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Facts
The assessee, a senior citizen suffering from medical ailments, deposited Rs. 8,00,000/- in cash during demonetization. The assessee claimed these deposits were from past savings and explained the need for cash in hand due to age and medical needs. The Assessing Officer and CIT(A) rejected this explanation for lack of documentary evidence.
Held
The Tribunal held that the assessee's explanation regarding cash deposits from past savings and for meeting emergency medical expenses was reasonable and acceptable given the circumstances, including the assessee's age and medical conditions. The orders of the lower authorities were found to be erroneous.
Key Issues
Whether the cash deposits made by a senior citizen during demonetization, explained as stemming from past savings and for medical emergencies, were appropriately rejected by the revenue authorities without sufficient inquiry.
Sections Cited
143(3), 69A
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Income Tax Appellate Tribunal, LUCKNOW BENCH ‘SMC’, LUCKNOW
Before: SHRI ANADEE NATH MISSHRA
2017-18 against impugned appellate order dated 17/02/2025 (DIN & Order No.ITBA/APL/S/250/2024- 25/1073364329(1) of ADDL/JCIT(A)-2, Ahmedabad [“Addl/Jt.CIT(A)” for short].
(A.1) In this case assessment order dated 23/12/2019 was passed u/s 143(3) of the Income Tax Act, 1961 (“the Act” for short) whereby the assessee’s total income was assessed at Rs.11,91,780/- as against returned income of Rs.3,91,780/-. In the aforesaid assessment order, an addition of Rs.8,00,000/- was made u/s 69A of the Act. The aforesaid amount of Rs.8,00,000/- was made on account of cash deposited by the assessee in bank. The assessee, during assessment proceedings, submitted that the assessee himself and his wife, both were senior citizens, suffering from medical ailments and had to maintain reasonable amount of cash in hand (to meet emergency medical expenses). The assessee also submitted cash flow statement to explain the source of cash deposit in bank. Aggrieved by the addition made in the assessment order, the assessee filed appeal. Vide impugned appellate order dated 17/02/2025, the assessee’s appeal was dismissed by learned Addl/Jt.CIT(A)-II, Ahmedabad. During the appellate proceedings, the assessee made detailed submissions and produced various documents in support thereof. The main contentions of the assessee appellant were as under:
(A.2) The learned Addl/Jt.CIT(A) did not consider the assessee’s explanation favourably. The submissions made by the assessee during appellate proceedings, regarding source of income, opening cash, cash flow statement and withdrawals were also not considered favourably by the learned Addl/Jt.CIT(A) on the ground that they were not supported by any concrete documentary evidence (and that there was large inconsistency in the facts and submissions made by the assessee). The learned Addl/Jt.CIT(A) dismissed assessee’s appeal, relying on the decision of Hon'ble Supreme Court in the case of P. Mohankala vs. CIT [2007] 291 ITR 278 (SC) for the proposition that surrounding circumstances and material evidences are concrete and correct manner of looking at justification of the appellant and arriving at conclusion.
(A.3) Aggrieved again, the assessee filed the present appeal in Income Tax Appellate Tribunal. At the time of hearing, the assessee was represented by none. In the absence of any representation from the assessee’s side, learned Sr. D.R. for Revenue was heard. He relied on the aforesaid orders dated 23/12/2019 and 17/02/2025 of Assessing Officer and Addl/Jt.CIT(A) respectively.
(B) Materials on record have been perused. Learned Sr. D.R. for Revenue has been heard. It is found that the Assessing Officer did not accept the assessee’s explanation stating that the submissions of the assessee and cash flow statements were not supported by any documentary evidence. Similarly, it is found that the learned Addl/Jt.CIT(A) also, in his aforesaid impugned appellate order, did not accept the assessee’s submissions stating that the source of income, opening cash, cash flow statement, and withdrawals etc. submitted by the assessee were not supported by any concrete documentary evidence and that there was large inconsistency in facts and submissions made by the appellant. However, on perusal of the orders passed by the Assessing Officer and the learned Addl/Jt.CIT(A), it is found that there is nowhere any mention of what further (concrete/documentary) evidences were called for from the assessee by them. Further, the assessment records of the assessee for earlier years were available/ accessible for Revenue authorities for verification and yet no discrepancy has been recorded either by the Assessing Officer or by learned Addl/Jt.CIT(A), having regard to earlier years’ records of the assessee, in the explanation submitted by the assessee or in details submitted by the assessee regarding source of income, opening cash, cash flow statement, withdrawals etc. It is not in dispute that the assessee has multiple sources of income (salary, rent, agricultural income, income from other sources). It is also not in dispute that the assessee himself and his wife are senior citizens suffering from medical ailments. Under these circumstances, the explanation submitted by the assessee that reasonable amount of cash in hand was required to be kept ready at home to meet any emergency expenses, if such need arises, either in his own case or in the case of his wife; is a reasonable and acceptable explanation; because it is common knowledge how expensive medical expenses can sometimes be. Although the learned Addl/Jt.CIT(A) has cited the case of Hon'ble Supreme Court in the case of P. Mohankala (supra), in the specific facts and circumstances of the present case, the aforesaid order of Hon'ble Supreme Court is in assessee’s favour. The surrounding circumstances (old age of the assessee and his wife, both suffering from medical ailments, multiple sources of income of the assessee; explanations and supporting documents submitted by the assessee regarding source of income, opening cash, cash flow statement, and withdrawals etc. as discussed earlier in this order) make it abundantly clear that the inferences drawn by the learned Addl/Jt.CIT(A) and the Assessing Officer were erroneous and that the explanation submitted by the assessee was acceptable in the specific facts and circumstances of the present case. It seems that the Assessing Officer and the learned Addl/Jt.CIT(A) have passed their orders with a premeditated mindset lacking in reason, balance and fair judgment in the present case. In view of the foregoing, the impugned appellate order of Addl/Jt.CIT(A) is set aside and the Assessing Officer is directed to delete the aforesaid addition of Rs.8,00,000/- made in the assessment order.
(C) In the result, the appeal of the assessee is allowed.
(Order pronounced in the open court on 29/04/2025)