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Facts
The assessee, a senior citizen, deposited ₹ 19 lakhs in cash into his bank account during the demonetization period. The Assessing Officer (AO) added this amount under Section 68 of the Income Tax Act, finding the explanation insufficient. The CIT(A) confirmed the addition.
Held
The Tribunal noted that the assessee provided a cash flow statement and bank statements indicating prior withdrawals totaling significantly more than the deposit. The AO failed to provide evidence that these withdrawals were for other purposes. Therefore, the source of the cash deposit was considered explained.
Key Issues
Whether the cash deposit of ₹ 19 lakhs during demonetization period is sufficiently explained by the assessee as per Section 68 of the Income Tax Act.
Sections Cited
68, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “SMC” Bench, Mumbai.
IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “SMC” Bench, Mumbai. Before Shri Prashant Maharishi (AM) (A.Y. 2017-18) Dhirajlal Khatau Thacker Vs. ITO-27(1)(4) B-301, Mahavir Co-op. Housing Room No. 409 4th Floor, Tower 6 Society Limited Derasar Lane, Vashi Railway Ghatkopar Station Commercial East, Mumbai-400 077. Complex, Navi Mumbai-400 703. PAN : ACBPT5615P (Appellant) (Respondent) Assessee by Shri Ashish Thakurdesai Department by Shri R.R. Makwana Date of Hearing 06.06.2024 Date of 25.07.2024 Pronouncement O R D E R
This Appeal is filed by Mr. Dhirajlal Khatau Thacker [ Assessee/ Appellant] for assessment year 2017 – 18 against appellate order passed by the National faceless appeal Centre (Delhi) (the learned CIT – A) dated 7/12/2023 wherein the appeal filed by the assessee against the assessment order passed under section 143 (3) of The Income Tax Act, 1961 (The Act) dated 18/11/2019 by The Income Tax Officer Ward 27 (1) (4), Mumbai (the AO) was dismissed.
Only ground raised
by the assessee is with respect to the addition of ₹ 19 lakhs under section 68 of The Income Tax Act on account of cash deposit in bank account during demonetization period.
3. Brief facts of the case shows that the assessee is an individual who filed his return of income declaring total income of Rs 3,37,910/– on 1/08/2017 which was subsequently revised on 31/08/2017 at same income. The case of the assessee was selected for limited scrutiny for the reason of the large value cash deposit during demonetization period. Accordingly notice under section 143 (2) of the act was issued on 21/08/2018.
It was found that assessee has deposited ₹ 19 lakhs in the bank account maintained with Abhudaya cooperative bank Ltd. Assessee submitted that source of income is from salary, house property, business income as assessee is partner in partnership firms/ LLPS and capital gain along with interest and dividend. Assessee submitted date -wise cash withdrawal from 27/4/2015 to 13/10/2016 totaling to ₹ 1,907,000 and explained that cash withdrawal was deposited in the bank account. Assessee also submitted cashbook for financial year 2014 – 15 to financial year 2016 – 17. According to that the opening cash balance for the respective financial year was ₹ 478,823/–, ₹ 59,003 and 23/–, ₹ 1,160,823/– and ₹ 19,46,323/- was available .
The AO noted that assessee has withdrawn ₹ 145,000/- for personal expenses from 1/4/2014 8/11/2016 which is low, ld AO rejected explanation that the amount that has been withdrawn from the bank account in cash from earlier years, which is available with him, has been deposited in the bank account on account of demonetization.
The learned assessing officer issued show cause notice asking for the copy of the bank statement of ICICI bank Ltd for earlier years and further that the submission of the assessee that the cash withdrawal of ₹ 19,00,000/- is available for deposit in bank 15/11/2016 not justified for the reason that the cash available with the assessee is only of ₹ 611,500. The learned AO also raised the issue of low withdrawal for household expenditure.
In response to these notice assessee submitted a cash statement wherein it was stated that from total cash available with the assessee the amount is deposited in the bank account. Assessee submitted a bank statements and cash flow statement wherein cash balance of ₹ 1,946,323/– available before date of depositing the cash. Out of which cash deposited on 15/11/2016 of ₹ 10 lakhs and ₹ 9 Lacs in the bank account. Therefore the total cash deposit amount remains completely explained. Assessee also explained the amount of household expenditure incurred by the assessee. However ld AO rejected the explanation of the assessee and made an addition of ₹ 19 lakhs under section 68 of The Income Tax Act by an assessment order under section 143 (3) dated 18/11/2019 determining the total income of the assessee at ₹ 2,237,910/–.
Assessee aggrieved filed appeal before the learned CIT – A who rejected explanation and assessment order was confirmed for the reason that those reasons given by the assessee are not sufficient to address the issue raised by the learned assessing officer. Accordingly the addition was confirmed by appellate order dated 7/12/2023.
Aggrieved, assessee is in appeal before us. Ld AR has submitted a paper book containing 69 pages. He explained that assessee was having available cash balance for deposit in the bank account and explanation furnished before CIT (A) reproduced at paragraph number 6 of the appellate order was not considered. The authorized representative relied on the decision of the coordinate bench in case of Mr. Dinesh Goswami /2017 for assessment year 2013 – 14 dated 28/2/2019 wherein on identical circumstances addition was deleted.
The learned departmental representative vehemently supported the orders of the learned lower authorities.
We have considered the rival contention and the orders of the learned lower authorities. Briefly stated the facts show that assessee is a senior citizen, who has deposited sum of ₹ 19 lakhs in the bank account during demonetization period. During course of assessment proceedings, assessee submitted cash flow statement starting from 1/4/2014 to 31/3/2017 wherein ₹ 19 lakhs was found to be deposited in Abhudaya Cooperative bank Limited on 15/11/20126 . Assessee has submitted that he has Five Bank accounts from which cash was withdrawn on various dates and Rs 19 lakhs were deposited in one bank account. Assessee also explained before the learned CIT – A reasons for maintaining cash on hand that assessee is a senior citizen and therefore to meet any medical emergency the cash is available. Even otherwise it is apparent that assessee has withdrawn cash from ICICI bank account and other banks from 2014 till the date of deposit a sum of ₹ 46 lakhs, Out of that assessee has Rs 19 lakhs also. The explanation of the assessee was that amount of cash deposited in the bank account on account of demonetization is available with the assessee out of cash withdrawn from the bank account on earlier dates. There is no evidence with the ld AO that withdrawal made from the bank account in cash by the assessee is not correct or the withdrawal so made is used by assessee for some other purposes and hence, source of such cash deposit is not available with the assessee. In absence of any such evidence, explanation of assessee cannot be rejected. In view of this we find that assessee has explained the deposit of cash of ₹ 19 lakhs in the bank account by supporting withdrawal from the bank account. In view of this, this addition of Rs 19 lakhs in the hands of assessee is not sustainable. Therefore, we reverse order of the learned lower authorities. Accordingly the addition made by the learned assessing officer of ₹ 19 lakhs under section 68 of the Act on account of deposit in the cash in bank account of the assessee is deleted.
Accordingly appeal of the assessee is allowed.
Order pronounced in the open court on 25.07, 2024.