SRI VIJAY DEVARAJE URS,MYSORE vs. THE INCOME TAX OFFICER, (INTERNATIONAL TAXATION),WARD-1(1), BANGALORE

The assessee is aggrieved by the decision of the learned CIT(A) in confirming the addition of Rs.10,00,000/- relating to cash deposits made during the demonetisation period.

The facts relating to the case are stated in brief. The assessee is a non-resident and it was noticed that he has deposited a sum of Rs.10,00,000/- in his bank account maintained with the Canara Bank during the demonetisation period. Since the assessee did not file return of income, the AO reopened the assessment under Section 148 of the Income Tax Act, 1961 (hereafter "the Act").

Before the AO the assessee explained that he had earlier given a loan of Rs.9,25,000/- to his sister-in law (brother’s wife) and it has been 2 IT(IT)A No. 311/Bang/2022 Shri Vijay Devaraje Urs returned back during the year under consideration by the brother of the assessee named Shri Devraj Krishna Urs. It was stated that a sum of Rs.8,00,000/- received from his brother and the savings of Rs.2,00,000/- made out of cash withdrawn from his bank account on earlier occasions, both put together were used to make the deposit of Rs.10,00,000/-. Accordingly the AO issued a notice under Section 133(6) of the Act to the assessee’s brother asking for his explanations. Shri Devraj Krishna Urs furnished a reply wherein he stated that he has deposited Rs.10,00,000/- in the assessee’s bank account out of withdrawals made by him from his bank account. He confirmed that the assessee has given loan of Rs.9.25 lakhs to his wife and the same has been repaid. The AO noticed that there was contradiction between the reply given by the assessee and his brother. While the assessee has stated that he has used a sum of Rs.8,00,000/- received from his brother, the assessee’s brother has replied that he has deposited Rs.10,00,000/- out of cash withdrawals made from his bank account. Accordingly, the AO rejected the explanations of the assessee and made the addition of R.10,00,000/- under Section 69 of the Act. The learned CIT(A) confirmed the same and hence the assessee has filed this appeal before the Tribunal.

I heard the parties and perused the record. I noticed that the assessee as well as his brother acknowledged the fact that the assessee has given a sum of Rs.9.25 lakhs to his brother’s wife, named Mrs. Prapulla during FY 2014-15. At the time of hearing, the Ld A.R took me through the bank account of the assessee, to show that payment of Rs.9.25 lakhs to Smt. Prapulla has been made in different instalments. However, the case of the tax authorities is that there is contradiction between the assessee and his brother in explaining the sources. The assessee has stated that the amount of Rs.10,00,000/- was deposited in his account consisted of loan repayment amount of Rs.8,00,000/- and cash withdrawal amount of Rs.2,00,000/- made from his bank account, the assessee’s brother has stated that he himself has deposited Rs.10,00,000/- out of withdrawals made from his bank account.

In the result, the appeal filed by the assessee is allowed.