The Chennai Bench of the Income Tax Appellate Tribunal (ITAT)has held that addition on cash deposit During Demonetisation is not permissible when the opportunity to adduce evidence to prove the source was given to the assessee.
Devarajulu Natarajan, the assessee challenged the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 21.03.2022 in the matter of an assessment framed by Assessing Officer [AO] u/s. 143(3) of the Act on 30.09.2019 which confirmed certain addition of Rs.8.50 Lacs which represent cash deposits in Bank Accounts.
The assessee admitted income of Rs.6.82 Lacs which includes salary income and the case was subjected to scrutiny to verify cash deposited by the assessee during the demonetization period. The cash deposit during the demonetized period was Rs.8.50 Lacs.
It was contended by the assessee to have sourced it from the amount returned by friends and relatives out of money given to them during the past several years out of salary income.The salary was directly credited through banking channels. The AO added an entire cash deposit of Rs.12.85 Lacs u/s 69 which includesdeposits made before the demonetization period also.
The CIT(A), noted that post-demonetization, cash deposited in State Bank of Hyderabad was only Rs.2.50 Lacs and cash deposited in Canara bank was Rs.6 Lacs only. Accordingly, the addition was restricted to Rs.8.50 Lacs.
Shri N. Arjunraj (CA) for S. Sridhar (Advocate), the Counsel pleaded for another opportunity before lower authorities to substantiate the source of the cash deposit. Shri D. Hema Bhupal, the counsel for the department stated that the assessee could not establish the source of the deposit and that the additions are justified.
A Coram consisting of single member Shri Manoj Kumar Aggarwal, AM observed that the onus is on the assessee to substantiate the source of the cash deposit of Rs.8.50 Lacs and granted another opportunity to the assessee to substantiate its case before AO. The issue was restored to the file of AO with a direction to the assessee to substantiate the source of the deposit.
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