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Facts
The assessee deposited Rs. 10,00,000 cash during the demonetization period, which the AO added under Section 69A as unexplained. The assessee claimed the cash originated from prior bank withdrawals of Rs. 11,00,000, held by her mother for property purchase in Bangalore and father's medical emergency, and was redeposited due to demonetization. The AO and CIT(A) rejected this explanation due to the long holding period (over 8 months) without cogent evidence.
Held
The tribunal acknowledged the fact of cash withdrawals from the assessee's own bank account but found insufficient documentary evidence to substantiate the reasons for holding such a large amount for over eight months. Consequently, the tribunal allowed the addition to be deleted for the first deposit of Rs. 5,00,000 but confirmed the addition of the remaining Rs. 5,00,000.
Key Issues
Whether cash deposits made during demonetization, claimed to be from prior bank withdrawals for specific purposes but held for an extended period, constituted unexplained cash credit under Section 69A of the Income Tax Act.
Sections Cited
144, 142(1), 133(6), 250, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI VIJAY PAL RAO, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1059094792(1) dated 27.12.2023 for the I.T.A.No.67/VIZ/2024 Sudersan Gupta Shriram Kollipara A.Y.2017-18 arising out of order passed under section 144of the Income Tax Act, 1961 (in short ‘Act’) dated 25.11.2019.
Briefly stated facts of the case are, that on verification of the data relating to “cash deposits during the demonetization period” available in AIMS module of ITBA, it was noticed that assessee has deposited cash during the demonetization period. Subsequently, notice under section 142(1) was issued on 09.03.2018 and served on the assessee on 17.03.2018 for filing of return of income pertaining to A.Y. 2017-18. Assessee filed return of income on 30.05.2019 admitting a total income of Rs. 27,090/-. Since the return was filed beyond the date of 31.03.2018 it was considered as invalid return. Subsequently, another notice under section 142(1) was issued and duly served on the assessee. Thereafter, show-cause notice was issued to the assessee requesting to file the explanation. Ld. AO also issued notice under section 133(6) of the Act to Federal Bank calling for the bank statement of the assessee. On perusal of the bank statement, it was noticed that the assessee has deposited cash aggregating to Rs.10,00,000/- as follows: -
Name of the Bank Account No. Date of Cash Deposit Amount (Rs.) Federal Bank 11524100000252 11.11.2016 5,00,000 Federal Bank 11524100000252 18.11.2016 5,00,000 Total 10,00,000 3. In response, assessee submitted that, assessee has earlier withdrawn cash as follows: -
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I.T.A.No.67/VIZ/2024 Sudersan Gupta Shriram Kollipara Date of Cash Amount Name of the Bank Account No. withdrawal (Rs.) Federal Bank 11524100000252 31.03.2016 6,00,000 Federal Bank 11524100000252 02.04.2016 5,00,000 Total 11,00,000
Assessee claimed that these withdrawals was held by her mother for the purchase of property in Bangalore and subsequent to announcement of demonetization these were redeposited on 11.11.2016 and 18.11.2016 @Rs.5,00,000/- on each date. Ld. AO observing that no person could keep such a huge amount as cash on hand for almost eight months and in absence of any cogent evidence made addition of Rs. 10,00,000/- under section 69A of the Act.
Aggrieved by the order of the Ld. AO, assessee filed an appeal before Ld.CIT(A). Considering the similar submissions made by the assessee, Ld.CIT(A) being not satisfied, dismissed the appeal of the assessee.
On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal: - “1. That under the facts and circumstances of the case the orderspassed u/s 144 of the IT Act dt: 25/11/2019 passed by theIncome Tax Officer Ward 2(1) Vijayawada and upheld by the Ld.CIT(A) NFAC vide orders u/s 250 of the IT Act dt: 27/12/2023 is contrary to the facts of the case and provisions of law.
2. The Ld. CIT(A) NFAC erred on facts and in law in confirming the additions made by the Assessing Officer (ITO Ward 2(1)Vijayawada) of cash deposits in bank u/s.69A of Rs.10,00,000/- 3. The Ld. CIT(A) incorrectly upheld the addition of Rs. 10,00,000/- based on the AO's erroneous claim that no person would keepsuch a huge amount as cash in hand for nearly 8 months andfurther incorrectly held that the assessee has frequentlydeposited as well as withdrawn cash from his bank account, which is contrary to facts.” Page No. 3
I.T.A.No.67/VIZ/2024 Sudersan Gupta Shriram Kollipara 7. Ground No. 1 is general in nature and needs no adjudication.
Ground Nos. 2 & 3 pertains to addition of Rs. 10,00,000/- under section 69A of the Act. On this issue, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that assessee is an NRI having the bank account with Federal Bank which is operated by the mother of the assessee. The assessee has requested the mother of the assessee to withdraw an amount of Rs. 6,00,000/- on 31.03.2016 and Rs.5,00,000/- on 02.04.2016, for the purchase of property in Bangalore. Ld.AR also submitted that mother of the assessee holding the cash partly for the purpose of any medical emergency for the father of the assessee. Since the proposal to acquire the property in Bangalore could not materialise and in the meantime due to announcement of demonetization of the currency, assessee has redeposited the same into the bank account of the assessee. He therefore pleaded that the source of cash deposits has been properly explained and hence pleaded to allow the same and delete the addition made by the Revenue Authorities.
Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] fully relied on the orders of the Ld. AO and stated that assessee has held the cash for the period more than eight months and hence could not be considered as the source of deposit during the demonetization period. She pleaded that order of the Ld. CIT(A) be upheld.
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I.T.A.No.67/VIZ/2024 Sudersan Gupta Shriram Kollipara 10. We have heard both the sides and perused the material available on record. It is an admitted fact that the assessee has made cash deposits during the demonetization period as follows: -
Name of the Bank Account No. Date of Cash Deposit Amount (Rs.) Federal Bank 11524100000252 11.11.2016 5,00,000 Federal Bank 11524100000252 18.11.2016 5,00,000 Total 10,00,000
Ld.AR explained the source of above cash deposits arising out of the cash withdrawals as follows: -
Date of Cash Amount Name of the Bank Account No. withdrawal (Rs.) Federal Bank 11524100000252 31.03.2016 6,00,000 Federal Bank 11524100000252 02.04.2016 5,00,000 Total 11,00,000
The reason attributed by the Ld.AR for holding such huge cash for a period of more than eight months was to identify the property in Bangalore and for the purpose of any medical emergency for the father of the assessee who was underwent “BypassSurgery”. It is also found that cash has been withdrawn by the assessee from his own bank account and deposited the same into the same bank account. In such circumstances it can be said that fact of withdrawal of cash was not disputed by the revenue. The assessee from the assessment until its appeal before us has been consistently claiming that the amount was withdrawn for purchase of some property and consequent to announcement of demonetization amount was again redeposited into bank account by the Page No. 5
I.T.A.No.67/VIZ/2024 Sudersan Gupta Shriram Kollipara assessee. However, no documentary evidences have been produced by the assessee to substantiate the same. Ld.AR also not clearly demonstrated with evidences that the withdrawal by the assessee is for the purpose of buying adjacent vacant site in Bangalore. This Bench has consistently taken a view that in the absence of any cogent evidences establishing the purpose of holding of the same for a longer period, only the first deposit into the bank account consequent to announcement of demonetization shall be allowed. We are therefore inclined to allow an amount of Rs. 5,00,000/- deposited on 11.11.2016, thereby confirming the addition of balance amount of Rs.5,00,000/- made by the Assessing Officer. Thus, grounds raised by the assessee is partly allowed.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 28th January, 2025.