The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) quashed the addition under Section 115BBE of the Income Tax Act, 1961 which states the procedure for determination of tax for unexplained Investment/Expenditure, as the assessee could not recall the details of income within the specified time due to old age.
The assessee is aged about 73 years and he retired as a Cashier from the State Bank of India (SBI). At the time of retirement, the assessee got a retirement benefit of Rs. 18,00,000/-. He accumulated his savings by giving as hand loans to his friends and relatives. Besides pension from SBI and rent from house property, he is getting interest on his savings from banks and from his friends.
The assessee had explained the sources of cash deposits for Rs. 18,00,000/-, in the sworn statement. Assessee explained that he has accumulated savings from earlier years and is not able to recollect the correct person to whom he has given and recovered in the past.
The Assessing Officer accepted the explanation of the assessee for the deposit of Rs.14.00 lakhs, but added a sum of Rs. 4 lakhs as ‘income from other source’, by stating that the assessee could not explain the sources for cash deposits of Rs.4,00,000/- and also not produced any documentary evidence for the same. The Assessing Officer applied the provisions of Section 115BBE of the Income Tax Act.
The Commissioner of Income Tax (Appeal) [CIT(A)] observed that except this particular transaction, the assessee remembered every other thing and, therefore, it is unlikely that the assessee could have forgotten this. Further, for want of a formal application under Rule 46A of the Income Tax Rules, 1962 (Rules), CIT(A) refused to receive the affidavit of the debtor. He confirmed the addition and application of Section 115BBE of the Income Tax Act.
The Authorized Representative contended that the assessee cannot be penalized for his poor memory in not recollecting the details relating to Rs. 4 lakhs at his advanced age of 73 years, and since he produced the evidence explaining the balance amount of Rs. 4 lakhs also, the same may be deleted.
The Departmental Representative submitted that when the assessee remembered every other detail, it was difficult to believe that he could not recollect the details of only this Rs. 4 lakhs. He, therefore, prayed to dismiss the appeal.
The Single-member bench comprising of Narasimha Chary (Judicial member) held that the act of refusing to look into the evidence produced by the assessee, who has never been found to be a tax evader, on the ground that it is an afterthought is nothing but an act of prejudice. Such evidence should have been examined and if any doubt arises on such examination, then the alternative view could have been taken by the authorities below.
Having regard to the common course of natural events, human conduct, and public and private business, in relation to the facts of this case, the bench did not find anything unusual in the plea taken by the assessee. Hence, direct the Assessing Officer to delete this addition, in view of the plea that the total income of the assessee is less than the threshold limit. Thus, the appeal of the assessee was allowed.
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