Case Law Details
Maltiben Gurudutt Yadav Vs ITO (ITAT Ahmedabad)
In a recent decision, the Income Tax Appellate Tribunal (ITAT) Ahmedabad addressed an appeal filed by Maltiben Gurudutt Yadav against an order issued by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The primary concern of this case was the addition of a cash deposit in the bank account of the assessee, amounting to Rs. 2,70,000, which had not been adequately explained. This article provides an in-depth analysis of the case and its outcome.
1. Background of the Case:
The appellant, Maltiben Gurudutt Yadav, challenged the assessment order issued under Section 250 of the Income Tax Act for the Assessment Year (AY) 2015-16.
2. The Core Issue:
The primary dispute in this appeal revolved around a cash deposit of Rs. 2,70,000 made into the assessee’s bank account, which remained unexplained. The grounds raised by the appellant highlighted the alleged illegality and injustice in upholding this addition.
3. Assessing Officer’s Observation:
The Assessing Officer noted that the appellant had deposited Rs. 3,89,500 in her bank account with Kalupur Commercial Bank during the relevant assessment year. Among this amount, Rs. 1,69,000 was received by way of cheques. Consequently, the Assessing Officer concluded that the remaining Rs. 2,70,000 had been deposited in cash and added it to the appellant’s income as unexplained.
4. Appellant’s Argument:
The appellant, a lady with limited financial means, mainly earned income from operating a PG accommodation. She contended that the entire cash deposit of Rs. 3,89,500 could be attributed to her PG income. The appellant filed a complete cash flow statement to support her claim, detailing the deposits related to PG income, other sources of income such as shares and mutual funds, and cash withdrawals.
5. ITAT’s Decision:
After reviewing the submissions and evidence presented by the appellant, the ITAT found that the entire cash deposit could be adequately explained as originating from PG income. The ITAT disagreed with the authorities’ treatment of the amount as unexplained and directed its deletion.
6. Humanitarian Perspective:
The ITAT acknowledged that individuals like the appellant, often women with limited income sources, should be spared from the strenuous process of income tax assessments, especially when dealing with small amounts. It suggested that the tax authorities should focus their resources on more substantial cases of undisclosed income and take a compassionate approach toward taxpayers like the appellant.
6. Conclusion:
The ITAT’s decision in the case of Maltiben Gurudutt Yadav vs. ITO serves as a reminder that while enforcing tax compliance is essential, it should be balanced with a compassionate understanding of individual circumstances. In this instance, the ITAT ruled in favor of the appellant, emphasizing the need to consider the source of cash deposits and avoid undue pressure on taxpayers with modest incomes. This decision offers valuable insights into the humane aspect of tax administration.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The present appeal has been filed by the assessee against order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)” for short] dated 17.02.2023 passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act” for short] for the Assessment Year (AY) 2015-16.
2. The solitary issue in the present appeal relates to cash found to be deposited in the bank account of the assessee to the tune of Rs.2,70,000/-remaining unexplained. The grounds raised by the assessee in this regard are as under:-
“1.1 The order passed by U/s.250 passed on 17.02.2023 by NFAC (CIT(A), Delhi(for short “NFAC] upholding the addition of Rs.2,70,000/- made by A.O. towards cash deposit in bank account is wholly illegal, unlawful and against the principles of natural justice.
2.1 The Id. NFAC has grievously erred in law and or on facts in not considering fully and properly the explanation submitted by the appellant.
2.2 That in the facts and circumstances of the case the ld. NFAC ought not to have upheld the addition of Rs. 2,70,000/- towards cash deposit in bank account as unexplained credit.
2.3 Without prejudice to above and in the alternative, the impugned addition of Rs. 2,70,000/- is highly excessive and calls for reduction.”
3. As transpires from the orders of the authorities below, the assessee is a lady who earns income from running PG accommodation and it was noted that she had deposited cash of Rs.3,89,500/- in her bank account with Kalupur Commercial Bank during the impugned year. The Assessing Officer noted that the assessee had returned PG income of Rs.2,88,500/-. He further noted that to the extent of Rs.1,69,000/- the PG income had been received by way of cheque. Therefore, out of the total PG income returned by the assessee of Rs.2,88,500/-, he reduced the amount received by way of cheque amounting to Rs.1,69,000/- and the balance he accepted the assessee to have received in cash which amounted to Rs.1,19,500/-.Out of total cash deposited of Rs.3,89,500/-,he therefore accepted the source of the same out of PG income to the tune of Rs.1,19,500/- and the balance amount of Rs.2,70,000/- was added to her income as unexplained cash deposited in the bank.
4. I have considered the submissions of both the parties and perused the material available on the record. I have noted that the assessee is a lady with meager means who has returned taxable income of Rs.67,540/- for the impugned year. Admittedly, her major source of income is PG income. The computation of income filed before us reveals that the assessee had returned profits from her business as Rs.2,54,951/- and income from savings bank interest and other bank interest as Rs.8,224/-. Against the same, she had claimed deduction on account of investment in LIC and PF as allowable deduction under Section 80-C of the Act to the tune of Rs.1,50,000/-, and other deduction under Section 80-D of the Act for medical insurance premium paid and u/s 80-TTA for interest earned from savings account amounting to Rs.11,454/-; thus a total deduction of Rs.1,61,454/- was claimed from the gross total income of Rs.2,28,990/- returned by the assessee, resulting in net taxable income of Rs.67,540/-. What the assessee has returned as her income from business of Rs.2,54,951/- is a net profit from the business. The Assessing Officer has taken a figure of Rs.2,88,500/-as a gross receipt from the PG business, which records do not reveal from where he has taken. The assessee has contended that the entire deposits in her bank account was primarily on account of PG income with the component of cash deposit of Rs.3,89,500/- and cheque deposit of Rs.1,69,000/-. The complete cash flow statement has been filed before us at page no. 5 of the paper-book revealing the deposits on account of PG income as stated above, on account of other income from shares, mutual funds, TRFF to the tune of Rs.4,07,627/- and cash withdrawals to the tune of Rs.5,03,500/- on account of PG deposits returned and other withdrawals. I, therefore, find that the entire source of cash deposited in her bank account stands completely explained as coming from PG income only. Running a PG entails substantial expenses also; therefore, what the assessee had returned to tax in her return of income of Rs.2,54,951/- was her net profit from her business. The authorities below have totally misguided themselves by treating this amount as total gross receipts from PG income. Therefore, we do not find any merit in the order passed by the authorities below treating the amount of Rs. 2,70,000/- of cash deposited in her bank account as unexplained and we direct deletion of the same.
5. Before concluding, I would like to observe that assessee such as the present assessee, who is a woman having very meager source of income, should be spared from the rigors Income-tax assessments which result in such small quantum of additions. In my view, it is an entire waste of the huge resources and skill available with the Department which can be used for unraveling larger cases of undisclosed incomes. The assessee like this woman in the present case who must be barely managing to run her house with her meager source of income should be spared the troubles of participating in assessments and being subjected to the pressure of paying up demands raised. The CBDT, we have noted, is making all efforts to bring a human touch in its interaction with the general public and the assessees, and cases such as this, genuinely require human touch. With the above observations, I conclude my order directing the deletion of addition made in the present case.
6. In effect, the appeal of the assessee is allowed.
Order pronounced in the open Court on 29/08/2023 at Ahmedabad.
