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Facts
The assessee filed a return for AY 2017-18 and was selected for scrutiny. The main issue was the addition of Rs. 40.33 Lakhs by the AO, confirmed by the CIT(A), on account of cash deposits made during the demonetization period, treated as unexplained money under section 69A.
Held
The Tribunal noted that the assessee had sufficient cash withdrawals from bank accounts prior to the demonetization period. The explanation that these withdrawn cash amounts were kept at the residence and deposited due to demonetization was considered logical and acceptable. The Tribunal found no reason to disallow the withdrawals in totality.
Key Issues
Whether the cash deposits made during the demonetization period could be treated as unexplained money under section 69A of the Income Tax Act.
Sections Cited
69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI RAJ KUMAR CHAUHAN, HON’BLE
PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dt. 28/11/2023 by NFAC, Delhi, pertaining to AY 2017-18. 2. The sum and substances of the grievance of the assessee is that, the ld. CIT(A) erred in confirming the addition of Rs. 40.33 Lakhs being cash deposits as unexplained money u/s 69A of the Act.
Representatives were heard at length. Case records carefully perused and the relevant documentary evidence duly considered in light of Rule 18(6) of the ITAT Rules, 1963. I.T.A. No. 284/Mum/2024 2
The assessee filed his return of income on 08/12/2017 declaring total income at Rs. 11,73,600/-. The return was selected for scrutiny assessment under CASS and accordingly statutory notices were issued and served upon the assessee.
The bone of contention is the cash deposited during the demonetization period in the three bank accounts, namely, Bank of Maharashtra, Punjab National Bank and Yes Bank. The assessee was issued a showcause notice to showcause as to why the cash deposited in the bank account should not be added u/s 69A of the Act. The assessee filed details of cash deposits in the banks, which is as under:-
“5. 2. In response to the show cause, the assessee has submitted the details of cash deposit in banks. The details are as under:-
[This space is left blank intentionally, P.T.O.] 3
1. The assessee has also submitted the details of cash withdrawals from Banks which are as under:-
The assessee also explained the source of cash deposit and cash withdrawal from the preceding and subsequent years, which reads as under:-
After perusing the details, the AO accepted the contention of the assessee partly to the extent of Rs.49.60 Lakhs but considered the balance of Rs.40.33 Lakhs as unexplained money u/s 69A of the Act which was confirmed by the ld. CIT(A).
We have given a thoughtful consideration to the orders of the authorities below. The tabulation of monthly withdrawals/deposits of cash balance can be understood from the following chart:- 4
A perusal of the above clearly shows that the assessee was having sufficient cash available with him. We are of the considered view that since the high denomination notice of Rs.1,000/- and Rs.5,00/- were declared to be illegal tenders, the public was left with no choice but to deposit the same during the period 08/11/2016 to 31/12/2016. Therefore, the allegation of the AO that, why did the assessee deposit the cash in the bank accounts, does not hold any water. However, all that the AO had to see was that whether the assessee was sufficiently in a position to hold the cash. The factual position exhibited elsewhere clearly show that the assessee was having sufficient funds withdrawn from the bank account which was subsequently deposited in the bank accounts. The explanation of the assessee that, the cash which was withdrawn was kept at his residence and due to demonetization, the same was deposited in the old bank notes, seems to be a very logical and acceptable reason. It appears that the AO has simply presumed that 5
the cash withdrawn by the assessee was utilized by the assessee without bringing anything on record.
We are of the considered view that once the withdrawal of cash from bank accounts has been partly accepted by the AO himself, then we do not find any reason to not accept the withdrawals in totality. Considering the facts of the case in totality, we are inclined to accept that the assessee was having sufficient cash balance for making deposits as demonstrated in the chart exhibited elsewhere. We accordingly direct the AO to delete the impugned addition.
In the result, appeal of the assessee is allowed. Order pronounced in the Court on 29th July, 2024 at Mumbai. (RAJ KUMAR CHAUHAN) ACCOUNTANT MEMBER Mumbai, Dated 29/07/2024 *SC SrPs *SC SrPs *SC SrPs *SC SrPs
आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : अपीलाथ" / The Appellant
""थ" / The Respondent 2. संबंिधत आयकर आयु" / Concerned Pr. CIT 3. आयकर आयु" अपील
( ) / The CIT(A)- िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 5. गाड" फाई/ Guard file. 6. आदेशानुसार/ BY ORDER,