MRS. RANIAMMAL SUBRAMANIAM,CHENNAI vs. ITO NON CORP. WARD 10(5), CHENNAI

This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Order No.ITBA/NFAC/S/250/2023- 24/1058358075 (1) dated 30.11.2023. The assessment was framed by the Income Tax Officer, Non Corporate Ward-10(5), Chennai for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 12.12.2019.

The only issue in this appeal of assessee is as regards to the order of CIT(A)-NFAC in partially sustaining the addition made by AO u/s.69 of the Act being cash deposit during demonetization period amounting to Rs.17.53 lakhs and sustained by CIT(A)-NFAC at Rs.8,76,500/-. For this, assessee has raised various grounds which are argumentative and exhaustive and hence, need not be reproduced.

Brief facts of the case are that the assessee is an individual filed her return of income for the assessment year 2017-18 electronically on 31.07.2017 admitting total income of Rs.14,80,350/-. The assessee’s case was selected for limited scrutiny under CASS on account of cash deposits made during demonetization period. During the scrutiny proceedings, details like bank accounts, sources of cash deposits etc., were called for from the assessee. In response to the notices, the assessee submitted copy of three bank account details held by her. On perusal of bank account details submitted by the assessee, the AO found that the assessee has deposited cash during demonetization period to the extent of Rs.17,53,000/-. The assessee before AO contended that these cash deposits are basically receipts of rental income and income from other sources and consequently cash deposit was made - 3 - during demonetization period out of these rental receipts. The assessee’s claim was also that the entire cash deposit during demonetization period in demonetized currency was earlier years rent receipt but the assessee could not file any detail before AO hence, he added the entire cash deposit of Rs.17.53 lakhs as unexplained investment u/s.69 of the Act. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A)-NFAC after accepting the plea of assessee of rental receipts and earlier years rental receipts as well as advance security deposit received in cash for earlier years was deposited during demonetization period, he estimated the disallowance at 50% and thereby, restricted the addition at Rs.8,76,500/- as against made by AO at Rs.17,53,000/- by observing in para 5.5 as under:- 5.5 I have duly considered the explanation of the appellant with regard to source of cash deposit in the bank account. The appellant being the senior citizen ( house hold lady) and rental income being the only source of income, it is seen that the explanation with regard to cash deposit of Rs. 1753000 appears to be half truth. The appellant has not provided any documentary evidence in support of her claim however considering the totality of facts and keeping in View of a very natural tendency to save certain amount of cash by Indian family (more so in the case of Indian lady) every year it, would meet the end of justice if relief of 50% of the cash deposited in the bank account is allowed in this case. This is more so in view of government intent to reduce frivolous litigation as a means of higher tax payer service. Accordingly AO is directed to restrict the addition (at 50% of 1753000) 876500. Therefore these grounds of appeal are partly allowed.

We have heard rival contentions and gone through facts and circumstances of the case. We have perused the case records including the assessment order and the order of CIT(A)-NFAC. We noted that the CIT(A)-NFAC has examined the cash deposit and was of the view that the assessee is earning her livelihood by rental receipts and income from other sources, it is very natural tendency in the Indian families particularly ladies that they save cash at home. Hence, he allowed relief at 50%. We noted that the finding of CIT(A)-NFAC seems to be reasonable but we are of the view that a reasonable and fair estimate of disallowance is to be made. Hence, we restrict the addition at Rs.5,00,000/- and give further relief of Rs.3,76,500/-. We restrict the addition at Rs.5,00,000/- and partly- allow the appeal of the assessee.

In the result, the appeal filed by the assessee is partly-allowed.