Loading judgment…
Facts
The assessee, a senior citizen, deposited cash into his bank account during the demonetization period. The Assessing Officer treated a portion of these deposits (Rs. 15,30,000/-) as unexplained income under section 69A of the Act. The Commissioner (Appeals) upheld this addition.
Held
The Tribunal held that the assessee, being a senior citizen with his sisters, had explained the source of the cash deposits as withdrawals made from their bank accounts in FY 2015-16. The Tribunal found that the lower authorities had not adequately considered the evidence provided by the assessee, including affidavits and bank statements, and that the revenue had failed to show that the withdrawn cash was not available. Therefore, the addition was deleted.
Key Issues
Whether cash deposits made during the demonetization period, explained as withdrawals from bank accounts in prior financial years, can be treated as unexplained income under Section 69A of the Income Tax Act, particularly for a senior citizen assessee.
Sections Cited
69A, 250, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC-‘C’ BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI, VICE – & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 16/09/2024 in respect of the A.Y. 2017-18 and raised the following grounds: “
1. The order of the learned Commissioner of Income tax (Appeals) passed under Section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
2. The learned Commissioner of Income tax (Appeals) is not justified in law in confirming the addition made by the Assessing officer a sum of Rs. 15,30,000/- as unexplained money under section 69A of the Act on the facts and circumstances of the case.
3. The learned Commissioner of Income tax (Appeals) failed to appreciate explanation and source of cash deposits provided by the appellant during the demonetisation period a sum of Rs. 15,30,000/ - on the facts and circumstances of the case.
The learned Commissioner of Income tax (Appeals) is not justified in law in holding that withdrawals made from time to time since 2011 were kept at home without any valid reason to be deposited back into the bank account in the FY 2016-17 and therefore cash deposits to the extent of Rs. 15,30,000/- remains unsubstantiated on the facts and circumstances of the case.
5. The learned Commissioner of Income-tax (Appeals) failed to consider the advanced age of the appellant and that there is no other source of income of the appellant and consequently erred in confirming the addition made by the learned Assessing officer a sum of Rs. 15,30,000/-on the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) is not justified in law in rejecting the explanation given by the appellant that the deposits in the bank accounts are out of cash withdrawals made by the appellant from his bank account and erroneously made an addition under section 69A of the Act which is arbitrary, based on suspicion, surmise and conjecture on the facts and circumstances of the case.
7. The learned Commissioner of Income-tax (Appeals) failed to appreciate that the provisions of section 69A of the Act is not applicable to the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) failed to adjudicate the ground raised
by the appellant that the addition made under the head income from other sources is bad in law on the facts and circumstances of the case.
9. The learned Commissioner of Income-tax (Appeals) failed to adjudicate the ground raised by the appellant that learned Assessing officer erred in invoking the provisions of section 115BBE of the Act on the facts and circumstances of the case.
10. The Appellant craves leave to add, alter, amend, substitute or delete any or all of the grounds of appeal urged above.
11. For the above and other grounds to be urged during the course of hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.”
2. The assessee was an employee of LIC of India, Bangalore and retired from the service in the year 2002. The assessee deposited the retirement benefits of Rs. 14,40,622/- and the matured amount of LIC policies of Rs. 3,28,499/- in the interest bearing deposits. The assessee having no other income, mainly used the interest income for his livelihood. During the A.Y., the assessee filed his revised return of income declaring a gross total income of Rs. 3,30,860/-. Thereafter the case was selected for limited scrutiny to examine the issue of cash deposits made during the demonetisation period and notices were issued for providing details. The assessee filed his written submissions and after getting details from the bank, the assessment has been completed in which the AO had treated the cash deposits made into his savings bank account as unexplained income of the assessee. The assessee again filed his written submissions on 07/11/2019 and also furnish cash book from 01/04/2011 to 31/03/2017 and submitted that the cash deposits made on 21/11/2016 are nothing but the withdrawals made by the assessee from the above bank. The bank ledger was also produced in support of their claim that the deposited amounts are only from the withdrawals. The assessee also explained that the deposits made by him are cash withdrawals from the retirement benefits and also from the maturity of LIC policies. The AO examined the bank statements furnished and accepted a portion of the deposits as explained and confirmed the balance deposit of Rs. 15,30,000/- as unexplained income u/s. 69A of the Act. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and also produced the documents to show that the cash deposits made by him during the demonetisation period are made out of the withdrawals made by him from 12/05/2015 to 02/07/2016 i.e. during the F.Y. 2015-16. Before the Ld.CIT(A), the assessee also filed copies of the Vijaya Bank pass book, and the Comptroller’s Office Co-operative Bank Ltd. pass book and also the pass book of Shree Charan Souhardha Cooperative Bank Ltd. The Ld.CIT(A) dismissed the appeal on the wrong assumption that the assessee had made regular withdrawals from 2011 to 2016 and therefore the said explanation could not be treated as a valid explanation for the cash deposited during the year 2016-17.
As against the said order, the assessee is in appeal before this Tribunal.
4. At the time of hearing, the Ld.AR filed a paper book enclosing the details of the various bank accounts and the ledger account of the various banks and also the copy of the cash book from 01/04/2012 to 31/03/2017. The Ld.AR also filed a case law compilation and the synopsis in support of their ground that the withdrawn amounts were deposited during the demonetisation period. The assessee also filed an application for accepting the additional evidence in which the assessee had filed a notarised affidavit filed by his two sisters to establish the fact that the assessee and his sisters have withdrawn money on various dates which was later on deposited during the demonetisation period. The Ld.AR further submitted that even though the documents were produced before the Ld.CIT(A), the Ld.CIT(A) had dismissed the appeal on the impression that the monies were withdrawn from the year 2011 and therefore the said explanation could not be accepted as a valid reason for the deposits made in the F.Y. 2016-17.
The Ld.AR further submitted that the assessee is a senior citizen aged about 82 years and he has no other income except the pension and interest income and therefore submitted that the addition made u/s. 69A of the Act is not correct. The Ld.AR further submitted that for the each and every withdrawal, the details are available and the withdrawals are also in the F.Y. 2015-16 and therefore the finding of the Ld.CIT(A) that the withdrawals are from the year 2011 and therefore it could not be accepted as a valid reason for the cash deposits made during the A.Y. 2016-17 is not correct.
6. The Ld.DR relied on the orders of the lower authorities and also submitted an order of this Tribunal in case of Shri Keshav Murthy vs. ITO in IT(IT)A No. 705/Bang/2022 vide order dated 28/11/2023 and prayed to dismiss the appeal filed by the assessee.
We have heard the arguments of both sides and perused the materials available on record.
8. First we will consider the application filed for accepting the additional evidences in support of the submission that the cash was withdrawn from the bank accounts of his sisters and later on it was deposited into the bank accounts of the assessee during the demonetisation period. Before the AO as well as before the Ld.CIT(A), the assessee had contended that the cash was withdrawn from the SB accounts of the assessee as well as his two sisters and therefore the additional evidence filed before us are nothing but supporting evidence. Therefore we are admitting the additional evidences filed in the form of notorised affidavits filed by the assessee’s sisters Ms. Kaveri HK and Ms. Bhanumathi HK.
In the present appeal before us, the assessee had disputed the cash deposits made during the demonetisation period as unexplained investments u/s. 69A of the Act.
From the paper book filed by the assessee and the synopsis, we found that the assessee had explained the details of the cash deposits made during the demonetisation period. All the bank account statements, ledger accounts and the cash book details were produced by the assessee before the AO as well as before the Ld.CIT(A). We have also considered the fact that the assessee is a retired employee from the LIC of India aged about 82 years and also an unmarried person living with his two sisters Ms. Kaveri HK and Ms. Bhanumathi HK who are also unmarried. All the three were residing together and almost all the three are senior citizens and they also don’t have any other source of income except the pension and the interest income from the deposits. The various bank accounts and the ledger copy of the banks would establish the fact that the assessee had withdrawn amounts on various dates in the F.Y. 2015-16 and deposited the said amount on the announcement of demonetisation into his bank account otherwise the monies withdrawn by him or her would not be of any use to them. The assessee also explained the fact that how the said amount of Rs. 16,10,000/- was deposited into the bank account of the assessee. The amounts withdrawn by the assessee’s sisters on various dates could not be deposited into their bank account since the bank is situated 10 Kms. away from their residence. Therefore the assessee’s sisters were not able to go to the bank for depositing the SBN. Further, the banks also insisted for the physical presence of the account holder while depositing the said SBN during the Demonetisation. In such circumstances, the two sisters have handed over the cash to their brother and the assessee with great difficulty deposited the entire amounts in his bank account.
In the synopsis filed by the assessee in par no. 4, the assessee had explained the details of the amounts withdrawn on which date and the details of the bank account from which the amount was withdrawn which comes about Rs. 16,10,000/-. The AO had accepted the cash withdrawals made on 17/10/2016, 10/05/2016 and 18/05/2016 from the account of his sister but not considered the other withdrawals made by the assessee as well as his sisters. For the easy reference, we are extracting para no. 4 of the synopsis which reads as follows:
We have also perused the notarised affidavits filed by the assessee’s sisters about the cash withdrawals and the deposits made into the Vijaya Bank account of the assessee and the reason for the said deposits into the bank account of the assessee. From the various documents filed by the assessee and also based on the details submitted by the assessee in para no. 4 of the synopsis, we are of the view that the assessee had explained the source for the cash deposits made during the demonetisation period. We have also considered the peculiar facts of the case that the assessee is a Super Senior citizen aged about 82 years and his two sisters who are also senior citizens and having no other source of income except the pension and the interest from the deposits. Therefore, we conclude that the assessee had explained the source for the cash deposits made during the demonetisation period. We have also considered the fact that the AO had also no materials to substantiate that the assessee is having some other source of income which was not disclosed to the department, in order to treat the said deposits as unexplained investment u/s. 69A of the Act.
We have also considered the orders passed by the Coordinate Bench of this Tribunal which was relied on by the assessee in which this Tribunal following the judgement of the Hon’ble Jurisdictional High Court in case of S.R. Venkata Ratnam vs. CIT reported in (1981) 127 ITR 807, had held that to disbelieve the plea of the assessee that the cash withdrawals are there, the revenue must show that the previous withdrawal of cash would not have been available with the assessee on the deposit of cash in the bank account. The above finding given by the Coordinate Bench of this Tribunal in case of Shri Narayana Shibaroor Shibaraya vs. ITO in dated 23/11/2022 will squarely apply to the facts of the present case on hand.
We have also considered the order of this Tribunal in case of Shri Girigowda Dasegowda in dated 10/08/2022 in which the Tribunal had given the following finding.
“9. I have carefully considered the rival submission. The Hon'ble Karnataka High Court in the case of Smt. P. Padmavathy (supra) clearly laid down that earlier withdrawals of cash from Bank account have to be accepted as available to an assessee to explain a later deposit as source. The Hon'ble Court held that it was not open to the Revenue to contend that the assessee has to explain as to how the cash withdrawn earlier was utilized by an assessee and was still available with the assessee. The decisions cited by the learned DR are contrary to the law laid down by the Hon'ble Karnataka High Court and therefore not binding. I, therefore, hold the past withdrawals as claimed by the assessee from 2013 should be considered as being available to the assessee to explain the source of deposit. We are also of the view that a reasonable quantum of cash available out of past savings should also be considered as being available to the assessee to explain the source of cash deposited in the bank account.”
The two orders cited by the assessee were based on the judgement of the Hon’ble Jurisdictional High Court and therefore the same could be applied to the facts of the present case.
We have also perused the order of the Tribunal made in IT(IT)A No. 705/Bang/2022 dated 28/11/2023 relied on by the Ld.DR in which the facts are different from the facts available in the present case. In the order relied on by the Ld.DR, the Tribunal had not accepted the cash withdrawals since the withdrawals are as low as Rs. 300/- and average of Rs. 1000/- over a long period of time. The said amounts were also withdrawn from ATM and therefore the Ld.CIT(A) had held that it is apparent that the withdrawals have been made towards various cash expenses of the assessee and his family. The Ld.CIT(A) further held that if the assessee wanted any cash withdrawal for safekeeping or for any deposits, he could have made it directly from the banks in larger denominations. Considering the said facts, the Ld.CIT(A) had rejected the explanation offered by assessee in the said case which was later on affirmed by the Tribunal in the above said order.
The facts of the present care are entirely different. In the present case, the assessee had proved with documents that large withdrawals were made since the assessee and his two sisters are elderly persons and they are not able to visit the bank often for the purpose of withdrawal. In the present case, the assessee is also a super senior citizen and his sisters are also senior citizens and the withdrawals were made in the F.Y. 2015-16 which was later deposited during the demonetisation period in the bank account of the assessee. The reasons for the deposits into the bank account of the assessee is that the bankers insisted for the physical presence of the account holders for deposits during the demonetisation period and the assessee’s sisters would face difficulty to travel and therefore the assessee had put the money withdrawn by himself as well as his sisters into his bank account. Therefore, the order relied on by the Ld.DR could not be cited as a precedent for the facts of the present case.
We, therefore, accepted the grounds raised by the assessee and allow the appeal filed by the assessee by setting aside the order of the AO as well as the Ld.CIT(A).
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 30th June, 2025.