MRS. MANDEEP KAUR,RUPNAGAR vs. INCOME TAX OFFICER, WARD-2(2), RUPNAGAR, RUPNAGAR

Briefly, the facts of the case are that the assessee, an individual and homemaker, failed to file a return of income for A.Y. 2017-18. During the course of demonetization-related data analysis, it was observed that the assessee had deposited cash of Rs.11,06,000/- in her bank account with State Bank of India, Bela Chowk, Ropar, Punjab, during the period 09.11.2016 to 30.12.2016, besides cash deposits of Rs.5,000/- outside this period and other credits amounting to Rs.3,91,259/-. The assessee did not respond to multiple notices issued under section 142(1) nor did she file a return of income. Consequently, the AO completed the assessment to the best of his judgment under section 144 and treated the entire deposits as unexplained money under section 69A of the Act, thereby assessing total income at Rs.15,02,260/-. Penalty proceedings under various provisions were also initiated.

Aggrieved, the assessee filed an appeal before the CIT(A), NFAC. In the appeal, the assessee submitted that she is the wife of a serving Indian armed forces officer, Mr. Davinder Singh, and due to his frequent postings, she was often away from the native address and was unfamiliar with electronic communication. The assessee contended that the cash deposits were made out of amounts withdrawn by her husband from his HDFC account and were intended for personal use, including home repair and family expenses. It was further submitted that due to demonetization, the funds were redeposited into their joint SBI account. The assessee submitted supporting bank statements and details of loans received by her husband from various sources, including Naval Group Insurance, HDFC Bank, credit cards, and relatives.

The Revenue, on the other hand, contended that the assessee failed to submit corroborative evidence such as loan confirmations, agreements, or a direct nexus between the claimed sources and the deposits made in the assessee’s bank account. The CIT(A) observed that the assessee failed to correlate the deposits with the husband’s account, did not establish a consistent pattern of similar deposits in earlier years, and failed to discharge the onus of explaining the nature and source of the cash and credit entries. Accordingly, the CIT(A) upheld the order of the AO and dismissed the appeal.

Feeling aggrieved by the order passed by the Ld. CIT(A) the assessee preferred an appeal before the Tribunal.

The Ld. AR for the assessee had drawn our attention to the bank statement of the husband, wherein all the amount have came to the account of the assessee through the banking channels. In this regard the explanation of the amount deposited in the banks was as under:

Details of Receipt of amount in Salary Account of Mr. Davinder Singh (Husband) in HDFC Account 01301150004859 (Placed in the Paper-book at Pages 3-17) S. Date Amount Amount Source Paper-book No. Deposited Withdrawn Page i) 02.06.2016 398000.00 Loan from Naval Group Insurance 5 ii) 21.09.2016 200000.00 Loan from Credit Card No.23802250 9 iii) 23.09.2016 427105.00 Personal loan from HDFC account 9 iv) 01.10.2016 130000.00 Loan from Mr. Jaswinder Singh (Brother- 9 in-Law) through NEFT transfer from individual's account v) 01.10.2016 900000.00 9 vi) 03.10.2016 100000.00 9 Further it was submitted Sh. Davinder Singh husband of the assessee withdrew an amount of Rs. 900000/- on 01.10.2016 and Rs. 100000/- on 03.10.2016 as mentioned above. . This amount was duly explained and was later on deposited by the assessee in her in joint bank account as per the following details:

25.04.2016 10000.00 20 10000.00 3 2. 10.05.2016 (Deposited out of ATM withdrawal on 5000.00 20 07.05.2016) Double addition as per Ground No.4 3. 26.05.2016 Received from IOC subsidy 119.10 20 4. 26.06.2016 SB Interest 63.00 21 5. 01.07.2016 100000.00 21 100000.00 6 6. 05.07.2016 170000.00 21 170000.00 6 7. 07.07.2016 Received from IOC subsidy 140.15 21 8. 30.08.2016 Received from IOC subsidy 71.27 22 9. 25.09.2016 SB Interest 226.00 22 10. 05.10.2016 Received from IOC subsidy 73.19 22 11. 25.12.2016 SB Interest 5357.00 22 12. 03.11.2016 4000.00 22 4000.00 10 13. 06.01.2017 6000.00 23 6000.00 1 2 14. 11.01.2017 100.00 24 100.00 1 3 15. 17.01.2017 65000.00 24 65000.00 1 5 16. 18.01.2017 10000.00 25 10000.00 1 5 17. 18.01.2017 10000.00 25 10000.00 1 5 Based on the above the Ld. AR submitted that the addition of Rs. 3,91,259/- is unsustainable as it was duly explained by the assessee before us and also before the lower authorities.

On the other the Ld. DR relied upon the order passed by the lower authorities.

I have heard the rival submissions and perused the material available on record. The assessee has submitted that she is the wife of a serving Indian armed forces officer and that due to his frequent transfers, she was often away from the address where notices were sent and was unfamiliar with electronic communications, which led to non-compliance. It was explained that the cash deposits in question were sourced from amounts withdrawn by her husband, Mr. Davinder Singh, from his HDFC Bank account, out of loans and savings meant for family use and home repairs. The assessee has placed on record bank statements and details of loans availed, including from Naval Group Insurance, HDFC Bank, credit cards, and family members, to support the explanation. The summary of the financial transactions are already reproduced in the submissions of the assessee hereinabove.

On the other hand, the Revenue has contended that no corroborative evidence such as loan confirmations, repayment details, or a clear reconciliation between the husband’s account and the assessee’s deposits was filed. It has further emphasized that the pattern of deposits was inconsistent with prior years and the assessee failed to discharge the onus of proving the nature and source of the deposits.

Upon careful consideration, I found that while the assessee’s initial compliance was deficient, she has now placed material on record to substantiate her claim regarding the source of funds. The revenue has failed to contradict the documents filed by the assessee before the authorities below and also before us. The explanation offered by the assessee, that the cash belonged to her husband and was deposited back into the joint account during demonetisation, appears plausible in the facts and circumstances of the case. The assessee has also demonstrated that the funds were withdrawn from identifiable banking sources of her husband and that the deposits were not out of undisclosed income or business receipts.

In my considered opinion, the strict application of section 69A in this case would result in injustice to the assessee, particularly when the assessee failure to respond arose due to genuine reasons linked to her husband’s transferable service and her limited access to technology. We find merit in the assessee’s explanation and hold that the addition of Rs.1106000/- and Rs. 3,91,259/- (totaling to Rs. 1497259/-) made under section 69A of the Act is not sustainable. Accordingly, we delete the addition. No other ground has been urged or