Cash deposits below Rs. 2.50 Lakhs during demonetization can not be taxed by AO
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Case Details: |
Uma Agarwal Vs. ITO |
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Appeal No.: |
ITA No. 35/Agr/2021 |
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Order Pronounced by: |
ITAT Agra Bench |
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Order Date: |
18-06-2021 |
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Assessment Year: |
2017-18 |
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In Favour of: |
Assessee |
Brief Facts:
- The appellant is a house wife who filed her ITR for A.Y. 2017-18 declaring total income of Rs. 1,30,810/-. During the period of demonetization, the assessee deposited cash Rs. 2,11,500/- in her bank account. The assessee had saved the above sum from her previous savings given by her husband, son, relatives for the purpose of her and family future.
- The case of the assessee was selected for scrutiny assessment for the reason that the cash was deposited in the bank after demonetization scheme announced by the revenue.
- The assessee was asked to explain the source of cash deposit during demonetization period. The assessee has no business activities in her name and she only has income from interest for her savings.
- The A.O. made addition of Rs. 2,11,500/- to the income of the assessee treating the amount as unexplained money under section 69A read with 115BBE of the Act
- Commissioner Appeal (NFAC) also dismissed the appeal of the assessee. CIT (NFAC) stated that it could not be believed that a person having annual income of less than Rs. 1 Lakh was able to accumulate Rs. 2 Lakhs in cash which was deposited during demonetization period.
Submission by assessee:
- The Hon’ble PM had declared that the revenue will not probe the accounts of individuals, housewives if the deposits made in the bank account were below Rs. 2.50 Lakhs during demonetization period. The attention was also drawn on CBDT public notice dated 18th Nov. 2016 and guidelines for verification of cash deposit during demonetization to A.O. vide Instruction No. 3/2017 dated 21st February, 2017.
- Since the instructions of the Board are statutory and binding on the revenue, the A.O. has no mandate to tax the cash deposit made in the bank account by the housewife if the amount is less than Rs. 2.50 Lakhs.
- The Hon’ble SC has also acknowledged the notional income of housewives in the matter of Kirti Vs. Oriental Insurance Company Civil Appeal No. 19-20 of 2021 decided on 05-01-2021.
ITAT Verdict:
- In our view, the addition made by the lower authority can not be sustained on account of the statement given by the Prime Minister, press statement and the standard operating procedure issued by the board, as instructions u/s 119 to the A.O., as the instructions issued by the Board are statutory and binding on the revenue.
- In view of the law laid down by the High Court and also by the Supreme Court with respect to binding nature of the instructions issued by the Board Instruction No. 03/2017 dated 21st February, 2017, we are of the opinion that the A.O. was prohibited from making the addition in the hands of the housewife if the amount deposited in the bank was found to be less than Rs. 2.50 Lakhs.
- The instructions were issued by the board, for the benefit of the person mentioned in the instructions, including the housewives and with a view to mitigate their grievances and also save them from the rigorous provisions of Income Tax Act.
- In our opinion, the assessee had duly explained the source of deposit and we have no hesitation to accept the same. Therefore, no additions can be made by the lower authority. We may clarify that this decision may be treated as precedent in respect to proceedings arising out of the cash deposits made by the housewives during the demonetization scheme 2016 only upto the limit of Rs. 2.50 Lakhs only.
