The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled to overturn the addition made under section 69A under Income Tax Act, as both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT (A)] overlooked crucial evidence pertaining to cash deposits.
The assessee, an individual made cash deposits in Union Bank of India, prompting a notice under section 133(6) of the Act to obtain detailed information from the bank, including bank account statements, interest paid to the taxpayer, specifics of specified bank note (SBN) deposits with pay-in slips, and Know Your Customer (KYC) details.
The bank duly furnished these details. Upon scrutiny of the bank statement, the Assessing Officer noted multiple cash deposits made by the taxpayer across different periods—pre-demonetization, during demonetization, and post-demonetization.
Consequently, the Assessing Officer observed cash deposits amounting to Rs. 11,74,000/- during the relevant financial year. Despite the taxpayer’s explanations, the Assessing Officer added Rs. 11,95,160/- as unexplained income under section 69A of the Income Tax Act.
The assessee’s counsel, Mr. S.N. Divetia, submitted that the cash deposits were proceeds from the sale of land, supported by documentation submitted to both authorities. Additionally, he argued that the pattern of cash deposits reflected regular agricultural income earned by the taxpayer.
Mr. Urjit B. Shah, representing the revenue, argued that the source of deposits remained unexplained, and the withdrawal from the father’s account was not clarified. He relied on the assessment order and the CIT (A)’s decision.
The bench noted that the taxpayer indeed derived agricultural income, evidenced by the assessment order explicitly mentioning the cash deposits.
A single-member bench, presided by Suchithra Kemble, emphasized that the taxpayer had provided details regarding the land sale and associated consideration, as well as evidence of withdrawals from the father’s account. Regrettably, both the Assessing Officer and the CIT (A) had disregarded this crucial evidence. Consequently, the taxpayer’s appeal was allowed.
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