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Facts
The assessee, an individual, filed her return of income for AY 2017-18. The Assessing Officer (AO) made additions for an unexplained cash deposit of ₹2,50,000 during demonetization and a maturity bonus of ₹52,537 from an insurance policy, which was deemed not exempt under Section 10(10D). The Ld. CIT(A) partly allowed the appeal, deleting a portion of the cash deposit but confirming ₹53,000 of the cash deposit and the entire insurance bonus addition.
Held
The Tribunal dismissed the ground related to the insurance maturity bonus, upholding its taxability under Section 10(10D) as the premium paid exceeded the prescribed limit (20% of sum assured). For the confirmed cash addition of ₹53,000, the Tribunal remanded the matter back to the AO to allow the assessee a proper opportunity to furnish confirmations and explanations.
Key Issues
Whether a cash deposit during demonetization was adequately explained and whether maturity bonus from an insurance policy qualifies for exemption under Section 10(10D) of the Income Tax Act.
Sections Cited
139(4), 143(1), 80C, 10(10D), 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Addl/JCIT(A)-1, Gurugram [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 07.03.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. That on the facts and circumstances of this case the learned Commissioner of Income Tax Appeal-1, GURUGRAM erred in law as well on facts in confirming additions of Rs. 53000/- out of cash deposit of Rs. 250000/- which is liable to be deleted
That the Assessing Office, during the course of hearing never asked any explanations in respect of 3 loans totalling to Rs. 53000/- but while passing the order has added to the total income whereas the said 3 loan amounts were credited in the bank account and all the 3 parties are assessed to tax and shown these loans in their accounts ITA No.: 965/KOL/2025 Assessment Year: 2017-18 Triveni Devi Bhutra.
That the Appellant has submitted all documents related to cash balance and filed copy of cash book, but without considering the facts the addition of Rs. 53000/- has been confirmed
That copies of cash book is submitted herewith for your kind consideration
That the Learned Commissioner of Income Tax Appeal has erred in law as well as on facts in confirming the additions of Rs. 21537/- u/s 10D being amount received on maturity of LIC Policy with Kotak Mahindra Life Insurance without considering the provisions of section 10(10D) of the IT Act, 1961 and is liable to be deleted
That charging of Interest u/s 115BBE is not applicable in as much as the Appellant has not concealed any income.”
Brief facts of the case are that the assessee is an individual and had filed her return of income u/s 139(4) of the Act showing total income of ₹3,33,920/- which was processed u/s 143(1) of the Act. The Assessing Officer (hereinafter referred to as Ld. 'AO') found that the assessee had deposited an amount of ₹2,50,000/- in cash in the bank account maintained with Canara Bank during the demonetization period. The assessee filed documents in support of the deposit but the Assessing Officer (“the Ld. AO”) found these as not tenable and added the same to the income of the assessee. Further, the Ld. AO found that the bonus amounting to ₹52,537/- on maturity of insurance policy maintained with Kotak Mahindra Life Insurance Company Ltd. was not exempt under Explanation to sub-section (3) of section 80C of the Act and added the same to the returned income of the assessee and assessed the total income at ₹6,05,460/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who partly allowed the appeal of the assessee as per his findings as under: “4.1 Ground of Appeal No. 1 & 2:- The reply filed by the appellant during the appeal ITA No.: 965/KOL/2025 Assessment Year: 2017-18 Triveni Devi Bhutra. proceedings as well as the assessment order has been perused and considered. The appellant contends that it was having opening cash balance of Rs. 2,22,090/- as on 01.04.2016 and thereafter certain cash was withdrawn as well as deposited. The appellant is regularly filing her income tax return. Considering the income declared by the appellant in earlier years, her age and status of the family the opening balance of cash appears to be justifiable when considered in the light of Instruction No. 3/2017 dated 21.02.2017 of CBDT. However it is also seen from the details of cash in hand/cash book that the appellant had contended that it has received cash of Rs. 18,000/- from Sh Vijay Kumar Kacholia, Rs. 17,000/- Smt. Renu Kacholia and Rs. 18,000/- from Sunita Kacholia on 06.11.2016 but no confirmation to this effect has been filed from such persons and no details of these persons have been provided apparently during assessment proceedings as well as during appeal proceedings. The purpose of such amount received in cash has also not been explained. In view of these facts, the cash in hand of Rs. 1,97,090/- is accepted and addition of Rs.1,97,000/- is hereby deleted and for the reason mentioned above, the addition of Rs. 53,000/- allegedly received from third party is confirmed. These grounds of appeal are partly allowed.
2 Ground of Appeal No. 3 & 4:- It is observed from the assessment order, that the assessing officer has stated that during the course of assessment proceedings the appellant admitted to treating the bonus from the insurance policy as income from other sources in her reply but the appellant is yet contesting this addition in this appeal. It is also observed from the record that the insurance policy was taken before March 31, 2012 and the premiums paid by the appellant in a single year was more than 20% of the sum assured, and as such in view of the Provision of section 10(10D) the maturity Bonus which does not qualify for an exemption under Section 10(10D) of the Income Tax Act. As a result, the assessing officer correctly added the maturity bonus of Rs. 21,537 to the appellant's total income. The appellant's request for exemption under Section 10(10D) is not acceptable as the yearly premium exceeded the prescribed limit for the exemption. Accordingly, the addition of Rs. 21,537/- on the maturity bonus of the LIC policy is upheld. ……….
In result the appeal of the appellant is partly allowed as above.”
Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. ITA No.: 965/KOL/2025 Assessment Year: 2017-18 Triveni Devi Bhutra.
Rival contentions were heard and the submissions made have been examined. It was submitted by the Ld. AR that the cash loans received were disallowed despite the cash book being produced before the Ld. AO but the cash deposit in the bank account was considered as unexplained. He drew our attention to pages 4 and 13 of the paper book filed which are the extracts from the cash book and the order of the Ld. CIT(A). It was submitted that the income from the life insurance was ₹ 21,537/-, which was exempt income. It is stated that the Ld. CIT(Appeals) accepted the opening cash in hand of ₹ 197,000/- and deleted the addition as the same was been shown at ₹ 2,22,090/- but the addition of ₹ 53,000/- was confirmed for the reason that no details of the persons from whom cash had been received were filed by the assessee during the assessment proceeding as well as during the appeal proceedings and the purpose of such amount received in cash was also not explained. As regards the addition for sum of ₹ 21,537/-, the Ld. CIT(Appeals) did not accept that the same was exempt under section 10(10D) of the Act. The Ld. AR requested that the matter may be remanded to AO as the assessee has confirmation in support of the cash received and also in respect of the exempt income. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.
We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A).
As regards the exemption under section 10 (10D), the sum assured was ₹ 1,10,000, 20% of which works out to ₹ 22,000/- and since the instalment of the premium was ₹ 24,006/- and service tax of ₹ 360/- was also payable, even after excluding the service tax, the premium was more than 20% of the sum assured and, therefore, the deduction under ITA No.: 965/KOL/2025 Assessment Year: 2017-18 Triveni Devi Bhutra. section 10 (10D) has been rightly disallowed and Ground no. 5 is dismissed. However, as regards Ground Nos. 1, 2, 3, 4 and 6, the assessee contended that the assessee has confirmations, which can be filed before the Ld. AO. The assessee has produced the excerpts from the cash book, in the absence of which the addition made by the Ld. AO was partly confirmed by the Ld. CIT(A). In the interest of justice and fair play, it was considered by the Bench that the request of the assessee to set aside the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) on this issue and remit the matter to the Ld. AO for examining the confirmations to be filed in respect of the cash received and thereafter, delete the addition which has been confirmed by the Ld. CIT(A) if the explanation is satisfactory. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in his appeal are partly allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 14th November, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 14.11.2025 Bidhan (Sr. P.S.) ITA No.: 965/KOL/2025 Assessment Year: 2017-18 Triveni Devi Bhutra. ITA No.: 965/KOL/2025 Assessment Year: 2017-18 Triveni Devi Bhutra. Copy of the order forwarded to:
Triveni Devi Bhutra, O S B Bhutra, 4, Synagogue Street, 5th Floor, Room No 505, Kolkata, West Bengal, 700001. 2. Income Tax Officer Ward 61(4), Kolkata.
Addl/JCIT(A)- 1, Gurugram.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order