Case Law Details
Tripuraneni Sarada Devi Vs ITO (ITAT Visakhapatnam)
Income Tax Appellate Tribunal (ITAT) Visakhapatnam bench, in the case of Tripuraneni Sarada Devi Vs. Income Tax Officer (ITO), has directed the Assessing Officer (AO) to verify the source of cash deposits totaling Rs. 24,55,030 made by the assessee during the demonetization period. This directive came after the assessee’s appeal challenging the Commissioner of Income Tax (Appeals) [CIT(A)] order, which had partly sustained an addition for unexplained money.
The case originated when Tripuraneni Sarada Devi deposited Rs. 24,55,030 in her State Bank of India (SBI) account during the demonetization drive. Subsequently, in response to a notice under Section 142(1) of the Income Tax Act, 1961, the assessee filed a return of income of Rs. 2,49,788. When questioned about the source of the cash deposits, the assessee contended that the funds originated from Rs. 25 lakhs withdrawn over time from the NRE/NRO and other bank accounts of her children residing in the USA.
However, the AO, after reviewing the assessee’s explanation, treated Rs. 19,55,030 of the cash deposits as unexplained money under Section 69A read with Section 115BBE of the Act.
Aggrieved by the AO’s decision, the assessee appealed to the CIT(A). The CIT(A), after considering the submissions, partly allowed the appeal, directing the AO to accept 50% of the cash deposits, amounting to Rs. 12,27,515, as explained. This partial relief led the assessee to further appeal before the ITAT.
During the ITAT proceedings, the assessee’s authorized representative submitted that the assessee is financially supported by her two sons in the USA. It was argued that a significant portion of these funds was converted into Fixed Deposits (FDs) with SBI, on which the assessee also received interest. Furthermore, the assessee had availed loans against these FDs with the intention of purchasing immovable property. When the property purchase did not materialize, the loan amounts were re-deposited into her bank accounts. The authorized representative contended that the source of the cash deposits was adequately explained, rendering the additions by the lower authorities unwarranted.
Conversely, the departmental representative upheld the orders of the lower authorities.
The central issue before the ITAT was the acceptability of the assessee’s explanation regarding the source of the cash deposit during the demonetization period. To substantiate her claims, the assessee’s representative presented a paper book containing bank account statements detailing the loans availed, a confirmation letter from SBI, Guru Nanak Branch, Vijayawada, and affidavits from her two sons confirming financial support.
Upon reviewing the submitted documents, the ITAT noted that the assessee’s SBI bank accounts were debited with Rs. 13,00,000 and Rs. 11,65,000 on May 5, 2016. The Tribunal also considered the letter dated December 18, 2019, from the Chief Manager, SBI Gurunanak Nagar Branch, Vijayawada, confirming that the assessee had availed loans totaling Rs. 24,65,000.
Considering these facts and circumstances, the ITAT found merit in the arguments presented by the assessee’s authorized representative. Consequently, the Tribunal directed the AO to verify the loans availed by the assessee, which were stated as the source for the cash deposits. If the verification confirms the loans as the source, the AO is to treat the cash deposits as explained and refrain from making any additions.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
Aggrieved by the order dated 25/09/2023 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (“Ld. CIT(A)”), in the case of Sarada Devi Tripuraneni (“the assessee”), assessee preferred this appeal.
2. Brief facts of the case are that the assessee made cash deposits to the extent of Rs. 24,55,030/- in her bank account, maintained with the State Bank of India (“SBI”), during demonetization period. Thereafter, in response to the notice issued by the Learned Assessing Officer (“learned AO”) U/s. 142(1) of the Income Tax Act, 1961, assessee filed her return of income of Rs. 2,49,788/-. On being asked with respect to the source of cash deposits of Rs. 24,55,030/-, the assessee submitted that the cash deposits were made out of the cash Rs. 25 lakhs withdrawn over a period of time from the NRE/NRO and other bank accounts of her children who were settled in USA. However, learned AO, after considering the submissions and explanation of assessee, treated the cash deposits of Rs. 19,55,030/- as unexplained money U/s. 69A read with section 115BBE of the Act.
3. Aggrieved, assessee preferred an appeal before the learned CIT(A). Learned CIT(A), after considering the submissions of the assessee and the material available before him, directed the learned AO to accept 50% of the cash deposits of Rs. 24,55,030/- which works out to Rs. 12,27,515/- as explained. Thus, the learned CIT(A) partly allowed the appeal of the assessee. Hence, the assessee is in appeal before us.
4. Learned Authorized Representative (“learned AR”) submitted that assessee is financially supported by her two sons, who are residing in USA. Out of such funds received by the assessee, after using some portion of the funds, converted the balance amount into Fixed Deposits (“FD”) in SBI and has received bank interest also. It was further submitted that assessee availed loan on such FDs with a view to purchase immovable property. Since the assessee’s proposal for purchase of property did not materialize, assessee has re-deposited the amounts into her bank accounts. Thus, learned AR submitted that since the assessee has properly explained the sources for the cash deposits, the addition made by the learned AO and partly sustained by the learned CIT(A) is unwarranted and not justified.
5. Per contra, Learned Departmental Representative (“learned DR”) vehemently relied upon the orders of the lower Authorities.
6. The core issue involved in this appeal is whether the assessee’s explanation with regard to the source of cash deposit made during the demonetization period is acceptable? On this issue, the contention of the learned AR is that the assessee is financially supported by her two sons, who are residing in USA. Out of such funds, the assessee made a substantial portion into FDs in SBI and availed loans. To substantiate this contention, the learned AR filed a paper book containing the bank account statements of loan availed by the assessee and a confirmation letter from SBI, Guru Nanak Branch, Vijayawada as well as the affidavits from the assessee’s two sons who said to have been financially supported their mother, the assessee.
7. On a perusal of the bank statements, we find that the assessee’s bank accounts with SBI were debited with Rs. 13,00,000/- and Rs. 11,65,000/- on 05/05/2016. Further, we have also gone through the letter dated 18/12/2019 issued by the Chief Manager, SBI Gurunanak Nagar Branch, Vijayawada confirming that the assessee has availed loans aggregating to Rs. 24,65,000/-. Under these circumstances, we find merits in the arguments of the learned AR. Therefore, considering facts and circumstances of the case, we hereby direct the learned AO to verify the loans availed by the assessee which are the source for cash deposits made by the assessee and, if found correct, the learned AO will treat the cash deposits as explained and will not make any addition. It is ordered accordingly.
8. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on the 17th January, 2025.
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