Himanshu Jain Vs ITO (ITAT Bangalore)
ITAT Slams Enhancement in Section 264 Proceedings – Past Salary Savings During Demonetisation Accepted, ₹4.55 Lakh Addition Deleted
The Bangalore ITAT held that proceedings under Section 264 are benevolent in nature and cannot be used by the Assessing Officer to place the assessee in a worse position than in the original assessment. In this case, the assessee had deposited ₹11.75 lakh during demonetisation and explained the source as salary received in cash over multiple years along with savings therefrom. The AO in the original assessment had already accepted ₹9.6 lakh as explained and made addition only for ₹2.15 lakh. However, after the matter was remanded by the PCIT under Section 264 for limited verification, the AO enhanced the addition to ₹4.55 lakh by reducing the amount earlier accepted.
The Tribunal held that such enhancement was contrary to the spirit and scheme of Section 264. It observed that once the department had accepted that the assessee consistently received salary in cash and had no other source of income, the possibility of savings from past salary income could not be rejected merely because there was no documentary trail showing cash retention at home. The ITAT also noted that the assessee was unmarried, living in a joint family with minimal expenses, making the explanation of accumulated savings plausible.
Rejecting the lower authorities’ view that keeping large cash at home was “impractical”, the Tribunal held that the law does not mandate that all savings must necessarily be kept in banks. Accordingly, the ITAT deleted the entire addition made under Section 69A and ruled in favour of the assessee.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
