No Addition u/s 69A when cash deposited during demonetization is adequately supported by ITRs of Past years: ITAT

The sole issue in the present appeal relates to confirmation of addition of Rs.5, 50, 000/- on account of deposit of cash in the two Bank Accounts of the assessee during the year under consideration.

Brief facts of the case are that assessee filed her return of income on 31. 10. 2017 reporting total income of Rs. 5,96,530/-. The case was selected for limited scrutiny through CASS for the issue “cash deposit during the demonetization period”. Statutory notices were issued and served upon the assessee, which were complied with. Ld. Assessing Officer completed the assessment by holding that out of the deposit of Rs.6, 50, 000/- of cash in the two bank accounts of the assessee, Rs.1,00,000/- is accepted as assessee might be having cash in hand as on 08. 11. 2016, which was subsequently used for deposit during the demonetization period. He thus, completed the assessment by making an addition of Rs.5, 50,000/- under section 69A of the Act.

It is important to note that during the demonetization period, the assessee had deposited cash of Rs.2,50, 000/- on 13. 11. 2016 in Kolkata Branch of ICICI Bank and Rs. 4,00,000/- at Allahabad in ICICI Bank on 23.11.2016 as noted by the ld. A. O. in the impugned assessment order. Aggrieved, assessee went in appeal before the ld. CIT(Appeals), who confirmed the addition against which the assessee is in appeal before the Tribunal.

Before ITAT, Shri R. Chowdhury, FCA, represented the assessee, who placed a paper book on record, containing 58 pages. Ld. Counsel for the assessee pointed out to the copies of acknowledgment of income tax returns filed by the assesese from assessment year 2011-12 to assessment year 2017-18, placed at pages 37 to 43 of the said paper book. From these returns filed by the assessee, it was contended that the assessee has always been regularly filing her income tax returns with substantial amount of income.

Further Ld. Counsel for the assessee also referred to the Cash Flow Statement prepared for the period 01.04.2013 to 31. 03. 2017 to demonstrate the availability of cash in hand with the assessee, which was deposited during the demonetization period on 13.11.2016 and 23. 11. 2016. He also contended that assumption by the ld. Assessing Officer of having a cash in hand of Rs. 1,00, 000/- as on 08. 11. 2016 is adhoc and without any basis.

Per contra, ld. Sr. DR Shri Vijay Kumar, Addl. CIT placed reliance on the order of the authorities.

After hearing the rival contentions and perused the material placed on record ITAT Admitted that it is an undisputed fact that the assessee has been regularly filing her income tax returns for past several years as tabulated hereinabove reporting substantial income in her hands.

Deposit of cash in Bank accounts during the demonetization period arose out of unavoidable circumstances, which prevailed during that time. The amount deposited by the assessee is Rs. 6,50,000/- as stated above, which is adequately substantiated and supported by gross total income as well as the exempt income reported by her in regular returns of income, placed on record.

ITAT said that there is nothing brought on record by the authorities below to demonstrate anything otherwise or contrary in respect of the returns filed by the assessee.

ITAT Order

Considering the facts on record, we do not find any justification in the approach adopted by the ld. Assessing Officer in making an addition of Rs. 5, 50, 000/- by giving an adhoc relief of Rs.1, 00, 000/- on an estimate basis by assuming that the assessee had cash in hand of Rs. 1,00,000/- on 08. 11. 2016 i.e. on the date of announcement of demonetization. We accordingly direct the ld. Assessing Officer to delete the addition made in this respect. Accordingly, the grounds taken by the assessee are allowed.

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