2021 (6) TMI 712 - AT - Income Tax

Tribunal Rules in Favor of Appellant in Demonetization Cash Deposit Case

The tribunal allowed the appeal, ruling in favor of the appellant. It found that the appellant satisfactorily explained the source of cash deposits during ... Unexplained money u/s 69A read with 115BBE - acknowledge income/ notional income of House wife - cash deposit in bank during demonetization period - as the case of the assessee that the assessee had collected/ saved the above said sum from her previous saving, given by her husband, son, relatives for the purposes of her and family future - HELD THAT:- The requirement of the section is that money or other asset must be “found “and the assessee is found to be owner of article specified in the section. Further this provision provides that if the assessee offers no explanation about the nature and source of acquisition of money etc or the explanation offered by the assessee, in the opinion of the AO is not satisfactory then the assessing officer “may” deem such money etc as income of the assessee for such financial year. In the present case the assessee had given the explanation to the AO during the assessment proceedings and had submitted that the amount deposited in the bank, were her money saved by her in last many year’s and were kept by her, for herself and for the family in case of emergency need - this explanation was rejected by the AO on the pretext the assessee was not having income from any business. AO has not brought on record any document, evidence etc to show that the assessee was having any income from any other source other than saving from various activities mentioned elsewhere. No evidence had been brought on record AO, in terms of press statement dated 18/11/2016 and SOP to established that the amount deposited in the account was not of the account holder/ assessee but of somebody else - when the AO had brought on record the evidence of proving that the money belongs to other person and not of the assessee, the amount deposited shall not added as income of the assessee. Assessee had duly explained the source of deposit i.e previous years saving and we have no hesitation to accept the same , as it would been presumed that this small amount of ₹ 2,21, 000/ would have been accumulated or saved by her from various activities undertaken by her for and on behalf of family in last many years . In the decision of Kirti [2021 (1) TMI 1123 - SUPREME COURT] women per say cannot be said to be not having income from any activities , as they are presumed to always been doing economic activities in the family for many years, hence in our view the assessee had duly explained the source of her investment. Therefore no additions can be made by lower authority. Further even if we ignore the explanation, for the sake of argument, then also it is for the assessing officer to bring on record some cogent evidence to prove that the amount deposited in the bank was undisclosed income arising from the business or from any other activities. No evidence has been brought on record by the lower authorities. Thus the amount deposited by the assessee during the demonetisation. Cannot be treated as income of the assessee. Hence the appeal of the assessee is allowed. Issues Involved:1. Justification of cash deposit during the demonetization period.2. Acceptance of appellant's explanation regarding the source of cash deposits.3. Applicability of Section 69A of the Income Tax Act.4. Consideration of instructions issued by the CBDT regarding cash deposits by housewives during demonetization.5. Relevance of the Supreme Court's acknowledgment of notional income of housewives.Issue-wise Detailed Analysis:1. Justification of Cash Deposit During the Demonetization Period:The appellant deposited Rs. 2,11,500 in her bank account during the demonetization period. She claimed the amount was saved from her previous savings and contributions from her husband, son, and relatives for future family needs. The Assessing Officer (AO) treated this deposit as unexplained money under Section 69A of the Income Tax Act, 1961, leading to its addition to her income.2. Acceptance of Appellant's Explanation Regarding the Source of Cash Deposits:The appellant argued that the cash was from her savings and contributions from family members. However, the AO and the National Faceless Appeal Centre (NFAC) did not accept this explanation due to the lack of supporting evidence and the appellant's low declared income in previous years. The NFAC noted that the appellant's annual income was less than Rs. 1 lakh, making it improbable for her to accumulate Rs. 2 lakh in cash.3. Applicability of Section 69A of the Income Tax Act:Section 69A allows the AO to deem unexplained money as the assessee's income if no satisfactory explanation is provided. The appellant argued that the cash deposits were from her savings, but the AO rejected this explanation. The tribunal highlighted that the AO had not provided any evidence to contradict the appellant's claim or to prove that the money belonged to someone else.4. Consideration of Instructions Issued by the CBDT Regarding Cash Deposits by Housewives During Demonetization:The appellant referred to the CBDT's instructions, which stated that deposits up to Rs. 2.5 lakh by housewives during demonetization would not be questioned. The tribunal emphasized that these instructions were binding on the revenue authorities and that the AO should not have taxed the deposits since they were below the specified limit. The tribunal cited the Karnataka High Court's decision in Dinakar Ullal, which affirmed the binding nature of such instructions.5. Relevance of the Supreme Court's Acknowledgment of Notional Income of Housewives:The appellant's counsel cited the Supreme Court's decision in Kirti vs. Oriental Insurance Company, which recognized the economic value of housewives' contributions. The tribunal acknowledged this perspective, noting that housewives engage in numerous economic activities that contribute to the family's well-being. The tribunal accepted the appellant's explanation that the deposited amount was from her savings accumulated over the years.Conclusion:The tribunal concluded that the addition made by the AO could not be sustained. It held that the appellant had satisfactorily explained the source of the cash deposits and that the AO had not provided any evidence to prove otherwise. The tribunal also emphasized the binding nature of the CBDT's instructions, which protected housewives' deposits up to Rs. 2.5 lakh during demonetization. Consequently, the appeal was allowed, and the addition of Rs. 2,11,500 was deleted. The tribunal clarified that this decision should be treated as a precedent for similar cases involving housewives' cash deposits during demonetization, up to the specified limit.