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Facts
The assessee, a retired government employee, deposited Rs. 10 lacs cash during the demonetization period and did not file his ROI within the stipulated time. The Assessing Officer made an addition of Rs. 50,94,553/- under Section 69A for unexplained cash deposits, which the CIT(A) partly confirmed to Rs. 21,90,289/-.
Held
The Tribunal noted that the CIT(A) had ignored crucial documentary evidence provided by the assessee regarding the source of funds, including gratuity, leave encashment, milk sales, and loan repayment. It held that the additions related to these explained amounts, including Rs. 21,90,289/- and a loan repayment of Rs. 4,95,000/-, do not sustain as the sources were established.
Key Issues
Whether the additions made under Section 69A for unexplained cash deposits are justified when the assessee provided evidence for the source of funds, and whether the CIT(A) erred in ignoring such evidence.
Sections Cited
69A, 142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Dr. BRR Kumar & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 30-07- 2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2017-18.
The grounds of appeal are as under:- “(1) That on facts, and in law, the learned NFAC and the ΛΟ has grievously erred in not fully considering the replies/ submissions filed by appellant. (2) That on facts and in law, the learned NFAC has grievously erred in partly confirming addition of Rs. 21, 90, 289/- out of Rs.40,94,553/- made by AO u/s 69A of the Act in respect of credit entries in appellant's bank account. (3) That on facts and in law, the learned NFAC has grievously erred in confirming the addition of Rs. 10,00,000/- made by AO u/s 69A of the Act in respect of cash deposits in appellant's bank account.
(4) The appellant craves leave to add, alter, amend any ground of appeal.”
3. The assessee is a government employee retired on 10-05- 2016. The assessee received gratuity and other retirement benefits amounting to Rs. 18,35,054/- during the first quarter of financial year and withdrawn the same for some personal and family needs. As per the information available, the assessee deposited cash to Rs. 10,00,000/- in bank account during the period of demonetization and the assessee has not filed his ROI within the stipulated time. Subsequently, notice u/s. 142(1) of the Act was issued on 04-06-2019, 13-06-2019, 31-08-2019 and 19-09-2019 which were duly served to the assessee. In response to the notices issued, the assessee has partly furnished the details. The assessee filed return of income on 20-09-2019 wherein the assessee declared total income to Rs. 4,50,800/- salary income received from District Health Office, Dahol. During the course of assessment proceedings, the Assessing Officer observed that the assessee deposited cash of Rs. 10 lacs in the name of the assessee of bank of BOB Devgarh Branch during the demonetization period i.e. 9th Nov, 2016 to 30th Dec 2016 but did not comply the notice issued to him therefore the source of cash deposits made during the demonetization remained unexplained. Since the assessee failed to furnish all the relevant details, the assessment was passed u/s. 144 and the Assessing Officer made addition of Rs. 50,94,553/- on account of cash deposited u/s. 69A of the Income Tax Act, 1961.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
Karansinh Patel, A.Y. 2017-18 5. The ld. A.R. submitted that the amount credited in the bank account is out of the following activities: a. Insurance Payout b. Cash deposited during demonetization c. Cheque bounced and amount credited d. Amount received from sale of milk e. Gratuity payout f. Leave encashment after retirement g. Salary difference payout h. The receipts of car loan, crop loan, loan given to Sanjay Modi etc.
The documentary evidence such as loan agreement, invoices, bills and vouchers related to gratuity received, salary arrear, leave encashment and milk sales were furnished by the assessee. The assessee did not submit bank account statement of his accounts in Bank of Baroda and Bank of India and neither did he submit the PAN details of Sanjay Modi so as to confirm whether the loan was availed by him or not. These observations by the CIT(A) is not justified as all the details were given to the CIT(A). The ld. A.R. submitted that the CIT(A) ignored all the evidences and made the addition to the extent of Rs. 21,90,289/- out of Rs. 50,94,553/-. As regards cash deposits in assessee’s bank account, the ld. A.R. explained all the details of gratuity, leave encashment and salary difference pay out which amounting to Rs. 18,35,054/- in the present assessment year itself as the assessee retired on 10-05-2016.
The ld. D.R. relied upon the order of the CIT(A).
Karansinh Patel, A.Y. 2017-18 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the insurance pay out, cheque bounce and amount credited, the gratuity pay out, leave encashment after retirement, the salary difference, pay out, receipt of car loan, gratuity loan, all these documents were before the CIT(A) and therefore these should have been taken into account by the CIT(A). The details of Bank of Baroda and Bank of India were not presented as contemplated by the Assessing Officer, yet the cash deposited during demonetization has been properly explained as the Assessing Officer has taken into account the credit details and the details of their milk sales and approximately admitted Rs. 19,04,264/-. But the revised addition to the extent of Rs. 21,90,289/- how the A.O. has arrived has not been taken into account. Therefore, this component of addition does not sustain. As regards loan given to Sanjay Modi which was received through repayment to that of Rs. 4,95,000/-, the said amount has been established by the assessee through proper confirmation and the details of the purpose of loan given to Sanjay Modi receiving back. Thus, we are of the opinion that to that extent only the confirmation should have been given which was not filed by the assessee. Thus, this addition does not sustain. Thus, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 04-11-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 04/11/2025 Karansinh Patel, A.Y. 2017-18 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद