ITAT deleted addition for cash deposit on account of the statement given by the Prime Minister, press statement and CBDT SOP
In a recent judgment, ITAT Chennai has held that addition u/s 69A cannot be sustained on account of the statement given by the Prime Minister, press statement and the standard operating procedure issued by the CBDT.
ABCAUS Case Law Citation:
4605 (2025) (06) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) upholding the addition u/s 69A of Income Tax Act 1961 (the Act) on account of cash deposited in bank accounting during demonetization period.
The assessee was an individual filed his return of income electronically for the AY 2017-18. The case was selected for the limited scrutiny through CASS for the reason ‘Cash deposit during demonetization period”. The AO finalized the assessment u/s 143(3) making the addition u/s 69A of the Act.
Aggrieved, the assessee challenged order of assessment before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
Before the Tribunal, the assessee submitted that that cash deposits made during demonetization period belonged to assessee, his wife and also assessee’s mother who was 73 years old.
The assessee further submitted that the AO without making any enquiries had simply rejected the submissions of the assessee. He also relied upon the order of the Agra Tribunal and contended that in similar circumstances the Tribunal had accepted the explanation of the assessee and allowed the appeal.
The Tribunal observed that the AO had not taken any step to enquire about the money which is belonged to assessee’s wife and mother. The Tribunal observed that one cannot ignore the situation after the demonetization, where the housewives of every age had revealed the cash.
The Tribunal noted that coordinate bench of ITAT Agra had observed that Hon’ble PM and thereafter CBDT, considering the above said aspects in mind and showing their concern to Women (house wife etc) had issued instruction under section 119 to AO, had assured that the individual assessee and house wife having no business income, would not be questioned if the bank deposits during the demonetisation were found to be less than Rs. 2,50,000/- being basic exemption limit of Income tax. Further revenue had issued a press release for the benefit of public on 18/11/2016, immediately after the announcement of the Scheme, it was stated that genuine persons depositing their own household savings in cash into their bank accounts would not be questioned.
The Agra ITAT had observed that assessee during the assessment proceedings and before first appellate authority, had raised her plea of issuing the binding CBDT instructions, however despite that the additions were made on account of the deposit made in the bank for an amount of Rs. 2,21,000/-. The addition made by the lower authority cannot be sustained on account of the statement given by the Prime Minister, press statement and the standard operating procedure issued by the board, as instructions under section 119 to the Assessing officer, as the instructions issued by the Board are statutory and binding on the revenue.
The ITAT Agra further observed that the Hon’ble Karnataka High Court has held that section 119 authorises CBDT to issue orders, instructions and directions to the income-tax authorities for proper administration of the Act. A circular is admittedly executive in character and has to be issued in aid of functioning of the Act and with the objective that, the provisions of the Act are properly administered. The Board may, in issuing a circular, clarify a point of ambiguity in any provision of law. Such clarification is not binding upon the courts. It cannot also run counter to the legislative provisions and create rights or obligations which are contrary to the statute. Instructions really supplant the law and not supplement the law. It is settled law that circulars cannot impose any burden on the taxpayer but can deviate from the provisions of the Act if it is beneficial to the assessee and has mitigated or relaxed the rigour of the law.
The ITAT Agra had opined that in view of the law laid down by the High Court and also by the Supreme Court with respect to binding nature of the instruction issued by the board Instruction No. 03/2017 Dated 21st of February, 2017, the assessing officer was prohibited from making the addition in the hands of the housewife if the amount deposited in the bank was found to be less than 2.5 lakhs. The instructions were issued by the CBDT, for the benefit of the person mentioned in the instructions, including the housewife and with a view to mitigate their grievances and also save them from the rigorous provisions of Income-tax Act.
Further, the ITAT Agra had noted that the assessee had given the explanation to the AO during the assessment proceedings and had submitted that the amount deposited in the bank, were his wife and mother’s money saved by them in last many year’s and were kept by them, for herself and for the family in case of emergency need. However, this explanation was rejected by the AO on the pretext the assessee was not having income from any business.
The ITAT Agra further observed that as held women per say cannot be said to be not having income from any activities, as they are presumed to always been doing economic activities in the family for many years, hence in our view the assessee had duly explained the source of her investment.
As a result, the Tribunal deleted the addition and allowed the appeal of the assessee.
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