JAGSIR SINGH SANDHU,BHAI RUPA V. ITO WARD 1(3), BATHINDA

ITA 151/ASR/2024

AI Insights

The case involves Jagsir Singh Sandhu, a retired military pensioner and bank security guard, who appealed against the order of the CIT(A) confirming an addition of Rs.5,22,500 as unexplained cash deposits during the demonetization period. The assessee had deposited Rs.11,46,500 in cash in various bank accounts, which was scrutinized by the Income Tax Department. The CIT(A) had partially relieved the assessee by deleting some additions but sustained Rs.5,22,500. The Tribunal considered the assessee's income sources, including salary, pension, and agricultural income, and the CBDT's guidelines that small deposits during demonetization would not be questioned, leading to a further reduction in the sustained addition.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23328 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 28-03-2024
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RISHI KUMAR
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Business income; Salary income
• Section: 143(3); 142(1); 119; 250; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 Jagsir Singh Sandhu, S/o Sh. Chhota Singh, VPO Bhai Rupa Tehsil Rampura Phul Distt. Bathinda. [PAN:DACPS0948J] (Appellant) Vs. ITO, Ward-I (3), Bathinda. (Respondent) Appellant by Sh. Sudhir Sehgal, Adv. Respondent by Sh. Rishi Kumar, Sr. DR Date of Hearing 09.09.2024 Date of Pronouncement 18.10.2024 ORDER Per: Udayan Das Gupta, JM This appeal is preferred by the assessee against the order of the Ld. CIT (A), NFAC, passed u/s 250 dated 14/02/2024, which has emanated from the order of the AO, Ward-1(3) Bathinda passed u/s 143(3) dated 09/12/2019. 2. The grounds of appeal preferred by the assessee in Form No. 36 are as follows: I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 2 “1. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming addition of Rs. 5,22.500/- as unexplained cash deposits in the bank whereas as per explanation filed and material placed on record, no addition is called for. 2. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred by allowing rebate of Rs. 1,00,000/- only l.e. Rs. 25,000/- for each family members against Rs. 10.00,0000/- l.e. Rs. 2,50,000/- for each family: members as per government instructions. As such, addition: confirmed amounting to Rs. 5,22,500/- is unjustified. The same be deleted. 3. Without prejudice to the above, on the facts and circumstances of the case as well as in law. the Learned CIT(A) has erred in upholding the levy of tax at the rate of 60 percent on the income earned (bank deposit) prior to 15-12- 2016 as per provisions of section 115BBE of the Income Tax Act without appreciating that the levy of lax al the enhanced rate of 60 percent was not applicable to the income earned or deemed to be earned before 15-12-2016. 4. On the facts and circumstances of the case as well as in law, | the Learned CIT(A) has erred in upholding the levy of tax at the rate of 60 percent as per amended provisions whereas the amended provisions are applicable w.e.f. 01-04-2017, hence, relevant to the assessment year 2018-19 I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 3 5. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed of.” 3. All the four grounds of appeal relates to one single addition of Rs.5,22,500/- sustained by the ld. CIT(A) on account of cash deposit in bank during demonetization period. 4. The brief facts of the case are that the assessee is a retired military pensioner who is also working as a security guard in a bank. During year the assessee deposited an amount of Rs.11,46,500/- in cash in various bank accounts maintained with State Bank of India. The assessee has disclosed returned income the amount of Rs.5,37,170/- in his regular return filed as income from salary. The case was selected for scrutiny for limited purpose to examine the deposit of cash in bank during the demonetization period. In course of assessment proceedings there has not been compliance on the part of the assessee even though notices u/s 142(1) has been issued by the AO. In absence of any such compliance on the part of the assessee, the entire amount of Rs.11,46,500/- deposited in the bank account has been added back to the returned income and finally the income has been determined as Rs.16,83,670/-. 5. The matter was carried in appeal before the first appellate authority and on the basis of materials on record and after considering the submission of the assessee, the ld. CIT(A) has given part relief by deleting the addition of I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 4 Rs.5,24,000/- being the cash deposited during banking hours on 08.11.2016, because the said portion was beyond scope of demonetization. Furthermore, the ld. CIT(A) has considered the fact that the assessee is also owner of an agricultural land measuring 4 kilas and he held that there must be some agricultural income also apart from the income from pension and salary which are disclosed in the return of income. As such, the ld. CIT(A) has allowed further relief of Rs.1 lakh (One Lakh) by considering that the assessee and his family members must be having some cash availability with them on the date of demonetization. As such, total relief granted by the first appellate authority was Rs.6,24,000/- out of total addition of Rs.11,46,500/- thereby sustaining an amount of Rs.5,22,500/- which has been held as unexplained u/s 69 of the Act r.w.s. 115BBE. 6. Now the matter is before the Tribunal on the ground contained in the memorandum of appeal. In course of hearing, the ld. AR of the assessee has filed a short paper book containing 28 pages which consists of the submissions filed before the ld. CIT(A), the bank accounts statement with State Bank of India and the copy of the return furnished by the assessee. The ld. AR submitted that the assessee derived income from salary and pension and he is also the owner of agricultural land measuring about 4 acre from where agricultural income is derived. The assessee has also availed Kisan Credit Limited against such agricultural land holdings which is also evident from the bank account. He further I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 5 states that the cash deposited by the assessee in this bank account has been deposited out of accumulated savings by the assessee and his family which was saved past many years for sending their son for higher studies abroad. He further drew our notice to the bank account statements pointed out that the amount of Rs.4 lakh has been withdrawn in cash by the assessee on 13.05.2016 which was followed by two further withdrawals of Rs.40,000/- and Rs.36,000/- on 20.10.2016 and 04.11.2016 respectively. Thereafter the assessee has deposited an amount of Rs.3 lakh on 13.11.2016 and an amount of Rs.2,25,000/- on 15.11.2016. Thereafter on 15.11.2016 an amount of Rs.5,25,000/- was withdrawn by NEFT for transfer of his son’s educational expenses. The ld. AR argues that this cash withdrawal of Rs.4 lakh on 13.05.2016 has not been fully spent and as such some consideration for credit of the same should be given to the assessee for consideration of the cash deposits on 13.11.2016. The ld. AR further relied upon the instruction of the Board vide press release dated 11.11.2016 and the guidelines for verification of the cash deposit during demonetization vide Instruction No.03/2017 dated 21.02.2017. The relevant portion of the said instruction are reproduced as below: “9. The Chairman of CBDT, gave a clear statement that cash deposit upto Rs. 2,50,000/- will not be questioned, CBDT vide Press Release dated 18th Nov 2016 and guidelines for Verification of Cash deposit during demonetization to the AO, I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 6 vide Instruction No. 03/2017, dated 21-2-2017 and annexure thereof issued under section 119 of Income Tax Act. The relevant Excerpts of Press Release dated 18th Nov 2016 (Placed at Page No. 8) “It was announced by the Government earlier that small deposits made in the banks by artisans, workers, housewives, etc. would not be questioned by the Income Tax Department in view of the fact that present exemption limit for Income Tax is Rs.2.5 lakh”. The relevant excerpts of F.No.225/100/2017/ITA-11 ,Annexure “Source Specific General Verification Guidelines” (placed at Page No. 9 -13) Cash out of earlier income or savings In case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to 2.5 lakh. In the case of taxpayers above 70 years of age, the limit is Rs. 5.0 Lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filing of I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 7 ROI and income shown therein, cash withdrawals made from accounts etc. In the given case, a very nominal amount accumulated on account of family savings was deposited by the assessee in his bank accounts. The family of the assessee comprises of 4 members, accordingly, deposit to extent of Rs. 2,50,000/- for each members was clearly said to be non-questionable.” 7. To summarize the argument of the assessee, the ld. AR pleads that the appellant having his own agricultural income and also income from salary and pension availability of cash and cash savings to the tune of Rs.6 lakh cannot be simply brushed aside. He prays that taking a practical view in the matter and considering the CBDT Instruction the addition made by the AO may please be deleted. He further relied on the some judicial decisions to argue that no addition can be made on the basis of probability, assumption and presumption: a. CIT vs. Tania Investments P Ltd. 322 ITR 394 BOM HC b. CIT vs. Suresh Kumar Thakkar 324 ITR 331 (DEL HC) c. Shri Vikram Deokisan Sarda vs. the ACIT in ITA No. 277/M/2012 Mumbai Bench. 8. On the other hand, the ld. DR relied on the order of the ld. CIT(A) and prayed for sustaining of the addition amounting to Rs.5,22,500/-. 9. We have heard the rival contention and consider all the materials on record and the paper book filed by the assessee. We have also noted the general I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 8 verification guidelines in case of cash deposit out of earlier income or savings (Instruction No. 03/2017 dated F. No. 225/100/217/ITA-II), the relevant portion is reproduced for ready reference: “1. Cash out of earlier income or savings 1.1 In case of an individual (other than minors) not having any business income, to further Verification is required to be made if total cash deposit is up to Rs. 2.5 lakh. In case of taxpayers above 70 years of age, the limit is Rs. 5.0 lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filing of ROI and income shown therein, cash withdrawals made from accounts etc.” 10. Considering the above instruction and also considering the fact that the family consists of the assessee and his wife apart from his children and also considering the fact that the assessee is owner of the agricultural land from where agricultural income is derived and further considering that he is having income from pension and also a salaried employee in the bank as a private security guard, the savings amount of Rs.2,50,000/- each for himself and his wife is acceptable. As such, even if the total savings of the assessee himself and his wife clubbed together I.T.A. No.151/Asr/2024 Assessment Year: 2017-18 9 is taken Rs.5 lakh out of which benefit of Rs.1 lakh has already been allowed by the ld. CIT(A) and amount of Rs.4 lakh being the remaining balance may be accepted as quite reasonable. As such, we are further inclined to reduce the addition by an amount of Rs.4 lakh. As a result, the addition of Rs.5,22,500/- sustained by the ld. CIT(A) is reduced to Rs.1,22,500/-. As a result, the appeal of the assessee is partly allowed. 11. In the result, the appeal of the assessee bearing ITA No. 151/Asr/2024 is partly allowed. Order pronounced in the open court on 18.10.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order "