MERAJ ANJUM,HYDERABAD vs. INCOME TAX OFFICER, WARD-7(1), HYDERABAD

Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A).

Before the Ld. CIT(A), the assessee reiterated her arguments made before the A.O. towards source for cash deposits, and also filed relevant bank account statements, indicating cash withdrawals on four dates, i.e., 13-07-2016, 16-08-2016, 06-09- 2016, and 30-09-2016, aggregating to Rs. 21,50,000/-. The assessee has also explained the reasons for cash withdrawal and subsequent redepositing into bank account. The Ld. CIT(A), after considering the relevant submissions of the assessee, held that, although there were cash withdrawals of Rs. 21,50,000/- on 4 Meraj Anjum earlier occasions, but there is no explanation why fresh withdrawals were made in close succession without utilizing the earlier withdrawals, which runs contrary to normal human conduct. The assessee has not maintained any record to show that the specific cash withdrawals remained unutilized and were available in hand till the date of demonetization. Mere availability of earlier withdrawals in bank account is not sufficient to establish the nexus with subsequent cash deposits. The assessee must establish a direct link between the withdrawals and deposits. Since the assessee has failed to establish the nexus between the withdrawals and deposits, there is no error in the reasons given by the A.O. to make additions towards cash deposit under Section 69A of the Act. Thus, rejected the explanation of the assessee and sustained additions made by the A.O.

Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee Shri K.C. Devdas, C.A., referring to the explanation furnished by the assessee to the A.O. during the course of assessment proceedings, submitted that, the assessee has explained the source for cash deposit out of previous 5 Meraj Anjum withdrawals from the very same bank account for the purpose of her daughter's marriage. The assessee further submitted that, she is a widow and is meeting her living expenses out of the interest income from fixed deposits in her bank account, which she had inherited from her husband, and apart from this, she does not have any other source of income. Further, the source of cash deposits was explained out of cash withdrawal from the very same bank account for the purpose of her daughter's marriage. Since the marriage did not materialize and further, the demonetization was announced after withdrawal of cash from the bank, she was forced to re-deposit the cash into bank account. Although these facts have been explained to the A.O., but the A.O. rejected the explanation of the assessee and made additions. Therefore, he submitted that, the additions made by the A.O. should be deleted.

The learned Senior A.R. for the Revenue Shri A. Suresh, on the other hand, supporting the order of the Ld. CIT(A), submitted that, although the assessee claims to have withdrawn cash for the purpose of her daughter's marriage, but could not explain as to how the cash was withdrawn on different occasions. Further, the assessee could not file any evidences to prove the dates and events 6 Meraj Anjum of marriage and subsequent cancellation of marriage, if any. Since the assessee could not explain the source for cash deposit, except stating withdrawals from the very same bank account, the A.O. has rightly made additions on the ground that, the assessee has failed to explain the nexus between the cash withdrawal and cash deposits. The Ld. CIT(A), after considering the relevant facts, has rightly sustained the addition. Therefore, he submitted that, the additions made by the A.O. should be upheld.

We have heard both parties, perused the material available on record, and had gone through the orders of the authorities below. We have also carefully considered the relevant bank account statements furnished by the assessee. Upon careful consideration of relevant bank account statements, we find that, the assessee is maintaining a savings bank account with HSBC Bank. The assessee has withdrawn cash on four occasions from HSBC Bank account before the demonetization period. The assessee explained the source for cash deposit into bank account during demonetization period was out of cash withdrawals from HSBC Bank account on earlier occasions and claimed that, she had withdrawn the cash for the purpose of her daughter's marriage 7 Meraj Anjum and due to unforeseen circumstances, the marriage was called off. Since the demonetization announced on 08.11.2016, she has deposited the cash available with her out of withdrawals from bank account during the demonetization period.

We find that, the assessee is an individual deriving income from other sources, being interest income from fixed deposits in bank account. Except income from other sources, the assessee does not have any other source of income. Further, on perusal of relevant bank account statements, there are no cash deposits in the bank account except cash deposited to the extent of Rs. 19,74,500/- during the demonetization period. If we consider the relevant facts available on record, including bank account statement in light of the explanation of the assessee and also the income returned by the assessee in her return of income for the assessment year under consideration, in our considered view, the explanation of the assessee with regard to the source for cash deposits is bona fide and acceptable. Since the assessee does not have any other income except interest income from fixed deposits, there is no chance for the assessee to derive any undisclosed income in the form of cash, as alleged by the A.O. Since there are 8 Meraj Anjum sufficient cash withdrawals from the very same bank account on earlier occasions and the A.O. failed to make out a case that, the cash withdrawals from the bank account has been spent for any other purpose, in our considered view, the explanation of the assessee with regard to source for cash deposits was out of the previous withdrawals should be accepted. The Ld. CIT(A), without appreciating the relevant facts, simply sustained the additions made by the A.O. towards cash deposits under Section 69A of the Act. Thus, we set aside the order of the Ld. CIT(A) and direct the A.O. to delete the additions made towards cash deposits into the bank account during the demonetization period under Section 69A of the Act.

In the result, the appeal filed by the assessee is allowed.