HARVINDER SINGH ,CHANDIGARH vs. INCOME TAX OFFICER, WARD-5(1), CHANDIGARH , CHANDIGARH

In the present appeal, the Assessee has raised the following grounds of appeal:

That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of tax at 60% applying the provisions of Section 115 BBE which are not applicable in the instant case.

Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has since sustained the said addition and against the said findings, the assessee is in appeal before us.

During the course of hearing, the submissions made before the lower authorities were reiterated by the ld AR and it was submitted that the submissions so filed have not been appreciated by the lower authorities. It was submitted that the assessee was maintaining two bank accounts with Canara Bank and Yes Bank and there were total cash withdrawals of Rs. 39,44,500/- from these two bank accounts from 01/04/2016 to 07/11/2016. It was submitted that out of the cash so withdrawn, the assessee has incurred household expenses of around 3,00,000/- for first eight months, expenses on construction of house for Rs. 9,00,000/- and expended another Rs. 8,00,000/- on illness of her sister who has since expired on 03/11/2016 and out of the remaining cash withdrawn, Rs. 14,00,000/- was deposited on 15/11/2016 which still leave an amount of Rs. 5,44,500/- as cash in hand. It was further submitted that during the period relevant to previous assessment year 2016-17, assessee sold his share of property for a sum of Rs. 1,17,50,000/- and has also received interest from Greater Mohali Area Development Authority of Rs. 62,20,454/- which were deposited in these two bank accounts and the cash has thus been withdrawn from the available and known source of funds which have been duly disclosed to the Revenue authorities. It was accordingly submitted that the source of cash so deposited is out of the earlier withdrawal so made from the bank account of the assessee and all relevant information in respect of the various dates on which the cash so withdrawn and the corresponding amount as well as copy of the bank statement of the account maintained with Yes Bank and Canara Bank were submitted before the lower authorities who have failed to appreciate the same.

Per contra, the Ld. DR relied on the findings of the lower authorities and our reference was drawn to the findings of the Ld. CIT(A) which are contained at para 4.2 and 4.4 of the impugned order which read as under:

We have heard the rival contentions and purused the material available on record. The assessee has explained the source of cash deposit of Rs. 14,00,000/- during the demonetization period out of earlier cash withdrawals as made from his two bank accounts made from time to time during the first ten months of the financial year relevant to impugned assessment year. To corroborate the same, he has furnished copy of his bank statements as well as the explanation regarding withdrawals to meet household expenses, construction of house and for his sister’s illness who later on met with untimely death and expired on 03/11/2016. There are total cash withdrawals from the two bank accounts to the tune of Rs 39,44,500/- and after meeting all these expenses totaling to Rs 20,00,000/-, he was left with Rs 19,44,500/- and out of which, Rs 14,00,000/- was deposited on 15/11/2016 which still leave an amount of Rs. 5,44,500/- as cash in hand. The ld CIT(A) has also not disputed the quantum of such withdrawals and purpose for which such withdrawals were made as can be seen from his findings where he says that “the perusal of the cash withdrawal made from the beginning of the financial year till the end of October show that the appellant has been withdrawing cash at regular interval to meet various expenses, e.g., household, construction of house and for the illness of his sister” at the same time, he records his findings that there is no evidence to show that the cash was being accumulated for meeting certain contingencies. In this regard, we find that the assessee right from the assessment proceedings as well as during the appellate proceedings has stated that he has withdrawn cash for meeting health bills of his sister who had fallen ill and who later on expired during that period only. The ill health of the assessee’s sister is clearly a medical contingency and one cannot be expected to know in advance the likely hospital bill that one has to bear and therefore, where the assessee has withdrawn cash for such medical contingency and has spent amount therefrom and the remaining amount left unspent has been deposited back in the bank account, we find that the assessee’s explanation deserves to be accepted and no adverse view can be taken in this regard as he has sufficiently and adequately explained the source of cash deposit as out of earlier withdrawals made during the financial year from his two bank accounts. In the result, the addition so made and sustained by the ld CIT(A) is hereby directed to be deleted.

In the result, the appeal of the assessee is allowed.