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Facts
The assessee, an NRI, deposited Rs.40.00 lakh cash in his Axis Bank NRO account during the demonetization period (FY 2016-17). He contended that this amount originated from a Rs.35.00 lakh withdrawal made from his ICICI Bank account in December 2015 for his children's education and daughter's marriage, which remained unutilized. The Assessing Officer added the Rs.40.00 lakh as unexplained money under Section 69A, a decision confirmed by the CIT(A).
Held
The Tribunal noted the time gap between withdrawal and deposit but also acknowledged the assessee's NRI status and potential need for liquid funds. Taking a liberal view, it sustained an addition of Rs.15.00 lakh out of the Rs.40.00 lakh, granting relief of Rs.25.00 lakh, accepting part of the source as previous withdrawals and accumulated savings.
Key Issues
The key issue was whether the cash deposit of Rs.40.00 lakh during demonetization was unexplained money under Section 69A, given the assessee's claim of prior withdrawals for family purposes.
Sections Cited
250, 143(3), 69A, 143(2), 142(1), 133(6), 115BBE
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD & SHRI S.S.VISWANETHRA RAVI
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to assessment year 2017-18 is directed against the order dated 15.01.2025 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income Tax Act, 1961 ( in short ‘the Act’) which inturn is arising out of the Assessment order dated 26.12.2019 passed u/s.143(3) of the Act.
Assessee has raised following grounds of appeal :
“1) Under the facts and circumstances of the case and in law the learned CIT(A), NFAC has erred in confirming the addition of Rs. 40,00,000/- made by AO u/s.69A of the act by treating the cash deposits in Axis Bank Account as unexplained money of the appellant without appreciating the fact that the same was out of withdrawals made earlier from ICICI and other bank account.
2) Under the facts and circumstances of the case and in law the learned CIT(A), NFAC has erred in confirming the addition of Rs.40,00,000/- made by AO u/s.69A of the act by treating the cash deposits in Axis Bank Account as unexplained money of the appellant by merely observing that there is huge time gap between the date of the cash withdrawn (17.12.2015) and the actual deposit of the cash (16.11.2016) and without bringing anything on record to show that the cash which was withdrawn by the assessee was already utilized for any other purpose. 3) The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal.”
3. On perusal of the grounds, the sole issue for our consideration is that whether the ld.CIT(A) erred in confirming the addition of Rs.40.00 lakh made by the Assessing Officer (AO) for unexplained cash deposit u/s.69A of the Act.
Facts in brief are that the assessee is an individual and Non- resident Indian and is working in Al Khoudh Steel Furniture Company LLC. Income of Rs.3,26,560/- declared in the return for the A.Y. 2017-18 filed on 27.10.2017. On account of the reason “Large Value Cash deposits during demonetization period as compared to returned income” case selected for Limited Scrutiny followed by validly serving of notices u/s.143(2)/142(1) of the Act. Ld. AO observed that assessee has deposited cash of Rs.40.00 lakh during the demonetization period from 09.11.2016 to 30.12.2016 in Axis Bank NRO Account. In the course of assessment proceedings, ld. AO observed that the assessee claimed that he has withdrawn cash of Rs.35.00 lakh on 17.12.2015 for the purpose of marriage/education of his children but the same was not utilized and it was subsequently deposited in the bank. Ld. AO also observed that during F.Y. 2016-17 assessee purchased a flat from Kolte Patil Developers, Pune for a consideration of Rs.98,35,674/-. Along with payment of stamp duty and registration fees he also took loan from Bank of Oman, Muscat at Rs.51,89,574/-. Observing these facts, ld. AO concluded that the assessee on one hand has kept the funds for the marriage of his daughter but then has subsequently stated that daughter has taken admission for MDS. Ld. AO was also not satisfied with the fact that assessee on one hand assessee had cash in hand of Rs.35.00 lakh but still he has taken loan from the bank at Rs.51,89,574/-. Based on these observations, ld. AO concluded the assessment making addition u/s.69A of the Act at Rs.40.00 lakh and also invoked section 115BBE of the Act and assessed the income at Rs.43,26,560/-.
Aggrieved assessee preferred appeal before the ld.CIT(A) and reiterated the submissions along with placing reliance on certain judicial decisions. However, ld.CIT(A) was not convinced and he also referring to some judgments concluded the proceedings affirming the action of the AO observing as follows :
“4.1 Ground No. 1 relates to addition at Rs. 40,00,000/- on account of unexplained cash deposit in Axis Bank accounts during the F.Y. 2016- 17.
Briefly, the appellant was an NRI (Non Resident Indian) for the F.Y. 2016-17 and serving with Al Khoudh Steel Furniture Company LLC, Muscat. In India, the appellant earned income from fixed deposit and saving bank interest. The appellant filed his return of income on 27.10.2017 for the A.Y. 2017-18 declaring total income of Rs. 3,26,560/-, Accordingly, the case was selected for "Limited Scrutiny" for examining the issue of "Large Value Cash deposits during demonetization period as compared to return income". Thereafter, various statutory notices were issued to the appellant. In response to said notices, the appellant has submitted his written submission along relevant details/documents before the AO. Further, notice u/s 133(6) of the Act was issued to the bank authority to provide the details like bank account statement, details of SBN deposited during demonetization period. The bank authority has provided the requisite details/documents during the assessment proceedings. Accordingly, the AO passed an assessment order u/s 143(3) of the Act of Rs. 40,00,000/- assessing the cash deposited in SBN during the demonetization period as unexplained money u/s 69A of the Act.
4.1.1 In this regard, the appellant contended that the AO is not justified in making the addition u/s 69A of the Act as unexplained money of Rs. 40,00,000/-. The appellant explained that he was neither engaged in any business/profession nor maintained books of accounts during the year under consideration. He also declared the information of cash deposit in his ITR of A.Y. 2017-18. Accordingly, the AO had no jurisdiction to invoke the section u/s 69A of the Act and the entire addition made at Rs. 40,00,000/- u/s 69A of the act on account of unexplained money deserves to be deleted. After going through the submission, supporting documents as well as assessment order, I find that the appellant was working in Al Khoudh Steel furniture Company LLC, Muscat at Oman since March 2000 to May 2017. It is an undisputed fact that the appellant had deposited cash (SBN notes) at Rs. 40,00,000/- in Axis bank account no. 174010100071956 during demonetization period. Perusal of his ITR also supports such cash deposit in Axis Bank during the period 09.112016 to 30.12.2016 but failed to furnish the source/nature of the cash deposit during the assessment proceedings as well as appellate proceedings. Section 69A of the Act states that "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or other valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." In the present case, the appellant failed to establish the source of cash deposit in the bank and also failed to show that these cash were duly recorded in the books of account. Further, appellant himself admitted that he did not maintain the books of account during the year. Hence, section 69A of the Act is applicable in the present case. Further, the appellant placed reliance on the judgment of CIT vs. Hersh Washesher Chadha (ITA No. 676/2023) (Delhi High Court) but the judgment does not pertain to present case for the reason that the present case relates to cash deposit instead of maintenance of books of account. So the appellant failed to show the applicability of this cited decision in his case. Mere quoting of judgement with elaborating the decision and applicability in the appellant's case shall not come to the rescue of the appellant.
4.1.2 During the appellate proceedings, the appellant clarified the fact and details of availability of cash and contended that he informed Axis bank, Jalgaon Branch vide letter dated 16.01.2017 regarding the source of the cash deposit. In that letter the appellant stated that the amount had been withdrawn from ICICI Bank a/c no. 003501078238 on 17.12.2015 for the purpose of education of his son and marriage of his daughter but due to some matrimonial difficulties marriage could not be fixed and the amount kept in reserved for any time requirement. In support of his contention, the appellant relied upon several case laws during the appellate proceedings and submitted the copy of ICICI Bank Statement, Axis Bank Statement, copy of explanation provided to Branch Manager of Axis Bank, chart regarding the 5 years bank deposit and withdrawals in cash. In this case, it is also a fact that the appellant had withdrawn at Rs.35,00,000/- from ICICI Bank A/c no. 003501078238 on 17.12.2015. The appellant further explained in the written submission that the amount of Rs.40,00,000/- was kept for marriage of daughter but on the other hand stated that it was withdrawn for emergency funds for the education of children, maintenance of house and admission for MDS. There is clearly established that the reason given for cash in hand not justifiable. Perusal of the assessment order, the appellant explained before the AO that during the F.Y. 2016-17, he had purchased a Flat being No. 901 in Stargaze Apartment Pune on 02.07.2016 from Kolte Patil Developers, Pune for Rs.98,35,764, Stamp Duty Rs. 4,91,900/- and Registration Fees Rs.31,460/-. He had also taken loan from Bank of Oman, Muscat amounting to Rs. 51,89,574/- in January 2016 and the said amount were made to Kolte Patil Developers, Pune in July 2016. The AO clearly mentioned in Para 6 of the assessment order that no man keeps with him such huge amount in cash and takes the loan from bank. On verification of the ICICI bank account statement of the appellant for the period from 01.04.2015 to 31.03.2016, I find that the appellant used to withdraw very meager amount of money on different dates but only on one occasion, it had withdrawn such a large sum of Rs. 35 lac. i.e. on 17.12.2015 and it seems that it was withdrawn for personal/other expenses and not for accumulating amount for depositing at later dates. In short, the AO discussed all the points in details in his assessment order. In the present case, it is also a fact that there is huge time gap between the date of the cash withdrawn (17.12.2015) and the actual deposit of the cash (16.11.2016). In such circumstances, I would like to rely on the decisions of the Hon'ble Supreme Court that Sumati Dayal [214 ITR 801 SC) and Durga Prasad More ((1971) 82 ITR 540 SC] to state that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities
Thus, the appellant has completely failed to explain the source of cash deposits in Axis bank account with credible documentary evidences. Therefore, I do not find any infirmity in the action of the AO in making addition of Rs.40,00,000/- on a/c of unexplained cash deposit u/s 69A of the Act. Hence, this ground of appeal is dismissed.”
Aggrieved assessee is now in appeal before this Tribunal.
Ld. Counsel for the assessee apart from referring to the submissions filed before the lower authorities further took us through the paper book containing 17 pages and stated that the assessee is regularly receiving the funds in his bank account from his income earned at Muscat. He stated that the assessee has withdrawn Rs.35.00 lakh on 17.12.2015 and these funds were remained unutilized till the declaration of demonetization scheme and the same along with other accumulated funds for past many years have been deposited in the bank. He submitted that withdrawal of funds is duly supported by the bank statement and there has been no further application of money during the period from date of withdrawal till the announcement of demonetization scheme and there is no legal bar to keep cash in hand for a long time. He stated that he used to stay abroad and the family always needs liquid cash for any unforeseen circumstances. He thus prayed for deletion of the impugned addition.
On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.
We have heard the rival contentions and perused the record placed before us. Addition of unexplained cash deposit of Rs.40.00 lakh u/s.69A r.w.s.115BBE of the Act is in challenge before us. Ld.CIT(A) has affirmed the action of the AO by giving detailed finding observing that the purpose of cash withdrawn during the month of December, 2015 has not been properly explained and inspite of assessee having funds available with him has still proceeded to take the loan from bank for purchasing the property. We notice that the assessee is admittedly an NRI and there is regular inflow of funds in his account held with ICICI bank. During F.Y. 2015-16, more specifically on 16.12.2015 the assessee had bank balance of Rs.39,89,717/- out of which one major withdrawal is of Rs.35.00 lakh on 17.12.2015. Thereafter, there is no deposit of cash in this bank account. Further, the assessee has not filed bank statement from 01.04.2016 to 31.03.2017. Therefore, it cannot be verified whether any cash has been withdrawn or any further funds have been remitted. The next is the bank account held with Axis bank which is NRO Account. In this bank account which has been filed for the period 01.04.2016 to 31.03.2017 there are no major transactions till 30.09.2016 but just after the declaration of the demonetization scheme there is a small withdrawal of Rs.22,000/- on 16.11.2016 and on the very same date there is deposit of cash of Rs.40.00 lakh and then there is small withdrawal of Rs.10,000/-. Apart from that no major transaction has taken place.
Ld. Counsel for the assessee submitted that the cash withdrawn during F.Y. 2015-16, i.e. on 16.12.2015 is the major source for the alleged cash deposit. It has been further pleaded before us that the withdrawal of cash in December 2015 for the purpose of marriage/.education/emergency funds but the same remain unutilized. We further notice that there is no information available as to whether apart from the assessee there is any other family member earning the income for the year and therefore the only earning member in the family is the assessee. It has been stated that the assessee’s son is pursuing education in NT, Mumbai and daughter was also pursuing BDS at Nashik and further wanted to take admission for MDS. The assessee has also taken a plea that funds were withdrawn for the marriage of his daughter. It seems that the assessee had given various reasons just to demonstrate the purpose of withdrawal but then the real purpose is still not known because no details have been filed about the education expenses which the assessee had incurred for the education of his children. Certainly the assessee might have incurred some expenditure for education of his children at NT, Mumbai and for BDS at Nashik. It is also an accepted fact that marriage of the assessee’s daughter did not take place during this period. It is also observed that there are no cash withdrawals during the period from December 2015 till October 2016. We further fail to find any merit in the observation of the ld. AO that for such a long period from December 2015 till November 2016 assessee would not have kept the cash in hand at home because some liquid funds are required by family for meeting certain unforeseen circumstances and in the instant case the assessee being an NRI keeping cash in hand becomes more important for the family.
Taking all the above facts and circumstances of the case and also considering that assessee had not demonstrated about the source of alleged drawings and expenditure incurred for education of his children and also observing that as against the withdrawal of Rs.35.00 lakh but the cash deposit of Rs.40.00 lakh. So there is a clear cut difference of Rs.5.00 lakh. Further, assesee has purchased a property during the year under consideration but inspite of having cash in hand with him and has taken loan from Bank of Oman, Muscat. This fact also supports the fact that part of the funds withdrawn by it in December 2015 has been utilized for household needs and education of his children. However, taking liberal approach and considering the facts and circumstances, we deem it proper to sustain the addition of Rs.15.00 lakh as against Rs.40.00 lakh made by the AO and find that the assessee must have incurred some amount of funds withdrawn by him in December 2015 for the purpose of education of his children as well as household drawings. We therefore give relief of Rs.25.00 lakh to the assessee accepting part of the source of the alleged cash deposit from cash withdrawal made during December 2015 as well as accumulated savings of past so many years. Effective grounds of appeal raised by the assessee are partly allowed as per the terms indicated above.
In the result, the appeal of the assessee is partly allowed. Order pronounced on this 30th day of April, 2025.