Piyushbhai Mangalbhai Patel Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal, Ahmedabad Bench (“the ITAT”) in Piyushbhai Mangalbhai Patel Vs Income Tax Officer [I.T.A. No.198/Ahd/2020 dated October 28, 2022] has deleted the addition of Rs. 12,70,000/- observing that the personal savings of government employees could not be suspected for several years.
Facts:
Mr. Piyushbhai Mangalbhai Patel (“the Appellant”) who was a pharmacist in Government hospital since 1976, filed his return of income on July 7, 2011 declaring total income of Rs. 3,35,490/-. The Assessing officer (“the AO”) while assessing the return under Section 143(1) of the Income Tax Act, 1961 (“the IT Act”) found that during Financial Year (“F.Y.”) 2010-11 relevant to Assessment Year (“A.Y.”) 2011-12, the Appellant deposited total cash of Rs. 15,70,000/- in State Bank of India (“SBI”). Therefore, the Income Tax Officer (“the ITO”) issued a query letter to the Appellant on July 30, 2013 requesting to submit the copy of return of income filed for A.Y. 2011-12 with computation of total income, supporting bank account statement, source of cash deposit with documentary evidences etc to which the Appellant filed reply along with return of income and Form 16 only.
The Appellant submitted that his son was planning to go to USA for higher education and as per the norms of respective college or university, the student or his parents shall have minimum balance of Rs. 15,00,000/- in the bank account. Therefore, during the year, the Appellant started arranging the fund and the same was sourced by loan from bank withdrawal from Provident Fund and Teachers’ credit society, gift from father-in-law, loan from sister-in-law, gift from wife and remaining balance was managed from his personal savings. The AO made addition of Rs. 12,70,000/- on account of unexplained cash deposits in bank account and Rs. 446 towards undisclosed interest income.
The Appellant then filed an appeal before the Commissioner of Income Tax (Appeals) (“CIT(A)”) but the same was dismissed on the grounds that the Appellant could not have saved that much amount as personal savings. Then, the Appellant filed an appeal before the ITAT for final order and prayed that the addition be deleted as the cash deposits were fully explained to both the Revenue authorities.
Issue:
Whether the personal savings of the Government employee could be doubted while assessing the cash deposits in a return?
Held:
The ITAT held as under:
