rs.11,00,000/- represented merely a transfer of funds from Axis Bank account to Bank of Baroda account through RTGS on 07.08.2018 and therefore did not constitute unexplained income. Copies of bank statements placed in the paper book were relied upon. On the other hand ld. D.R. supported the order of the authority below but could not controverted the fact.

We, after considering the material available on record, we find that the bank statements clearly establish that the amount of Rs.11,00,000/- was merely a transfer of funds from one bank account of the assessee to another bank account of the same assessee. Accordingly, the source of the amount stands satisfactorily explained and therefore addition under section 69A cannot survive. Accordingly, we direct deletion of addition of Rs.11,00,000/-.

Regarding deduction under Chapter VI-A, we find that the assessee has produced supporting documents including LIC premium receipts amounting to Rs.96,260/- and notified mutual fund investment receipts amounting to Rs.25,930/- in support of deduction claimed under section 80C. Similarly, deduction claimed under section 80TTA for Rs.2,500/- towards savings bank interest is found reasonable. Further, with regard to deduction under section 80U of the Act, the assessee has produced disability certificate issued by the competent medical authority and assessee also personally appeared before us establishing the disability claim. Such evidence cannot be ignored. Accordingly, the assessee is entitled to deduction under section 80C, section 80TTA and section 80U of the Act. Accordingly, we direct deletion of entire addition of Rs.1,97,190/- as made by the AO. With regard to the addition of Rs.87,338/- towards salary difference, we find that the discrepancy arose due to an incorrect interpretation of entries appearing in the bank statement. The actual salary and pension income received by the assessee from April 2018 to March 2019 was Rs.5,07,225/- and not Rs.5,94,563/- as considered by the Assessing Officer. Thus, the addition of Rs.87,338/- was made on account of incorrect appreciation of facts and deserves to be deleted. Accordingly, we direct deletion of the addition of Rs.87,338/-. Regarding the addition of Rs.50,000/- treated as unexplained money under section 69A, the assessee has furnished details of six persons from whom the amounts were received along with their Aadhaar card details and supporting confirmations. The assessee explained that the amount represented repayment of loans advanced by him in earlier years. In our view, the assessee has satisfactorily explained the source of the amount and therefore the addition of Rs.50,000/- also deserves to be deleted.

Accordingly, the Assessing Officer is directed to delete the additions made in the hands of the assessee.

In the result, the appeal of the assessee is allowed.