Govt employee cash deposit from personal savings can be assessed?
Facts and issue of the case
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/-. Subsequently, the Assessing Officer received AIR information that during F.Y. 2010-11 relevant to A.Y. 2011-12, the assessee deposited total cash of Rs. 15,70,000/- in State Bank of India, Lunawada. Therefore, the then ITO issued a query letter to the assessee on 30.07.2013 and requested 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. In response, the assessee filed reply along with return of income and Form 16 only. The Assessing Officer 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.
Whether the personal savings of the Government employee could be doubted while assessing the cash deposits in a return?
Observation of the case
The Ld. AR submitted that during the said assessment year, the assessee’s 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 assessee 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 Ld. AR submitted that the details of which are set out order of the CIT(A) where the assessee’s submissions were quoted. Therefore, the Ld. AR prayed that the addition be deleted as the cash deposits were fully explained by the assessee before both the revenue authorities.
Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee during the assessment proceedings has explained the reasons for which the assessee collected the cash deposits as well as the arrangement for the money. The assessee submitted evidence related to amount withdrawn from Teachers’ society which was accepted by the Assessing Officer. Besides this the confirmations from sister-in-law regarding the loan and gift from father-in-law were also on record. The same were not doubted by the Assessing Officer. The Gift from wife was also explained by the assessee through bank statements. Regarding personal saving the CIT(A) doubted that the assessee could not save that much amount. But the assessee was working as pharmacist in Government Hospital since 1976 and received salary, therefore, personal saving of a government employee cannot be doubted for several years. Thus, the Assessing Officer as well as the CIT(A) both failed to take cognizance of the evidences produced by the assessee during the assessment proceedings as well as before the CIT(A). The appeal of the assessee is allowed.
Full Judgement given below
Piyushbhai Mangalbhai Patel Vs ITO (ITAT Ahmedabad)Piyushbhai-Mangalbhai-Patel-Vs-ITO-ITAT-Ahmedabad