CIT to look at practical situation before treating cash deposits as unexplained income: ITAT

Case Details: Shergil Harjit v. PCIT - [2022] 136 taxmann.com 413 (Pune - Trib.)

Judiciary and Counsel Details

• • Inturi Rama Rao, Accountant Member and Partha Sarathi Chaudhary, Judicial Member
  • Prasad Bhandari for the Appellant.
  •  Subhakant Sahu for the Respondent.

Facts of the Case

The assessee was engaged in the business of readymade garments and also deriving income from bank interest. She had deposited a higher amount in cash in the bank against gross turnover of the business. During the assessment, the assessee submitted evidence and filed an explanation regarding cash deposits.

The Assessing Officer (AO) accepted the explanation and made additions to income only regarding those cash deposits for which supporting evidence was not filed.
However, the Pr. Commissioner (CIT) initiated revisional proceedings under section 263 and held that such additions were required to be taxed as per section 115BBE. AO taxed the additions at the normal rate, and thus the assessment was erroneous and prejudicial to the interests of revenue. The assessee filed the instant appeal before the Tribunal against such revisional proceedings.

ITAT Held

The Tribunal held that the assessee and her husband were super senior citizens. The assessee submitted that they had liquid funds/cash at their disposal to meet any urgent medical contingencies because of old age and health ailments.
Both son and daughter of the assessee were also sending money to them for their day to day needs. These facts have not been disputed by the Department at all.

The practicalities of circumstances always have to be looked into by the quasi-judicial authorities before resorting to any provisions of the Act. There are several families consisting of super senior citizens whose children are well-settled but staying away from them for the sake of the job.

It is common practice in most of our country’s households that the children take care of their parents financially even though the parents may be financially well off on their own. It is a part of moral responsibility on the part of the children for taking care of their aged parents at least by sending finances irrespective of whether they require it or not.
These facts were explained before the AO, and other relevant details were also furnished. AO had taken a plausible view after examining the relevant details. Thus, the order passed by the CIT under section 263 was unjustified, invalid and liable to be quashed.

List of Cases Referred to

• • CIT v. Gabrial India Ltd. [1993] 71 Taxman 585/203 ITR 108 (Bom.) (para 4)
  • CIT v. Sunbeam Auto Ltd. [2010] 189 Taxman 436/[2011] 332 ITR 167 (Delhi) (para 4)
  • CIT v. Anil Kumar Sharma [2010] 194 Taxman 504/[2011] 335 ITR 83 (Delhi) (para 4).