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Facts
The assessee, a Chartered Accountant, declared income from salary and deposited Rs. 15,50,000/- in cash during the demonetization period. The Assessing Officer (AO) added this amount as unexplained cash credit. The CIT(A)/NFAC upheld the addition, stating that the explanation for retaining such a large sum of cash at home was not cogent.
Held
The Tribunal noted that the assessee had provided an affidavit explaining the withdrawal of Rs. 15,00,000/- on 10.12.2014 for anticipated medical expenses of family members and its subsequent redeposit during the demonetization period. The Tribunal found that the source and creditworthiness of the cash deposit were sufficiently established, and the authorities below failed to produce material to disprove the assessee's claim.
Key Issues
Whether the cash deposit of Rs. 15,50,000/- during the demonetization period was sufficiently explained by the assessee to not be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961.
Sections Cited
68, 143(2), 142(1), 144, 115BBE, 250
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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of assessee is directed against the order of CIT(A)/NFAC dated 24.11.2023 vide DIN & Order No. ITBA/NFAC/S/250/2023-24/1058214072(1) passed under section 250 of the Income Tax Act,1961(in short “The Act”) for the AY 2017- 18. The assessee has raised following grounds of appeal:
2. At the outset, the ld. AR of the assessee submitted that there is a delay of 208 days in filing the appeal before this Tribunal. On perusal of the record, we find that the assessee has filed an application for condonation of delay along with an affidavit dated 14/08/2024 sworn before the Notary Public stating that the Vanajakshi Chikkappaiah, Bangalore Page 3 of 23 assessee could not noticed the Appellate Order dated 24/11/2023 passed by the NFAC & received through e-mail as she was attending to her father’s hospitalization due to blood cancer and out of city. Further, in the month of August, 2024 only she could able to detect that Order U/s 250 of the Act was passed and thereafter, on the advice of the legal consultant, she immediately filed an appeal with an application for condonation of delay. Further, the ld. A.R. of the assessee vehemently submitted that the assessee has no intention to jeopardize the interest of the revenue by delaying the filing of appeal. In support of her claim, the assessee also filed a medical discharge summary of her father and prayed that delay was bonafide and not on account of the negligence on the part of assessee and prayed to condone the delay and admit the appeal for adjudication.
2.1 The ld. DR on the one hand though opposed for the condonation of delay but could not controvert the submissions made therein.
We have heard the rival submissions and perused the materials available on record. In our opinion, it cannot be said that assessee is very callous in its approach in filing the appeal before us. The affidavit placed before us is reproduced below for ease of reference and convenience.
Vanajakshi Chikkappaiah, Bangalore Page 15 of 23 3.2 At this juncture, it is appropriate to mention the judgment of the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
(3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
(5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
3.3 Being so, when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserve to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. Moreover no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the belated appeal was filed deliberately.
Vanajakshi Chikkappaiah, Bangalore Page 16 of 23 Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. Therefore, in our opinion, this is a fit case to condone the delay of 208 days in filing the appeal before this Tribunal. Accordingly, the delay is condoned and the appeal is admitted for adjudication.
Now the brief facts of the case are that the assessee is a Chartered Accountant employed in BEL, Bangalore. The only source of income is from salary. For the assessment year 2017-18, the assessee has e-filed her return of income in form ITR-1 SAHAJ on 25.7.2017 declaring total income of Rs.9,75,700/- as reduced by the deduction claimed under Chapter VIA amounting to Rs.1,50,000/- followed by a revised return e-filed on 9.4.2018 declaring enhanced income of Rs.10,80,520/-. Thereafter, the case was selected for a limited scrutiny to examine the source of cash of Rs.15,50,000/- deposited during the demonetization period and accordingly, the AO issued statutory notices u/s 143(2) as well as 142(1) of the Act. The ld. AO observed that based on the information received in this case reveals that the assessee had deposited cash to the extent of Rs.15,50,000/- during the demonetization period into her bank account held with SBI Mahalakshmi Layout Branch, bearing account No.54001999276. Vide notices dated 14.5.2019, 18.10.2019, 22.10.2019, 11.11.2019, the assessee was requested to furnish the details with respect to the cash deposits made. Further, show cause notice dated 13.11.2019 was also issued to the assessee giving a final opportunity to furnish the details for the cash deposit made. The assessee neither replied for any of the notices nor for the show cause notice. Thus, in the absence of any compliance/explanation to the said notices, the assessment was concluded ex-parte u/s 144 of the Act to the best of judgment. Since the assessee could not furnish any evidence in support of the cash deposit made, hence, amount of Rs.15,50,000/- Vanajakshi Chikkappaiah, Bangalore Page 17 of 23 was brought to tax as unexplained cash credit u/s 68 of the Act and taxed accordingly. Aggrieved by the order of assessment passed u/s 144 of the Act, the assessee preferred an appeal before the ld. CIT(A)/NFAC. The NFAC dismissed the appeal of the assessee with the following observations:
5.2 The addition made by the Assessing Officer and the submissions of the appellant have been perused. The AO made addition stating that the appellant neither appeared nor furnished any details with regard to cash deposited in her bank account . The appellant contended that sufficient opportunity was not given by the AO. It is seen from the assessment order that the AO issued notices dated 14.05.2019, 18.10.2019, 22.10.2019, 11.11.2019 to file submissions with regard to cash deposits made during demonetization period. However, there was no compliance by the appellant. Ample opportunities have been given by the AO and the appellant failed to utilize the given opportunities. Thus, it is wrong upon the appellant to say that the AO has not given sufficient opportunities to submit the details. Now coming to the addition of Rs.15,50,000/-, the appellant stated that an amount of Rs.15,00,000/- was withdrawn on 10.12.2014 and the same was redeposited during demonetization period. It can be seen that the withdrawal was made in December, 2014 and cash deposit was made in November, 2016 and the reason given by the appellant for retaining such huge cash is said to be for her convenience. The reason given by her is not a cogent reason and keeping such huge cash at home for such a long period is beyond any imagination. Further the appellant filed bank account statement of one day i.e. 10.12.2014 containing one page in support of her claim and it is seen from the said bank statement that there are credits on the same date, subsequent to withdrawal of Rs.15,00,000/-. In view of the above, the addition of Rs.15,50,000/- made by the AO is upheld.
4.1 Aggrieved with the order of ld. CIT(A), the assessee has filed the present appeal before this Tribunal. The assessee has filed the details of bank statement from the years 2014 to 2017 i.e. for 3 years before us. Further, the assessee has also filed an affidavit stating that she is maintaining only one bank account with State Bank of India till today. Further, the assessee has also filed an affidavit stating that she has withdrawn a sum of Rs.15 lakhs in anticipation of medical expenses of her family members including herself, her husband, father & her father-in-law. Further, the assessee has also filed screen shot of response submitted on 6.10.2018 before the AO during the course of assessment proceedings u/s 143(3) of the Act. Before us ld. A.R. of the assessee Vanajakshi Chikkappaiah, Bangalore Page 18 of 23 vehemently submitted that an amount of Rs.15 lakhs was withdrawn on 10.12.2014 by drawing our attention to the bank statement submitted before us and submitted that the same amount was re-deposited during the demonetization period. Further, the ld. A.R of the assessee submitted that the only bank account maintained by the assessee was also produced before the AO on 6.10.2018 by submitting that the withdrawal vide cheque No.49907 on 10.12.2014 by her was only deposited back during the Financial year 2016-17 and the same information has been shared in the income tax return for the year 2016-17 relevant for the assessment year 2017-18 and prayed to close the case initiated u/s 143(2) of the Act.
The ld. D.R. on the other hand, supported the orders of the authorities below and submitted that assessee could not establish the source of deposit of Rs.15,50,000/- made during the demonetization period and accordingly prayed to dismiss the appeal of the assessee.
We have heard the rival submissions and perused the materials available on record. In the present case, assessee is a Chartered Accountant and employed in BEL. Before us, the assessee filed an affidavit stating that she is only maintaining bank account no.54001999270 with State Bank of India Mahalakshmi Layout Branch, Bangalore and except the aforesaid bank account she did not have any other bank account even today and for the financial year 2016-17. The copy of affidavit is reproduced below for ease of reference and record:
6.1 Further, the ld. A.R. of the assessee also submitted the return of income of the assessee i.e. ITR 1 Sahaj filed for the assessment year 2017-18 in which the assessee has mentioned only one bank account i.e. State Bank of Mysore bearing account no.54001999270 in the Part E-Other Information. Therefore, we are inclined to accept the contention of the assessee that the assessee maintains only one bank account with State Bank of India Mahalakshmi Layout Branch, Bangalore during the financial year 2016-17. On going through the bank statement which is also submitted before the AO, we find that assessee has withdrawn Rs.15 lakhs vide cheque No.0499907 on 10.12.2024. Now before us, the reason for withdrawing such huge cash is also explained by the assessee by way of an affidavit dated 20.11.2024 by stating that she has Vanajakshi Chikkappaiah, Bangalore Page 21 of 23 withdrawn a sum of Rs.15 lakhs in anticipation of medical expenses for her family members including herself, her husband, her father and father-in-law having medical issues. In this regard, the affidavit submitted before us is reproduced below for ease of reference and convenience:
6.2 On going through the Bank Accounts submitted before us, we also find that the assessee has deposited the same cash of Rs.15 lakhs on 24.11.2016 which the assessee claims to have redeposited from the cash withdrawn on 10.12.2014 from the same bank account. Therefore, we are of the considered opinion that assessee has properly explained the source of cash deposited on 24.11.2016 Vanajakshi Chikkappaiah, Bangalore Page 23 of 23 and the authorities below have not brought any material on record to disprove the same. We also find that the AO in the guise of absence of any details had added an amount of Rs.15,50,000/- as unexplained cash credit u/s 68 of the Act, whereas as can be seen from the screen shot produced before us, the assessee had filed the response before the AO on 6.10.2018 stating that vide cheque No.49907 on 10.12.2024 withdrawn by her has been deposited back during the year 2016-17 and the same information has been shared in the income tax return for the AY 2016-17 and prayed that the information is sufficient to close the case u/s 143(2) of the Act. In view of the above, we find no merit to sustain the addition made u/s 68 of the Act as the conditions i.e. nature, source and creditworthiness has been fully established by the assessee and the assessee has offered satisfactory explanation before the authorities below and also the authorities below could not bring any material on record to disprove the claim made by the assessee.