AGRA ITAT--NO TAX ON HOUSEWIVES WHO DEPOSITED LESS THEN RS. 2.50 LAKHS CASH DURING DEMONETIZATION

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AGRA ITAT--NO TAX ON HOUSEWIVES WHO DEPOSITED LESS THEN RS. 2.50 LAKHS CASH DURING DEMONETIZATION

22/06/2021

ITAT AGRA

SMT. UMA AGRAWAL V/S ITO

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 issued by AO the assessee filed the reply to the notice . It was submitted by the assessee that the assessee has no business activities in a name and she only on the income from interest on her saving.

6. The assessee was asked to produce the evidence in support of her cash deposit in the bank during the demonetisation.

7. The assessing officer has made the addition of Rupees 2, 11, 500/- to the income of the assessee treating the amount deposited in the bank as unexplained money under section 69A read with 115BBE of the income tax Act 1961.

8. Feeling aggrieved by the order passed by the assessing officer the assessee filed the appeal before the Commissioner appeal (NFAC). NFAC had dismissed the appeal filed by the assessee, by mentioning in the order as under:

“The appellant submitted that the Assessing Officer erred in making addition of Rs. 2,11,500/-, without any basis. The appellant submitted that the cash deposited in the bank during the period of demonetization was out of her previous savings and savings from money given by her husband and her son for household expenses and savings for future safeguard of family from the scheme "Streedhan".

4.2 The appellant submissions were carefully considered. It is observed from the assessment order that the appellant was given numerous opportunities to explain the cash deposit. The appellant simply submitted that it is out of her savings but did not submit any evidence in this regard. Even during the course of appellate proceedings, no evidence was furnished to prove the deposits were made out of previous savings. It appears that the appellant did not have any source of income. For the assessment year 2015-16 and 2016-17, the appellant declared income of Rs. 94,360/- and Rs. 94,030/-. It could not be believed that a person having annual income of less than Rs. 1 lakh was able to accumulate Rs.2 lakh in cash, which was deposited during demonetization period.

4.3 The Assessing Officer observed that the cash the cash deposits made during the Financial Year 2015-16 and during the period of 01/04/2016 to 08/11/2016 was 'Nil'. The only cash deposits made by the appellant, was during the period of demonetization. Similarly, there were no cash deposits made in the appellant's other banks accounts namely State Bank of India (a/c no. 33379918764) and Syndicate Bank of India (a/c no. 77802200001181 ).

4.5 In view of the above, the appellant's submissions that the cash deposits were made out of the previous savings cannot be accepted. The addition made by the Assessing Officer of Rs. 2,11,500/- is confirmed. This ground of appeal is dismissed.”

9. Feeling aggrieved by the order passed by the NFAC on 25.03.2021, the assessee is in appeal before us on the grounds mentioned hereinabove

10. The Ld.AR for the assessee had made elaborate submissions 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 had explained that women gives birth to the child, take care of the family, cook food, maintain house, manage finances of kitchen, contribute in household business/work, work in the field, discharge duties as nurse, teacher, caretaker etc. Thereafter had submitted that though house wife are normally not going out of home for earning but they are financially contributing in the families by means of above service . He had submitted that for the selfless and caring nature of House wife , they are not charging any amount for the services.

11. 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.

12. 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 . We are reproducing the relevant excerpts of F.No.225/100/2017/ITA-11 ,Annexure “Source Specific General Verification Guidelines” it provides as under :

1. Cash out of earlier income or savings

1.1 In case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to 2.5 lakh. In case of taxpayers above 70 years of age, the limit is Rs. 5.0 Iakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filing of ROI and income shown therein, cash withdrawals made from accounts etc .

17. From the ancient time, women in India are having special place in family and society. We have many woman as role model in Indian history to a name a few Mata Zizabai ( Mother of Chaterpati Shivaji Maharaj ) , Ahaliya Bhai , Laxmi Bai, Phoole , Anne Besant , Captain Lakshmi Swaminathan (better known as Lakshmi Sahgal), of INA, though were house wife, but had contributed a lot as and when occasion so demanded .Further many housewives had even contributed by way of cash and jewelry during freedom movement.

18. On July 13, 1927, Mahatma Gandhi addressed a gathering at the Mahila Seva Samaja in Basavanagudi. Gandhi encouraged women to be change-makers and contribute to the Freedom movement and Harijan Movement by donating their streedhan and other money. Similar call was given Former PM Pt Nehru, during 1962 war thereby calling on the women of India to give their jewelry to the cause. Above said had been recorded here just to show that women in India were always saving some money for the family.

10. The sheer amount of time and effort that is dedicated to household work by individuals, who are more likely to be women than men, is not surprising when one considers the plethora of activities a housemaker undertakes. A housemaker often prepares food for the entire family, manages the procurement of groceries and other household shopping needs, cleans and manages the house and its surroundings, undertakes decoration, repairs and maintenance work, looks after the needs of the children and any aged member of the household, manages budgets and so much more. In rural households, they often also assist in the sowing, harvesting and transplanting activities in the field, apart from tending cattle [See Arun Kumar Agrawal (supra); National Insurance Co. Ltd. v. Minor Deepika rep. by her guardian and next friend, Ranganathan, 2009 SCC OnLine Mad 828]. However, despite all the above, the conception that housemakers do not “work” or that they do not add economic value to the household is a problematic idea that has persisted for many years and must be overcome.

17. The issue of fixing notional income for a homemaker, therefore, serves extremely important functions. It is a recognition of the multitude of women who are engaged in this activity, whether by choice or as a result of social/cultural norms. It signals to society at large that the law and the Courts of the land believe in the value of the labour, services and sacrifices of homemakers. It is an acceptance of the idea that these activities contribute in a very real way to the economic condition of the family, and the economy of the nation, regardless of the fact that it may have been traditionally excluded from economic analyses. It is a reflection of changing attitudes and mindsets and of our international law obligations. And, most importantly, it is a step towards the constitutional vision of social equality and ensuring dignity of life to all individuals.

18. Returning to the question of how such notional income of a homemaker is to be calculated, there can be no fixed approach. It is to be understood that in such cases the attempt by the Court is to fix an approximate economic value for all the work that a homemaker does, impossible though that task may be. Courts must keep in mind the idea of awarding just compensation in such cases, looking to the facts and circumstances [See R.K. Malik v. Kiran Pal, (2009) 14 SCC 1].”

20. Further as per a UNDP (United Nations Development Programme) study, 80% of women in India don’t have bank accounts, as of 2014- 15. Women (across socioeconomic 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.

21. 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.

22. 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. Lot of concerned were raised by political and social organisation bring on fore the plight of women folks, on account of scheme of 2016.

23. 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 .

25. 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, we are of the opinion that 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 board , 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.

28. 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.

29. In our opinion assessee had duly explained the source of deposit i.e previous years saving and we have no hesitation to accept the same , as it would been presumed that this small amount of Rs 2,21, 000/ would have been accumulated or saved by her from various activities undertaken by her for and on behalf of family in last many years . Further as mentioned herein above, in the decision of Kirti ( supra), 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. Therefore no additions can be made by lower authority. Further even if we ignore the explanation, for the sake of argument, then also it is for the assessing officer to bring on record some cogent evidence to prove that the amount deposited in the bank was undisclosed income arising from the business or from any other activities.

33. In the result the appeal of the assessee is allowed . Announced in open court on 18th June 2021.

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