TMI Blog2021 (9) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... n 19.11.2016 after the announcement of de-monetization in November, 2016. In the interest of justice, the issue is set aside to the file of the A.O. with a direction to re-examine the issue and after allowing reasonable estimation of expenditure towards household medical expenses, over the years, the balance of withdrawals are to be treated as explained and only the unexplained portion to be treated as income u/s. 69A of the Act. The issue of interest u/s. 234A is also remanded to the AO. Assessee's appeal is partly allowed for statistical purposes. - ITA No. 524/Hyd./2020 - - - Dated:- 13-9-2021 - P. Madhavi Devi, Member (J) And A. Mohan Alankamony, Member (A) For the Appellant : Harsha, Adv. For the Respondents : Rohit Mujumdar, D.R ORDER Per P. Madhavi Devi, JM This is assessee's appeal for A.Y. 2017-18 against the order of CIT(Appeals)-4, Hyderabad dated 30.07.2020. 2. Brief facts of the case are that the assessee is an individual and is the retired Dy. Director (IES) with Micro Small and Medium Enterprises (MSME). During the de-monetization period, the assessee has deposited cash of ₹ 10,00,000/- into his bank account No. 1055866 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal. 1. For easy comprehension, submissions in this appeal memorandum are made under different heading covering different aspects involved in the subject order: a. Learned CIT(A) had erred by passing a Non-Speaking Order b. Learned CIT(A) had erred by confirming the order passed by ITO under Section 144 of the Act c. Learned CIT(A) had erred by confirming the additions made by ITO, where such additions are permitted neither under Section 68 nor under Section 69A of the Act d. Learned CIT(A) had erred by confirming interest under Section 234A of the Act In Re: Learned CIT(A) had erred by passing a Non-Speaking Order: 2. Appellant submits that from a bare perusal of the impugned order, it would be evident that the said order has been passed without assigning any specific reasons for confirming the demand. The observations made by Learned CIT(A) are routine in nature and non-speaking. The Learned CIT(A) has just extracted the submissions made by the Appellant to signify the same were being considered but has not in fact duly considered. 3. Appellant submits that for instance, Learned CIT(A) while dealing with submissions challenging additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s valid in law since the Appellant has filed to fail return in compliance with notice issued under Section 142(1) without taking into consideration the return filed along with the reply to show cause notice. Hence, Appellant submits that the action of Learned CIT(A) evidences that the impugned order is passed without appreciating the evidence and information on record. Hence, it is prayed that the order passed in such a state has to be quashed and set aside. 9. Without prejudice to the foregoing, Appellant submits that the entire approach of the Learned Respondent and Learned CIT(A) reveals the state of mind with which they have carried assessment and adjudication of the issue. Appellant submits that every procedure adopted in completion of the assessment is only to check the box and not adjudication of the real issue. Appellant submits that the order passed in such a state is to be quashed and prayed for an appropriate relief. 10. Without prejudice to the foregoing, Appellant submits that assuming that the action of the Learned Respondent and thereafter confirmation by Learned CIT(A) that the assessment is in accordance with the law, the impugned order requires to be set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Appellant submits that amounts which were being withdrawn from the savings accounts over a period of 6 to 7 years were amounting to ₹ 10,00,000/-. The withdrawals in the last few years has been increased with an intent to renovate the house. Appellant submits that a retired government employee having an accumulated savings of ₹ 10,00,000/- over a period of 6 to 7 years is not abnormal and impugned order not being convinced is illogical and accordingly it is prayed to set aside the order. 17. Appellant submits that since the amounts which are deposited into saving banks account because of demonetisation, the same does not require any addition as contemplated by the impugned order. 18. In the light of the above judgment, Appellant submits that correlating to the facts of the case considering the age of the Appellant and also the total withdrawals made from the date of retirement itself are amounting to ₹ 28,82,000/- from which sum of ₹ 10,00,00,000/- were accumulated over a period of 6 years is not an abnormal thing, and so does not require any additions as confirmed by the impugned order. 19. Appellant submits that the impugned order has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elationship with cash. This is evidenced by the steep growth observed in the retail digital payments. Increasing acceptance and convenience of digital payments vis-a-vis. cash is also reflected in decrease in average value per digital payment transaction. 23. Appellant submits that from the above report of Reserve Bank of India and Table 23, it is evident that the increase in digital payments have increased over a period of time and were very nominal at the inception of 2015 and 2016. Appellant submits from the above, one can estimate the acceptability and readiness for businesses to accept digital payments during 2010 to 2016 and especially in the locality where he resides. Appellant submits that hence it is not as easy as the Learned CIT(A) states in his order with the help of Google Maps of Year 2020 to confirm that the businesses accept digital payments and there is no requirement to withdraw cash for meeting expenses. Hence, this evidences the presumption that the Learned CIT(A) carries to confirm the additions made by Learned Respondent. 24. Appellant further submits there is no penalty for businesses for accepting payments in cash till 1st April 2017. Only from suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... daily works and considering the environment prevailing prior to demonetization, it is highly impossible to make payments to daily labourers in bank or digital means. The Learned CIT(A) observation on this also is devoid of the practical considerations. Accordingly, Appellant submits that the impugned order passed in such a stage requires to be set aside. 28. Without prejudice to the foregoing, Appellant submits that it is not an abnormal amount what was deposited in the bank account. The bank statements support the withdrawals and there is appropriate source for such withdrawals and accordingly the question of unexplained credits does not arise. Appellant submits that it is not an abnormal amount considering the fact that the Appellant was a retired Central Government employee. Appellant submits that the entire approach of Learned CIT(A) and Learned Respondent was with a state of mind to fix tax irrespective of the submissions made. Hence, it is prayed that the order passed in such a state has to be quashed. 29. Appellant further submits that the entire amount which has been withdrawn over the period of time for the reasons mentioned above was deposited in the bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that the Learned CIT(A) has failed to apply the provisions of Section 69A in toto. The main ingredient of Section 69A is that the amount which is proposed to be added in light of Section 69A is not be recorded in books of account, if any maintained by Appellant. In other words, the Appellant submits that the possession of the funds/money is not only the important condition that is required to be satisfied to trigger addition under Section 69A, but such possession should also not be found in the books of accounts, if any maintained. 35. Appellant submits that the Learned CIT(A) has only applied part of the test as specified in Section 69A that is possession/ownership of the funds/money but has not examined the other part that is whether such possession/ownership is recorded in the books of accounts or not. Appellant submits that if the Learned CIT(A) has applied the remaining test also to the facts of the instant case, the result would have varied. Appellant submits that the said funds/money was deposited in bank account and can be safely stated to be recorded in books of accounts (assuming but not admitting that bank account is also forms part of books of accounts). Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l that the impugned order to be set aside. 41. Appellant submits that the bank statement cannot be elevated to the status of books of account for the purposes of additions under Section 68. 42. Appellant submits in light of the above judgments, it is evident that the bank statements could not be equated with the books of accounts and accordingly the additions under Section 68 cannot be pressed into and prayed that the order has to be set aside. Appellant further submits that none of the above submissions were considered by the Learned CIT(A) and accordingly prayed that order passed in such a state has to be set aside. 43. Appellant further submits that when the cash deposits were made in the bank account were not found credited in the books of accounts maintained by the assessee, then the such additions cannot be made under Section 68 for the sole reason that the amounts deposited in bank accounts were made outside the books of accounts and such amount cannot be brought into the ambit of Section 68. 44. Without prejudice to the foregoing, Appellant submits that the assessing officer cannot act unreasonably, and his satisfaction that a particular transaction is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the current case, since the appellant has provided nature and source of the amounts that were deposited in the bank account, the additions under Section 68 are required to be held as unwarranted. 51. Without prejudice to the foregoing, Appellant submits that the Honorable Visakhapatnam Tribunal in Dinsala Bala Murali vs. Income Tax Officer Ward-I Palakol 2020 (8) TMI 592 has stated that the appropriate section under which an addition can be made pertaining to deposits in the bank account is u/s. 69 and neither Section 68 nor Section 69A. Hence, the Appellant submits that if at all there arises an occasion to add the subject deposits, the same shall be under Section 69 and not as proposed under Section 68 nor as confirmed under Section 69A. 52. Without prejudice to the foregoing, Appellant submits that the impugned order has confirmed the interest under Section 234A amounting to ₹ 2,24,800/-. The said interest was calculated by the Learned Respondent for a period of 29 months. The Learned Respondent has arrived the period of 29 months by considering the difference between the due date for filing of return for the period ended 3rd March 2017 as 31st July 2017 and da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes and employer has deducted tax. The assessee has received a certificate of tax deduction in Form 16 from his employer g. The assessee has discharged his total tax liability for the assessment year through tax deduction at source and its deposit by the employer to the Central Government h. The assessee has no claim of refund of taxes due to him for the income of the assessment year and i. The assessee has received salary from only one employer for the assessment year 55. Appellant submits that in the instant case he has satisfied majority of the conditions stipulated vide the above Notification except for the fact that the interest income received from bank saving account is ₹ 20,148/- (erroneously considered by the Learned Respondent as ₹ 33,357/-). Since majority of the conditions were satisfied the Appellant was of the belief that a return of income for the period ended 31.03.2017 is not required to be filed and accordingly not filed. Appellant prays that in light of the fact that majority of the substantial conditions are satisfied by him and the interest was also subjected to tax deduction by the banker, the benefit of such notification shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmation of the addition. 6. Having regard to rival contentions and material placed on record, case laws cited, we find that the assessee is an old aged person and therefore it is acceptable that he would keep certain cash with him to meet his personal and medical exigencies. The source of income of the assessee is stated to be his pension which is regularly deposited into his bank accounts and as observed from the bank statements, as soon as the pension is deposited, the assessee is withdrawing certain part of it to meet his personal needs. Therefore, it cannot be accepted that the entire withdrawals are kept aside by him which have since been deposited by him. The assessee's argument that provisions of sec. 69A are not applicable is also not acceptable because the assessee has not been able to explain the sources of the entire deposit of ₹ 10 lakhs into his bank account on a single day i.e. on 19.11.2016 after the announcement of de-monetization in November, 2016. Therefore, in the interest of justice, the issue is set aside to the file of the A.O. with a direction to re-examine the issue and after allowing reasonable estimation of expenditure towards household ..... X X X X Extracts X X X X X X X X Extracts X X X X
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