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Facts
The assessee filed a return of income and it was selected for limited scrutiny regarding cash deposits during demonetization. Notices were issued, and the assessee explained the cash deposits as withdrawals from previous years' salary, kept in cash at home due to apprehension of claims from his divorced wife. The Assessing Officer treated a significant portion of the cash deposit as undisclosed income under Section 69A.
Held
The Tribunal upheld the decision of the CIT(Appeals) that a portion of the cash deposit could be explained by withdrawals from previous years' salary, but found the assessee's claim for the entire amount to be unsubstantiated. The Tribunal confirmed the addition of Rs. 26,68,000/- as undisclosed income.
Key Issues
Whether cash deposits made during the demonetization period, claimed to be from earlier cash withdrawals due to marital disputes, constitute undisclosed income. Whether Section 115BBE is applicable for AY 2017-18.
Sections Cited
139(1), 143(1), 143(2), 142(1), 69A, 115BBE
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
The present appeal is directed at the instance of assessee against the order of Id. Commissioner of Income Tax (Appeals), (A.Y. 2017-2018) Tapas Kundu National Faceless Appeal Centre (NFAC), Delhi dated 18.06.2025 passed for Assessment Year 2017-2018.
Brief facts of the case are that the assessee is an individual, who filed his return of income under section 139(1) of the Income Tax Act, 1961 disclosing total income of Rs.9,50,070/-. The said return of income was subsequently processed under section 143(1) of the Income Tax Act. The case was selected for limited scrutiny through CASS for examination of cash deposit during demonetization period. Accordingly notices under section 143(2) and 142(1) of the Act were issued and served on the assessee electronically through e-proceeding module. The assessee was also asked by issuing notices under section 142(1) of the Act to furnish or cause to be furnished the relevant accounts and documents electronically in e-proceeding facility through his account in e- filing portal. In response, the assessee furnished the details, clarifications and supporting evidences electronically as well as physically through speed post. The assessee has shown Rs.11,00,070/- as his gross total income. Out of which, Rs.10,24,370/- was declared as income from salary and Rs.75,700/- as income from other sources. The assessee’s salary (A.Y. 2017-2018) Tapas Kundu was directly credited to his bank account and the other source of income was also credited to his bank accounts. Th assessee has stated that he had not received any cash during the relevant financial year. From the record, it is seen that the assessee’s total income for last eight years excluding the year under consideration is Rs.46,12,693/- and he had paid taxes of Rs.3,87,560/-. The assessee stated that all the cash withdrawals were utilized for domestic purposes and meeting unforeseen medical needs and emergencies. The assessee further stated that the cash of Rs.39,22,500/- has been disclosed in his total income in the earlier assessment years and the same is lying in his hand, out the withdrawals from his saving bank account, wherein his salary was regularly credited, after meeting his family’s day to day expenditures and medical needs, which was redeposited in several bank accounts and post office savings account during the demonetization period. The ld. Assessing Officer observed that the amount of Rs.32,68,000/- [Rs.39,22,500/- minus Rs.6,54,500/-] was deposited by the assessee in his bank account is nothing but his income from any other unknown source, which was not disclosed by him in his return of income for the relevant assessment year. Therefore, the ld. Assessing Officer treated the (A.Y. 2017-2018) Tapas Kundu said amount of cash of Rs.32,68,000/-, deposited during demonetization period, as undisclosed money and added to the total income of the assessee as per provision of section 69A of the Income Tax Act. Finally, ld. Assessing Officer determined the total assessed income of the assessee at Rs.42,18,070/-. Not being satisfied, the assessee preferred an appeal before the ld. CIT(Appeals).
The ld. CIT(Appeals) partly allowed the appeal of the assessee by observing as under:
“7.1. The grounds of appeal
, copy of assessment order, submissions of the appellant, statement of facts and Form 35 have been carefully considered and adjudicated as under: 7.2. During the A.Y. 2017-18, the appellant has deposited cash of Rs.39,22,500/- during the demonetization period. The appellant has claimed that the source for cash deposits was from withdrawal of cash made in the previous years. The AO has stated that the appellant has withdrawn Rs.21,54,000/- in the previous years and out of withdrawal of Rs.21,54,000/-, an amount of Rs.15,00,000/- was expended for personal expenditure and the remaining amount of Rs.6,54,500/- was allowed to set off against the cash deposit of Rs.39,22,500/-. The AO has assessed the remaining cash of Rs.32,68,000/- (39,22,500/- - 6,54,500/-) as undisclosed money u/s 69A of the Act. The appellant has filed the present appeal against the addition of Rs.32,68,000/-. 7.3. The appellant has claimed that he has divorced his wife in 2009 and as per his lawyer advice, he has not maintained the salary in the savings account and the same was withdrawn from bank and keep it as cash in the house. Further, the appellant has claimed that he was advised that 4. (A.Y. 2017-2018) Tapas Kundu if his salary income is accumulated in bank, the divorced estranged wife may ask for further compensation in future. Based on appellant’s lawyer’s advice and for apprehension of appellant divorced estranged wife future claim, appellant used to withdraw his entire salary as and when received even though the cash was getting accumulated in his house. The appellant claim is perused. For his day-to-day expenditure, the appellant has not expended through banking channel and the expenditure is used to be meet out from the cash withdrawn from the bank. The appellant has claimed that the gift received as cash from the parents was deposited in other savings bank account other than salary savings bank account. If the appellant’s claim is correct, the withdrawn cash could be deposited in the other savings bank account. Further, the appellant has maintained some investment in the form of fixed deposit with various entities. Therefore, appellant claim is not acceptable. The appellant has withdrawn the total cash of Rs.21,54,000/ from his savings account and AO has stated that out of total cash withdrawal of Rs. 21,54,000/-, an amount of Rs.15,00,000/- was set off for day-to-day expenditure. The appellant is single person and he does not have any dependents, therefore, expenditure of Rs. 5,00,000/- for day-to-day expenditure for each year is on the higher side. By considering the appellant’s single status, the expenditure of Rs.3,00,000/- for day -to-day expenditure for each year is fair. Total expenditure is allowed for three years is Rs.9,00,000/- against the total cash withdrawal of Rs.21,54,000/-, therefore, the remaining amount of Rs. 11,54,000/-(Rs.21,54,000/- - Rs. 9,00,000/-) is set off against the cash deposit of Rs.39,22,500/-. In view of the above-mentioned facts and discussions, the appellant is given relief to the extent of Rs.6,00,000/- (Rs. 15,00,000/- - Rs.9,00,000/-), therefore, the addition to the extent of Rs.6,00,000/- is deleted and the remaining cash deposit of Rs.26,68,000/- is confirmed. The appellant has raised the objection for making the addition on cash deposit through ground no. 2, therefore, ground no. 2 is partly allowed. 7.4 The appellant has raised objection through ground no. 1 that taxing the cash deposit u/s 115BBE of Act under special rate. The section 115BBE was amended with effect from 15.12.2016, therefore, the special rate is appliable for the A.Y. 2017-18. Hence, ground no. 1 is decided against the appellant.
7.5 Ground no. 3 & 4 are general in nature. Hence, there is no separate adjudication required. 5 (A.Y. 2017-2018) Tapas Kundu 8.0. Hence, the appeal of the appellant is partly allowed”.
Not being satisfied, the assessee preferred an appeal before the Tribunal. It was the submission of the ld. Counsel for the assessee that cash of Rs.39,22,500/- was lying in his hand out of his withdrawal from his Savings Bank account, wherein his salary was credited from year to year, after meeting the expenditure for domestic purposes and unforeseen medical needs and emergencies. It was the further submission of the ld. Counsel for the assessee that the assessee has withdrawn the amount of Rs.7,61,900/- for the financial year 2014-15, Rs.8,02,400/- for the financial year 2015-16 and Rs.,5,90,200/- for the financial year 2016-17. He further submitted that the assessee is having some problems with his wife, therefore, immediately he has withdrawn the amount from his salary account and kept it in his custody and during demonetization period, he deposited the said amount into his Bank accounts. The ld. CIT(Appeals) only deleted the amount of Rs.6,00,000/- and confirmed the remaining cash deposit of Rs.26,68,000/-. Therefore, the ld. Counsel for the assessee pleaded to set aside the orders passed by the lower authorities.
(A.Y. 2017-2018) Tapas Kundu 5. On the other hand, it was the submission of the ld. Departmental Representative that the assessee has not given any proper explanation to substantiate his claim. He further submitted that withdrawal of the amount from the Bank account of the assessee was much prior to demonetization. Therefore, the assessee might be utilized the said amount for some other purposes and the reason given by the assessee is that he withdrew the amount due to matrimonial dispute with his wife, but there is no material to substantiate his claim because the assessee was withdrawing the amount only from his salary account. If the assessee is having any apprehension for his Bank accounts, he should have withdrawn the amount from his other Bank accounts also, but no amount of cash was withdrawn from any other Bank account. Therefore, the contention of the assessee is not tenable and the ld. CIT(Appeals) has considered Rs.6,00,000/- and the remaining balance amount of Rs.26,68,000/- was added to the total income of the assessee. Ld. D.R., therefore, pleaded to uphold the order passed by the ld. CIT(Appeals).
I have heard the rival submissions and perused the material available on record. It is an admitted fact that there is no dispute that the assessee has deposited the amount of Rs.39,22,500/- 7 (A.Y. 2017-2018) Tapas Kundu during demonetization period. It is also an admitted fact that there were cash withdrawals from the salary account of the assessee during F.Y. 2014-15, 2015-16, 2016-17. During assessment year 2017-18, the appellant had deposited cash of Rs.39,22,500/- during demonetization period. The contention of the assessee is that the source for cash deposits was from withdrawal of cash made in the previous year [F.Y. 2014-15 to 2016-17]. It is an admitted fact that the assessee has withdrawn an amount of Rs.21,54,000/- in the previous years. An amount of Rs.15,00,000/- was expended for personal expenditure and the remining amount of Rs.6,54,000/- was allowed to set off against the cash deposit of Rs.39,22,500/-. The main contention of the ld. Counsel for the assessee is that the assessee has divorced his wife in 2009 and as per his lawyer’s advice, he has not kept his salary in his savings account and the same was withdrawn from bank kept the salary amount by way of cash in his house. The contention of the assessee was that if his salary income is accumulated in the Bank, the divorced estranged wife may ask for further compensation in future, therefore, he used to withdraw the entire salary amount and kept it as cash in his house, but at the same time, the assessee is also having nine Bank accounts, but (A.Y. 2017-2018) Tapas Kundu the amounts were deposited in other savings Bank. Therefore, the contention of the assessee is not acceptable and there is no evidence or material to show that the withdrawn amount was redeposited in the bank accounts of the assessee during demonetization period. It is also an admitted fact that the assessee has withdrawn the money from his Bank account not immediately before demonetization period and it was 5 to 7 years back, hence the such withdrawals of cash cannot be considered for the source of cash deposits during demonetization period. Therefore, I am of the firm opinion that the ld. CIT(Appeals) has rightly considered the claim of the assessee and allowed for an amount of Rs.6,00,000/- and the remaining amount of Rs.26,68,000/- has been added to the total income of the assessee. I do not find any infirmity in the order of ld. CIT(Appeals). Hence, the grounds raised by the assessee are dismissed.