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Facts
The assessee's return for AY 2017-18 was selected for scrutiny after depositing cash during demonetization. The AO made an addition of Rs. 5,71,000/- under section 69A for unproved cash deposits in HDFC Saving Bank and SCB Loan accounts. The assessee argued that the deposits were sourced from prior cash withdrawals, substantiating this with bank statements and a bank confirmation.
Held
The Tribunal agreed with the assessee regarding the HDFC Bank account, finding that the cash deposits of Rs. 2,58,000/- were from earlier withdrawals as evidenced by bank records and confirmation, and deleted this addition. However, the Tribunal upheld the addition of Rs. 3,13,000/- related to the SCB Loan Account due to a lack of explanation and evidence from the assessee regarding the source of those deposits.
Key Issues
Whether cash deposits made during demonetization were adequately explained as withdrawals from the same bank account, and whether unexplained deposits constituted income under Section 69A.
Sections Cited
Section 69A of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)/Additional/Joint Commissioner of Income Tax (Appeals)-5, Kolkata (hereinafter referred to as 'the CIT(A)') dated 12.03.2024, for assessment year 2017-18.
Shri Pupinder Singh, appearing on behalf of the assessee submits that the assessee filed its return of income for AY 2017-18 on 27.03.2018 declaring income of Rs. 13,07,480/-. The return of assessee was selected for limited scrutiny under CASS. It was alleged that the assessee had deposited cash during demonetization period. During the course of scrutiny assessment proceedings the assessee had furnished bank statements of HDFC Saving Bank Account No. 891000039482 and (AY 2017-18) SCB Loan Account No. 47752572. The Assessing Officer (AO) only took note of cash deposits during demonetization period without considering the submissions of assessee that the cash deposits were out of withdrawals in the preceding months. He referred to HDFC Bank Ltd. saving account bank statement at pages 72 to 76 of the paper book. He pointed that the transactions reflected in bank statement wherein narration ‘Chq Paid-New Friends’ is mentioned these are cash withdrawals by way of self bearer cheques. The Bank has issued confirmation that transactions reflected in bank statement containing narration ‘Chq Paid-New Friends’ represent cash withdrawals through self bearer cheques. The said confirmation from HDFC Bank is at page 54 of the paper book. The ld. AR further referred to pages 22 and 23 of the paper book to show transactions reflecting cash withdrawals but not considered by the AO. He further contended that if all withdrawal entries are considered cumulatively the cash balance would be positive.
Per contra, Shri Sanjay Kumar representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee.
Both sides heard, orders of the authorities below examined. The AO has made addition of Rs.5,71,000/- u/s. 69A of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) on account of unproved cash deposits in two bank accounts of the assessee i.e. HDFC Saving Bank Account and SCB Loan Account. The short contention of the assessee is that the cash deposits are from previous cash withdrawals from HDFC Saving Bank Account of the assessee. To substantiate cash withdrawals, the assessee has referred a bank statement and in particular to transactions with narration ‘Chq Paid-New Friends’. It is the contention of assessee that withdrawals with the aforesaid narration refers to cash withdrawals through self bearer cheques. I find that similar submissions were made by the assessee (AY 2017-18) before the AO, however the AO disbelieved the same and made addition of Rs.2,58,000/- on account of cash deposits in HDFC Bank account during demonetization period. Considering HDFC Bank statements available on record and the confirmation from the Bank explaining the narration of withdrawals through self bearer cheques, I find merit in submission of the assessee. Hence, addition u/s. 69A with regard to cash deposits in HDFC Bank account amounting to Rs.2,58,000/- are deleted. 4.1. In so far as the cash deposits in SCB Loan Account of Rs.3,13,000/-, neither any explanation has been furnished by the assessee nor any evidence has been adduced either before the authorities below or the Tribunal to show source of cash deposits in the said bank account. Hence, addition to the extent of Rs. 3,13,000/- u/s. 69A of the Act is upheld.