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Facts
The assessee, a government teacher, declared an income of Rs. 5,82,530/- for AY 2017-18. Her case was selected for scrutiny due to a cash deposit of Rs. 15.00 lakh during demonetization. The AO noted the assessee maintained two bank accounts but declared only one, and found insufficient cash in hand to explain the deposit and an earlier purchase of a flat.
Held
The Tribunal held that the authorities were not justified in making the addition of Rs. 15.00 lakh. The assessee had submitted cash flow statements and financials to substantiate the source of the deposit as her savings from salary and interest, and the authorities had not presented any material to prove otherwise.
Key Issues
Whether the addition of Rs. 15.00 lakh as unexplained cash deposit is justified without rejecting the assessee's documentary evidence regarding the source of funds.
Sections Cited
143(3), 147, 142(1), 143(2), 69A, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA BENCHES “SMC”, KOLKATA
Before: DR.MANISH BORAD
आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal pertaining to Assessment Year 2017- 18 at the instance of assessee is directed against the order dated 06.03.2024 passed by Addl/JCIT(A)-1, Lucknow u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’) which in turn is arising out of Assessment Order dated 27.11.2019 passed u/s.143(3) of the Act.
Succinctly, the facts of the case are that the assessee is a Government Teacher and earning salary income and interest income from her savings. Income of Rs.5,82,530/- was declared in the return for the A.Y. 2017-18 filed on 28.08.2017. Subsequent to the processing of return u/s.143(1) of the Act, the case selected for scrutiny through CASS for examination of cash deposit made by assessee during the demonetization period. Statutory notices u/s.143(2)/142(1) were issued to the assessee calling upon her to furnish the source of cash deposit during demonetization period. There was no compliance to such notices from the side of assessee. Based on the assessee’s bank statements, ld. AO noticed an amount of Rs.15.00 lakh was deposited in her bank account maintained at UBI, Belgachia, Kolkata. The assessee furnished reply in response to show cause notice. Ld. AO found that the assessee was maintaining two accounts but has only declared only one account in the income-return filed. The AO after analyzing the cash withdrawals for the financial years 2013-14, 2014-15 and 2015-16 came to conclusion that there was no sufficient cash in hand to deposit the same into her bank account. The AO also observed that the assessee has invested in NSC by way of cash and the maturity proceeds are regularly credited in the Saving bank account in Belgachia Post Office. In this regard, he has also analyzed the return of income shown by the assesee from A.Y. 2013-14 to 2017-18 and arrived at conclusion that the assessee is not having sufficient cash in hand. He therefore opined that since the assessee earns only salary income the source of investments in NSC remains unexplained. Eventually, ld. AO made addition of cash deposit Rs.15.00 lakh made during the demonetization period as unexplained income u/s.69A of the Act, rejecting the submissions of the assessee that it was made with her savings over a period of years. AO also made addition of Rs.47,086/- on account of failure of assessee to reflect one savings bank account.
Assessee contested before the ld.CIT(A) only the addition of cash deposit of Rs.15.00 lakh made by the AO. The ld.CIT(A) countenanced the action of the Assessing Officer by observing as under :
“Paragraph no.4.8, 4.9, 4.10, 4.11 & 4.12 I have also gone through the paragraph no.s 4.8 & 4.9 of the assessment order, wherein, the claim of saving the money for purchasing a residential flat has been discussed. In these paragraphs, the A.O has clearly established the usage of cash for booking a flat on 28/10/2016. Therefore, I agree with the A.O's observation that, assessee had sufficient cash in hand from undisclosed sources out of which Rs.15,00,000/- was deposited in bank during demonetization and Rs.5,25,000/- was used to book a flat just few days prior to the declaration of demonetization, The onus was completely on the assessee to explain the sources of cash but she couldn't. Mere claim without the support of any documentary evidence doesn't make the assessee's claim reliable and fit for a relief. Thus, the A.O, by an excellent marshalling of facts and a splendid analysis of financial data has in a highly logical manner concluded that, assessee had cash from some undisclosed sources of income. Similarly, in the paragraphs no. 4.10, 4.11 & 4.12, the A.O had rightly observed that, the assessee had disclosed a meager amount of total income in the last five assessment years. In these paragraphs, the A.O has established that, the assessee had no proper source of sufficient cash and the cash deposited in the bank during the demonetization was from undisclosed sources. These findings of the A.O are found to be correct. Ground of appeal no.3 & 4 : The assessee has submitted the grounds of appeal as :
3. The Ld. AO has erred in assuming that only current years income can be said to be deposited in Bank accounts. He also out of imagination, assumed that the assessee did not have any past savings nor she has accumulated stridhan and surpluses in her hand. His findings that as the salary incomes were withdrawn and have been spent by the assessee for her family expenses, ceremonies and medical needs etc does not carry any merit in absence of any tangible and corroborative evidence. The Ld. AO did have no basis for such conjectural imaginations. As such his action of addition of Rs. 15,00,000/- is liable to quashed and the assessment passed by him should be treated in nullity.
4. The assessee craves leave to add, alter, or withdraw any of the grounds of appeal before or at the time of hearing." I have also gone through this this ground along with the SOF submitted by the assessee. In this regard, my observation is that, mere claim that these cash deposits were out of Stridhan and past surpluses won't suffice. There should be documentary evidence to substantiate your claim. The assessee being non-responsive, it is deemed that, she has nothing to present. Also, there are no records of wealth tax returns to justify these claims. Hence, the assessee herself is basing her claim on conjectural imaginations in the absence of any tangible and corroborative evidence. Thus, this ground isn't tenable at all.
Thus, as discussed above, the A.O has arrived to the conclusion after a detailed analysis of the facts available on record as well as those submitted by the assessee. Further, the A.O has duly followed the procedure as laid down in the statute. Hence, the Assessing officer has correctly assessed after carrying out in-depth examination of facts available on record. Therefore, based upon merits too, the undersigned sees no reason to interfere with the orders of the Ld. Assessing Officer. Hence, all the grounds of appeal raised by the assessee are hereby dismissed.
6. Thus, as described in all the preceding paragraphs, the action of the AO is confirmed based on merits as well as on the non-compliance mode of the assessee and the grounds of appeal raised by the appellant are dismissed.”
4. Now the assessee is in appeal before the Tribunal challenging the impugned order passed by ld.CIT(A).
5. Ld. Counsel for the assessee referring to the paper book containing 36 pages submitted that the assessee is regularly filing the returns. The source for making the deposit is her savings over a period of time. She has filed all the details before the AO viz., cash flow statement, bank statement, financial statements etc. substantiating the source of cash deposit of Rs.15.00 lakh. The assessee has sufficient funds available to her credit. The authorities were not justified in making addition of said sum. He therefore submitted that the impugned order be reversed deleting the addition.
On the other hand, ld. DR vehemently argued supporting the orders of the lower authorities.
I have heard both the sides and perused the record placed before me. The solitary issue that arises for my consideration is whether the authorities below were justified in confirming the addition of cash deposit of Rs.15.00 lakh. In the instant case, the assessee is a salaried Govt. employee deriving income from salary and interest from savings and made cash deposit of Rs.15.00 lakh in the United Bank of India, Belgachia branch during the demonetization period. It was stated by the assessee that the said deposit was made from her savings over a period of time. The money was withdrawn from time to time as per the requirement and it was utilized for purchasing the flat. In this regard, ld. AO in para No.4.7 of the assessment order has drawn a chart indicating wherein cash withdrawals made by the assessee in the previous financial years 2013-14 to 2015-16 which aggregate to Rs.14,15,000/-. The assessee also submitted cash flow statement and financials to substantiate that the deposit was made out of the genuine source which of course is from her salary and interest. The contention of the assessee that she received certain gifts from the father, mother and relatives also cannot be ruled out. The authorities have nowhere rejected the financials submitted by the assessee and have not brought anything on record which goes to prove that the assessee has received cash from undisclosed sources. In the absence of any material contrary, the authorities were not justified in making the addition. I therefore order to delete the addition of Rs.15.00 lakh made by the AO and sustained by the CIT(A). Grounds of appeal raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on this 23rd day of January, 2025.