In a recent decision, the Income Tax Appellate Tribunal ( ITAT ) in Bangalore provided relief to a Canara Bank employee and national hockey player, by setting aside income additions totaling Rs. 9.84 lakh.
The appeal for the assessment year 2017-18, stems from cash deposits made in the assessee/appellant, Bharat Kumar Chetri’s bank account. The IT Department flagged these deposits during a limited scrutiny based on two main concerns: cash deposits and withdrawals.
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The assessee originally filed his income tax return on August 2, 2017, declaring an income of Rs. 4.24 lakh. However, due to the cash deposits totaling Rs. 21.24 lakh in 11 separate instances, the Assessing Officer ( AO ) treated this amount as unexplained income under Section 69A of the Income Tax Act 1961 ( ITA ). As a result, the AO raised the assessee’s total assessed income to Rs. 21.24 lakh, applying Section 115BBE of the ITA, which imposes a high tax rate on unexplained income.
The assessee, in response, appealed to the First Appellate Authority ( FAA ), who allowed partial relief, accepting explanations for Rs. 10.82 lakh of the deposits based on jewelry sales, personal savings, and a sum of Rs. 1.94 lakh. However, Rs. 10.41 lakh remained classified as unexplained income, which led the assessee to seek further recourse with the ITAT.
In his appeal to the ITAT, the assessee explained a 56-day delay, citing professional obligations as a hockey player and coach, which required frequent travel and led to a delay in his awareness of the FAA’s order. The Tribunal acknowledged this reason and condoned the delay, relying on the precedent set by the Supreme Court in Collector, Land Acquisition v. MST. Katiji and Others.
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At the ITAT hearing, the assessee’s representative argued that Rs. 10 lakh of the disputed deposits came from prior cash withdrawals. He pointed to two withdrawals—Rs. 7 lakh and Rs. 3 lakh—made in early August 2016, well before the demonetization period. These withdrawals, he argued, justified his cash reserves and explained the later deposits, which, as he contended, were also not made during demonetization.
The IT Department, however, countered that the documentation provided was insufficient, and the deposit dates were inconsistent.
After hearing both sides, the ITAT two member bench of Mr Laxmi Prasad Sahu and Mr Prakash Chand Yadav found the evidence satisfactory, noting that the assessee had no additional income sources and no indications of substantial investments. The Tribunal accepted that the deposits stemmed from previous cash withdrawals and thus ruled that the Rs. 9.84 lakh should not be counted as unexplained income, favoring the assessee.
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