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Facts
The assessee, an individual, filed her return of income for AY 2017-18 declaring Rs.3,47,870/-. The assessment was selected for scrutiny, and during the demonetization period, the assessee made cash deposits totaling Rs.12,28,500/-. The Assessing Officer (AO) added the entire amount as unexplained income.
Held
The Tribunal held that the assessee had provided acceptable explanations and supporting documents for most of the cash deposits, including rental income, loans from friends and relatives, and gifts. The Tribunal granted credit for these amounts, significantly reducing the addition.
Key Issues
Whether the cash deposits made by the assessee during the demonetization period were unexplained income under Section 69 of the Income Tax Act.
Sections Cited
250, 69, 143(3), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ (SMC
Before: SHRI GEORGE GEORGE K
आदेश/ O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 12.02.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2017-18, return of income was filed on 31.07.2017 declaring total income of Rs.3,47,870/-. The assessment was selected for scrutiny under CASS and notice was issued u/s.143(2) of the Act on 14.08.2018. During the demonetization period, the assessee had made the following cash deposits:- Sl.No. Name of the Bank Account No. Date of Deposit Amount 1 ICICI Bank 278001505207 24.11.2016 4,50,000/- 2 ICICI Bank 278001505207 22.12.2016 1,58,000/- 3 Axis Bank 916010034360498 24.11.2016 4,50,000/- 4 Axis Bank 916010034360498 22.12.2016 1,58,500/- 5 Axis Bank 916010034360498 30.12.2016 12,000/- Total 12,28,500/-
The assessee was directed to explain the source of aforesaid cash deposits. In response, assessee filed a letter dated 21.11.2019 stating as under:- “…Though rental income has to be offered to income tax on yearly basis, the assessee has declared the rental income for the period 2009 to 2016-17 in the assessment year 2017-18. In case if it is added to the returned income it would lead to double taxation. First as income from house property and secondly by way of addition of deposits into bank 3 -: during the demonetization period. With regards to other cash deposits the assessee has availed loan from his friend and relatives and documents have been submitted in this regards….”
Further, the assessee was issued a show-cause notice dated 23.11.2019 proposing to add the cash deposits of Rs.12,28,500/- as unexplained u/s.69 of the Act. Since there was no explanation from the assessee to show-cause notice dated 23.11.2019, the AO completed the assessment by making addition of Rs.12,28,500/- vide order dated 02.12.2019 u/s.143(3) of the Act.
Aggrieved by the assessment order, the assessee filed an appeal before the First Appellate Authority (FAA). Before the First Appellate Authority, assessee sought to explain the source of cash deposit as under:- a. Cash deposit out of Accumulated Rent = Rs.4,50,000/- b. Hand loan from Mr.J M Pratap = Rs.1,50,000/- c. Hand loan from Ms. P. Vimala = Rs.3,00,000/- d. Gift received by Song = Rs.2,20,000/- e. Accumulated Savings = Rs.1,08,500/-
The FAA did not accept the explanation / source of cash deposits. However, the FAA gave credit of Rs.3,47,870/- disclosed by the assessee in her return of income filed.
Aggrieved by the order of the FAA, the assessee has filed the present appeal before the Tribunal. The Ld.AR for the assessee has filed two sets of Paper-book enclosing therein the notices issued and response filed during the course of proceedings before the AO and the FAA, the return of income filed, the confirmation letters issued by various creditors and the tenant of the assessee, the bank statement of the creditors etc. The Ld.AR reiterated the submissions made before the FAA.
The Ld.DR supported the orders of the AO and the FAA.
I have heard rival submissions and perused the material on record. The Ld.AR has submitted the details of rental income received and in support of the same, confirmation from the tenant and rental agreement are placed on record. Hence, I give a further credit of Rs.1,02,130/-. As regards the amount of Rs.1,50,000/- received from assessee’s friend Shri J M Pratap, the FAA by referring to the confirmation issued had stated that the amount withdrawn by Shri Pratap on 07.10.2017 cannot be the 5 -: source of deposit made in the year 2016. In this context, I have gone through the bank statement of Shri Pratap and I find that the cash withdrawal by Shri Pratap was on 07.10.2016. Therefore, the confirmation given by Shri Pratap stating that cash was withdrawn on 07.10.2017 is only a typographical mistake. Hence, I grant credit of Rs.1,50,000/- with regard to the loan given by Shri Pratap to the assessee. As regards loan received from Smt. P. Vimala, I find she is a relative of the assessee (sister-in-law) and there is a clear withdrawal of Rs.3,00,000/- from her bank account on 25.09.2016. The Department does not have a case the amount that was given by Smt. Vimala to assessee has been utilized for some other purpose. Hence, the source of cash deposit to the extent of Rs.3,00,000/- is also allowed. The assessee had claimed a sum of Rs.2,20,000/- as gifts from her parents as well as in-laws. Confirmations from her parents and in-laws are also placed on record. In the confirmation letter of the parents and in-laws, it has been stated that gifts have been given to their grandchild and amounts were handed over to the assessee. I find no reason to disbelieve the confirmation given by the parents and in-laws of the assessee, since the sum of gift is only Rs.50,000/- and Rs.60,000/- each. Accordingly, I grant credit of Rs.2,20,000/-. The balance sum of 6 -: Rs.1,08,500/-, the assessee claimed the same is out of her past savings and also savings of her husband. A women in a household will be having sufficient past saving for the aforesaid sum and I give due credit for the same. In light of the aforesaid reasons, I delete the entire addition sustained by the FAA to the extent of Rs.8,80,630/-. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 3rd July, 2025 at Chennai.