SMT. A. SATHYA ,VELLORE vs. ITO, WARD-1, VELLORE, VELLORE

The only issue in this appeal of assessee is against the order of the Additional Commissioner of Income Tax (Appeals), Kolkata in confirming the addition made by the ld. Assessing Officer at Rs.9,16,000/- being demonetized cash deposit made by the assessee and treating the same as unexplained money u/s.69A of the Act and levying tax u/s.115BBE of the Act.

I have heard rival contentions and gone through facts and circumstances of the case. Brief facts of the case are that as per the information available with the Department, the assessee has deposited an amount of Rs.11,16,000/- in his Indian Bank Savings Account, Sathuvachary Branch on 16.11.2016 during Demonetization Period ie., from 09.11.2016 to 30.12.2016. When questioned about the cash deposits of Rs. 11,16,000/- in the Indian Bank Savings Account bearing Number 830695338 during the Demonetization Period, the Authorized Representative has replied that "the Assessee is doing Money lending business for the Past few years and started filing of Return of Income from the A.Y.2016-17 onwards. He used to give small amounts as loans to known people and the repayments from them along with the Interests usually received by cash only. During Demonitization Period even though he has insisted his Customers to repay the loans in Cheque, they refused to do so and paid him back in Old Currency Notes and the subsequent deposit of the same is source for the cash deposits during Demonetization Period. The Assessing Officer has not accepted the plea of the assessee by giving reasons that this action of the assessee seems to be an after thought to create debtors in his balance sheet and thereby accommodating loans and advances in the asset side of the Balance Sheet. According to him, assessee failed to produce list of persons and their contact details to whom he had given loans and advances and hence the Assessing Officer treated the entire cash deposit of Rs.11,16,000/- deposited during the demonetization period as unexplained except a sum of Rs.2,00,000/- may be his past family saving and is exempted from addition in view of principles of natural justice. Since the source of cash deposits was not properly explained, the Assessing Officer added a sum of Rs.9,16,000/- as unexplained money u/s.69A of the Act and taxed the same u/s.115BBE of the Act. Aggrieved, assessee preferred an appeal before the ld. Additional Commissioner of Income Tax (Appeals).

The ld. Addl. CIT(A) confirmed the action of the ld. Assessing Officer by observing as under:- ‘’The facts of the case, the appellant had deposited an amount of Rs.11.16 lakhs in his Indian Bank Savings Account, on 16.11.2016 during demonetization period i.e., from 09.11.2016 to 30.12.2016. AO had asked appellant to explain the source of cash deposit. Appellant in his reply had stated that he had engaged in money lending business, during demonetization, borrowers had repaid him

From the facts and circumstances of the case, I note that assessee has deposited a sum of Rs.11,16,000/- in the Indian Bank Saving Account during demonetization period as assessee is doing money lending business for the past few years. Admittedly, assessee has filed his return of income for the assessment year 2016-2017 on 15.11.2016 in which he has enclosed Balance Sheet which declared debtors/loans/ advances in asset side. Admittedly, assessee failed to produce the list of persons and their contact details before the ld. Assessing Officer. The Assessing Officer has estimated his saving at Rs.2,00,000/- which is very low. Going by the nature of business and debtors in the Balance Sheet claimed that assessee had deposits of Rs.11,16,000/- out of the some debtors, I make a fair estimate, accept a sum of Rs.6,00,000/- as cash in the shape of debtors/loans/ advance as asset in the balance sheet for assessment year 2016-2017 i.e year ending 31.03.2016 which was carried forward in the next year deposited in bank account on 16.11.2016. Hence, I accept the availability of cash deposit of Rs.6,00,000/- and the balance of Rs.5,16,000/- as unexplained. The appeal of the assessee is partly allowed.

In the result, the appeal of the assessee in 2017-2018 is partly allowed.