Cash deposited upto Rs. 2.5 lakh in bank account by women, out of her savings, during demonetization cannot be considered as income: ITAT Agra

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The above judgement has been passed by ITAT Agra in case of Smt. Uma Agrawal Vs. I.T.O –1(3) Gwalior, M.P. and order was pronounced on 18.06.2021.

Facts of the case:

1. The appellant, an individual filed return of income for Assessment Year 2017-18 on 13/03/2018, declaring total income of Rs. 1,30,810/-.

2. During the period of demonetization, the assessee deposited the cash of Rupees 211500/- in our bank account. It was the case of the assessee that the assessee had collected/ saved the above said sum from her previous saving, given by her husband, son, relatives for the purposes of her and family future.

3. The case of the assessee was selected for scrutiny assessment for the reason that the cash was deposited in the bank after the demonetization scheme, announced by the revenue.

4. During the course of assessment proceedings, the appellant was asked to explain the cash deposits of Rs. 2,11,500/- in the Nagrik Sahkari Bank, made during the period of demonetization from 09/11/2016 to 30/12/2016.

5. In response to the notice assessee said that she had no business income and her only income was from interest on her savings.

6. AO asked assessee to produce evidence for such cash deposit and later made addition of all cash deposit to the income of assessee u/s 69A read with section 115BBE of the Income tax act.

7. Aggrieved by the above order assessee filed an appeal before CIT(A) in NFAC manner wherein it was observed that no cash deposit was made before demonetization or in any other bank account of assessee and hence CIT(A) upheld the addition made by AO.

Assessee’s contention:

The Ld. AR of the assessee emphasized on the aspect of the income/ notional income of the housewives. He had submitted that the housewives are doing innumerable economic activities, if those activities are hired from outside, then huge sum would be required to get the same kind of services.

He further emphasized that it is a matter of common knowledge that, mother/wife and other ladies are saving money/ funds received by them either from the family or husband or children, for the rainy days.

It was contention of the Ld. AR that considering the above aspect into mind, the Hon’ble Prime Minister had declared that the revenue will not probe the accounts of individuals, housewives if the deposits made in the bank account were below Rs 2,50, 000/-, during Demonetization Scheme 2016. The Ld.AR had also drawn our attention to CBDT public notice dated 18th Nov 2016 and guidelines for Verification of Cash deposit during demonetization to the AO , vide Instruction No. 03/2017 Dated 21st of February, 2017 and annexure thereof issued under section 119 of Income Tax Act.

It was further contended that such circular are statutory and binding on the revenue and assessing officer has no mandate to tax the cash deposit made in the bank account by the housewife if the amount is less than Rs. 2.5 lakh, during the Demonetization Scheme of 2016.

Tribunal’s Judgement:

In Indian culture women have special place, this had been recognised from the time of Vedas and Purans.

Women (across socio economic groups) are often accompanied by male relatives who deal with banking officials to open a new bank account, make deposits, etc. on behalf of their female relatives. Documents carrying the name/signature of a father or a husband are often a requirement. Opening and operating accounts on mobile wallets requires mobile phones (preferably smartphones equipped with access to the internet) to begin with, which several women may not even own. Therefore, in essence, women require the consent of male relatives to access formal financial channels, whereas cash offers them a certain amount of independence.

Only after Hon’ble PM initiative of Jandhan Yojana , impetus was given to open the bank account with more focus on rural areas and women. Prior thereto generally women were not maintaining any Bank account and were largely keeping the cash in house at odd places, for the emergency use.

Women all over the country , had been accumulating cash that they had saved for themselves from household budgets , by haggling with vegetable sellers, tailors, grocers and assorted traders, years of stashing in whatever little cash gifts they received from relatives during festival times and years of tucking away the change they found in the pants that they washed every day, however suddenly they were left with no option but to deposit the amount in the denomination of Rs 500 and Rs 1000 notes in the banks on account of Demonetisation scheme 2016 , these notes were no more legal tenders.

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/ ( exemption limit of Income tax) . Further revenue had issued following press release for the benefit of public on 18/11/2016, immediately after the announcement of the Scheme.

In the present case the assessee had given the explanation to the AO during the assessment proceedings and had submitted that the amount deposited in the bank, were her money saved by her in last many year’s and were kept by her , 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. However assessing officer has not brought on record any document, evidence etc to show that the assessee was having any income from any other source other than saving from various activities mentioned elsewhere.

Further no evidence had been brought on record , AO, in terms of press statement dated 18/11/2016 and SOP to established that the amount deposited in the account was not of the account holder/ assessee but of somebody else. In the light of the above when the AO had brought on record the evidence of proving that the money belongs to other person and not of the assessee, the amount deposited shall not added as income of the assessee.

We may clarify that this decision may be treated as precedent in respect to proceedings arising out of the cash deposit made by the housewives during the demonetisation scheme 2016, only up to the limit of Rs 2.5 lakhs only .

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