A housewife now may not face any problem from the Income Tax Department on deposit of cash up to ₹2.5 lakh during demonetisation (2016). A Bench of Income Tax Appellate Tribunal (ITAT) has held that such deposits cannot be treated as income of the assessee.
This ruling will be applicable in similar matters as Agra Bench of ITAT said, “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 ₹2.5 lakh only.”
Rule of precedent
This is key as normally ITAT ruling is binding only on the applicant and the jurisdiction tax officer and can be used as reference in similar matter.
This ruling is important in the sense that the government had made it clear in 2017 that if an individual (other than minors) does not have any business income, no further verification is required if total cash deposit is up to ₹2.5 lakh.
But, the source of such amount has to be either household savings/savings from past income or amounts claimed to have been received from any of the sources such as tax-free income, bank withdrawal or from relatives.
In the present case, a housewife Uma Agrawal of Gwalior declared a total income of ₹1.30 lakh in her returns for AY18 (FY17). During the demonetisation period, she had deposited over ₹2.11 lakh cash in a bank.
The assessee said she had collected the said sum from her previous savings, given by her husband, son, and relatives for the future of her and her family.
The case was picked up for scrutiny on the basis of the deposit. The assessee was asked to produce evidence and give explanation. She said she has no business activities in her name and gets interest on her savings. However, the assessing office (AO) observed that the cash deposits made during FY16 and FY17 before demonetisation, was nil and only cash deposit was made during the period of demonetisation.
Accordingly, AO added the deposit amount to the income by treating that as unexplained money. This was upheld at the first level of appeal, following which the matter reached ITAT.
Key occupation
Going through all the facts and arguments, the Bench said that considering the instructions issued by the board, AO was prohibited from making the addition.
Highlighting the role of housewife, the Bench quoted an order by the Supreme Court, which mentioned that, in India, according to the 2011 Census, nearly 159.85 million women stated that “household work” was their main occupation compared to only 5.79 million men.
It added: “Women all over the country had been accumulating cash 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 ₹500 and ₹1,000 notes in banks on account of the 2016 demonetisation scheme; these notes were no more legal tenders.”
It also mentioned that concerns were raised by political and social organisations on the plight of women folk, on account of the demonetisation scheme.