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Facts
The assessee's case was selected for scrutiny for AY 2017-18 due to cash deposits of Rs.31,60,000/- during demonetization. While Rs.12,00,000/- was declared under PMGKY, the Assessing Officer added Rs.19,60,000/- as unexplained money u/s 69A, along with Rs.10,06,162/- from an old bank account closure. The CIT(A) partly allowed relief, upholding additions of Rs.14,50,000/- and Rs.10,06,162/- while deleting Rs.5,10,000/- (part of Rs.19,60,000/-) and Rs.1,60,000/- (maid's money).
Held
The ITAT upheld the CIT(A)'s confirmation of the Rs.14,50,000/- addition, as the assessee failed to establish the sources (savings, gifts, father-in-law's money). However, the ITAT deleted the Rs.10,06,162/- addition, accepting the assessee's explanation that it was a mere transfer of funds from her old ING Vysya Bank account to her Kotak Mahindra Bank account.
Key Issues
Whether cash deposits during demonetization from various sources were adequately explained, and whether a bank transfer from an old account to a new account, via a demand draft, constituted unexplained money under Section 69A.
Sections Cited
143(2), 142(1), 69A
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2017-2018 Bibha Pandey,……………………………………..Appellant AD-146, Salt Lake, Sector-1, Kolkata-700064, West Bengal [PAN:AJVPP3199B] -Vs.- Income Tax Officer,……………………….…...Respondent Ward-50(3), Kolkata, Income Tax Office, Manicktala Civil Centre, Uttarapan Complex, DS-IV, Kolkata-700067 Appearances by: Shri Anuj Moshadi, A.R., appeared on behalf of the assessee Shri Somnath Das Biswas, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing: May 19, 2025 Date of pronouncing the order: July 28, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 11.06.2024 passed for Assessment Year 2017-2018.
(A.Y. 2017-2018) Bibha Pandey 2. Facts in brief are that the assessee is an individual, who filed her return of income for the assessment year 2017-18 on 12.01.2018 declaring total income at Rs.10,70,760/-. The case was selected for scrutiny through CASS. A notice under section 143(2) of the Act was issued and duly served upon the assessee. Thereafter a notice under section 142(1) of the Act was also issued and served on the assessee. In response to the said notices, the assessee has filed her submissions. It is the case of the ld. Assessing Officer that the assessee had deposited cash of Rs.30,00,000/- in the account of Kotak Mahindra Bank and Rs.1,60,000/- in the account of HDFC Bank during demonetization period. The assessee has explained the source or cash deposits i.e. from her earlier savings for an amount of Rs.5,00,000/- and gift received from relatives on various occasions for an amount of Rs.6,00,000/- and also for an amount of Rs.7,00,000/- received from her father-in-law since his account was inoperative. So far as the source of another cash deposit of Rs.1,60,000/- into the Bank account of HDFC Bank is concerned, cash was belonged to her maid, who had handed over the cash to the assessee since her maid is not having any bank account. The assessee has also declared that cash of Rs.12,00,000/- had disclosed under PMGKY. In support of her claim, the assessee has submitted copy of Form 2 issued by the Pr. CIT-15, Kolkata and paid tax of Rs.5,98,800/-. However, the ld. Assessing Officer has not accepted the sources of cash deposits into her two Bank accounts with cogent material. The entire cash amount of Rs.19,60,000/- (total cash deposits of Rs.31,60,000/- minus Rs.12,00,000/- as declared under PMGKY) is treated as (A.Y. 2017-2018) Bibha Pandey unexplained money of the assessee by invoking the provision of section 69A of the Income Tax Act. The ld. Assessing Officer also made an addition of Rs.29,453/- as income of the assessee under the head “income from other sources”. The Bank statement of Kotak Mahindra Bank of the assessee reveals that an amount of Rs.10,06,162/- has been credited into the account through Demand Draft bearing No. 726701201617 on 14.06.2016. The assessee was asked to explain the source for the cash credit of Rs.10,06,162/-. The assessee filed her reply stating that the said Demand Draft was the closure proceeds of her old Bank account in ING Vysya Bank, but the assessee did not furnish any details in support of her claim. Therefore, the ld. Assessing Officer made an addition of Rs.10,06,162/-. The ld. Assessing Officer concluded the assessment assessing the total income of the assessee at Rs.40,66,375/-.
On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). After considering the submissions made by the assessee, the ld. CIT(Appeals) partly allowed the appeal of the assessee.
On being aggrieved, the assessee preferred an appeal before the ITAT and raised the following grounds:- (1) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in upholding the disallowances made by the ld. AO under section 69A of the Act. (2) On the facts and circumstances of the case and in law, the ld. CIT(A) erred in upholding the addition of Rs.5,00,000/- made under section 69A of the Act with respect to the sum gifted by assessee’s father-in-law on the (A.Y. 2017-2018) Bibha Pandey basis of erroneous consideration of his income tax return thereby doubting the creditworthiness of the payer. (3a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding the addition of Rs.7,00,000/- made under section 69A of the Act with respect to the cash of assesese’s father-in-law deposited in account of assessee due to ‘inoperative’ status of the bank account of the assessee’s father-in-law. (3b) On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in not correctly considering the Income Tax Returns of Assessee's father-in-law and thereby holding that his return profile does not support such cash-in- hand before demonetization. (4) On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in not appraising that the cash amounting to Rs.5,00,000/- were deposited by the Assesses from her own savings over the years and thereby upholding addition to the extent of Rs. 2,50,000 made by the Ld. AO. (5) On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) grossly erred in upholding the addition of Rs.10,06,162/- under section 69A of the Act despite the submission of Assessee that the said sum represented her own funds transferred from her own account. (6) The above grounds of appeal are without prejudice to each other. Further, the Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal and to submit such statements, documents and papers as may be considered necessary at any time before or at the time of hearing, of the appeal, so as to enable Your Honours to decide the matter in accordance with the law.
5. I have heard both the sides. It was the submission of the ld. Counsel for the assessee that the ld. Assessing Officer has failed to consider the explanation of the assessee regarding the cash deposited in her Bank account and made wrong addition of Rs.19,60,000/- under section 69A of the Act. He further submitted that the assessee has filed all the evidences before the ld. 4 (A.Y. 2017-2018) Bibha Pandey Assessing Officer but the ld. Assessing Officer had allowed credit for an amount of Rs.12,00,000/-, which the appellant had declared in PMGKY and the balance amount of Rs.19,60,000/- was added to the total income of the assessee. He further submitted that the ld. Assessing Officer has not considered the Cash Flow Statement in respect of earlier cash savings of Rs.5,00,000/-, Rs.6,00,000/- received as gift from relatives, cash received from her father-in-law for an amount of Rs.7,00,000/- and also Rs.1,60,000/- which belonged to her house-maid, who kept that amount with the assessee as she does not have any Bank account. Ld. Counsel further submitted that the assessee has also filed all the details before the ld. CIT(Appeals) and after considering the evidences filed by the assessee, the ld. CIT(Appeals) upheld the amount of Rs.14,50,000/- out of the addition of Rs.19,60,000/- and the balance amount of addition of Rs.5,10,000/- (Rs.19,60,000/- minus Rs.14,50,000/-) was deleted by the ld. CIT(Appeals). He further submitted that the ld. CIT(Appeals) also confirmed the addition made by the ld. Assessing Officer for an amount of Rs.10,06,162/-, which was credited in the Kotak Mahindra Bank account of the assessee, which was closure proceeds of her old Bank account in ING Vysya Bank. Ld. Counsel further submitted that so far as the cash deposited for an amount of 1,60,000/- is concerned, the ld. CIT(Appeals) accepted the explanation given by the assessee and deleted the addition made by the ld. Assessing Officer on account of cash deposit of Rs.1,60,000/-, which was handed over by the house-maid to the assessee. He further submitted that the assessee has explained the source for the entire amount and pleaded to delete the addition (A.Y. 2017-2018) Bibha Pandey of Rs.10,06,162/- and Rs.14,50,000/- made by the ld. Assessing Officer as confirmed by the ld. CIT(Appeals).
6. On the other hand, ld. Departmental Representative has submitted that the ld. CIT(Appeals) has examined all the evidences and granted part relief to the assessee. He further submitted that the assessee was not able to prove the source of cash deposit before the ld. CIT(Appeals) for the amount of Rs.14,50,000/- and Rs.10,06,162/-, therefore, the ld. CIT(Appeals) confirmed the addition made by the ld. Assessing Officer. Thus, he pleaded to uphold the orders of revenue authorities.
7. I have perused the material available on record. On perusal of the assessment order as well as first appellate order, the major grievance of the assessee is that the ld. CIT(Appeals) has not considered an amount of Rs.14,50,000/- and the ld. CIT(Appeals) has considered only Rs.5,10,000/- (past savings Rs.2,50,000/- plus Gift of Rs.1,00,000/- plus maid salary saving Rs.1,60,000/- ). Before me, the assessee has not filed any documents to establish to Revenue the cash savings of Rs.2,50,000/-. Hence, it needs no interference. So far as the remaining addition is concerned, the ld. CIT(Appeals) has categorically mentioned that the assessee has not filed any proof to show that the Savings Bank account of the father-in-law of the assessee became inactive or inoperative just before demonetization. On this aspect before me also, the assessee has not submitted any evidence to establish that the father-in-law was not having any valid Bank account. Therefore, I am of the view that the assessee failed to establish the source for the amount of (A.Y. 2017-2018) Bibha Pandey Rs.14,50,000/- (Rs.5,00,000/- plus Rs.2,50,000/- plus Rs.7,00,000/-). Therefore, I do not find any infirmity in the order passed by the ld. CIT(Appeals). The ld. CIT(Appeals) has rightly confirmed the addition to the extent of Rs.14,50,000/-, which is justified in the eyes of law. So far as the addition of Rs.10,06,162/- under section 69A of the Act is concerned, it was the submission of the assessee that the assessee had an account in ING Vysya Bank and in order to closure of the said Bank account, the assessee obtained the Demand Draft for an amount of Rs.10,06,162/- vide Demand Draft bearing No. 726701201617 dated 14.06.2016 and the same was deposited in her Kotak Mahindra Bank account. The assessee also filed Bank statement before the ITAT and on perusal of the Bank account of ING Vysya Bank, ING Vysya has issued Demand Draft for the said amount from the account of the assessee and the assessee had deposited in her Kotak Mahindra Bank account. Therefore, I am of the view that the assessee has explained the source for the amount of Rs.10,06,162/- since it is only transfer of her amount from one account to another Bank account. Therefore, I direct the ld. Assessing Officer to delete the addition of Rs.10,06,162/-. Thus, the grounds raised by the assessee are partly allowed.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 28/07/2025.