MADHAVI PONUGOTI,HYDERABAD vs. INCOME TAX OFFICER, WARD-3(1), HYDERABAD

Brief facts of the case are that the learned Assessing Officer made an addition of Rs. 10,57,177/- for the deposits in the account of the assessee during demonetization period, holding that the assessee did not appear and explain these deposits. In the first appeal, the assessee had taken the plea that such deposits represent the repayment of the gold loan obtained by the assessee on earlier occasions. Learned CIT(A), however, did not accept the same on the ground that the assessee did not file any return of income by declaring such income, nor did she pay the taxes thereon and also that no evidence is produced by her.

The assessee again submitted the bank statement before me to demonstrate that in the month of June, the assessee withdrew Rs. 10 lakhs from Bhavana Rishi Co-Op. Urban Bank Ltd., which the assessee re-deposited in her bank account due to demonetization. Learned AR submitted that the assessee was planning to purchase some immoveable property for which the loan was obtained, but due to demonetization, the assessee was forced to deposit the same into her bank account.

Learned DR, on the other hand, submitted that the assessee had repaid gold loan in cash at Rs. 10,59,177/- as stated in the learned CIT(A) order and the same is not recorded in the books of accounts. Learned DR further submitted that the assessee did not explain the source of such deposits also and argued that the assessee did not offer any acceptable and cogent explanation regarding the source of such money found in the bank account and since the assessee did not file the return of income, the income earned has not been offered and taxes due are not paid, the gold loan repaid in cash is treated as un-explained money under section 69A of the Act, and upheld the addition.

I have gone through the record in the light of the submissions made on either side. Insofar as the assessee obtaining gold loan on 15/06/2016 is concerned, the bank statement is clear and the learned CIT(A) also did not suspect this document. There is nothing unusual in the plea taken by the assessee that planning to purchase some immoveable property, the assessee obtained gold loan and because of the sudden demonetization, the assessee had to deposit the same into her account. When the source is clear and acceptable, the other things recorded by the learned CIT(A) cannot be a ground to make an addition. I, therefore, accept the contention of the assessee and believe that there was source for the deposits made by the assessee in the bank account. Thus, I direct the learned Assessing Officer to delete the addition so made. Grounds are accordingly allowed.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on this the 13th day of June, 2024.