A rural lady who was never a tax-payer unlikely to have unexplained money

The fact that assessee was a rural lady and never been in a tax-payer category in itself is sufficient that she has no unexplained money

In a recent judgment ITAT has held that a rural lady who never been in a tax-payer category in itself is sufficient to show that she has no unexplained money

ABCAUS Case Law Citation:
ABCAUS 3775 (2023) (06) ITAT

In the instant case, the assessee had challenged the order passed by ommissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) in sustaining the addition u/s 69 of the Income Tax Act, 1961 (the Act) for cash deposited in bank during demonetisation period.

A notice under section 142(1) generated by the Computer System was issued and served upon the assessee. The return of income was called upon from the assessee but the notices remained un-complied with.

Subsequently assessee filed a reply through e-mail, wherein she enclosed the bank statement of her husband and submitted that cash was deposited by her husband and not by her. The complete bank details were made available to the Assessing Officer.

However, the AO passed an ex-parte assessment order under section 144 of the Income Tax Act (i.e. best judgment assessment order) making an addition under section 69 of the Act by holding that it was an unexplained investment of the assessee in the Bank account.

The Tribunal observed that as per the affidavit submitted by the husband of the assessee, he deposed to be in Indian army and always remained out of station and, therefore, always used to send money to the assessee, who was managing the affairs of the family members. The husband took the responsibility that whatever was deposited in the account that was by him only.

The Tribunal observed that in the past, the assessee took personal loan as well as withdrawal from Provident Fund. This earlier cash withdrawal had been negated by the AO on the ground that these withdrawals were made at the fag end of one year earlier and it is to be construed as used by the assessee. In other words, in the opinion of the ld. Assessing Officer, this amount cannot be stated as available with the assessee for re-deposit during demonetisation period.

The Tribunal observed that the assessee was staying in small village, which was five hours journey from the city. She had been assessed to tax only on the ground that cash deposit during the demonetisation, never had taxable income in her life.

The Tribunal opined that under the given circumstances, it might be very difficult for a lady belonging to a rural rustic background to comprehend all intricacies of income-tax. The assessee belonged to a rural life, never had taxable income in her life, her affairs cannot be expected as organized as of other assesses in the urban area. The fact that she had never been in a tax-payer category in itself was sufficient that she has no unexplained money, rather whatever may be the saved from agricultural activity, husband’s salary.

Accordingly, the Tribunal allowed the appeal and deleted the addition.

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