The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the cash deposits could be accepted during the demonetisation period if the source has been explained.
The assessee R. Raju, was an individual, whose return was, selected for limited scrutiny under CASS to verify large value cash deposits during the demonetization period as compared to returned income for the assessment year 2017-18 on 01.08. 2017.During the course of assessment proceedings, the assessee explained before the AO, that source for cash deposits was out of maturity proceeds of fixed deposits in SBI, and also amount withdrawn out of maturity proceeds of insurance policy.
The assessee had explained that the account was held with joint name along with his wife and she had deposited a sum out of her source and AO, except to the extent of income returned in the impugned assessment year amounting to a sum, the assessee could not explain source of balance cash deposit.AO made addition under Section 69A of the Income Tax Act, 1961.
S. Keerthi Rajan on behalf of the assessee contended that, the assessee was having sufficient source of income to explain cash deposits, but the CIT(A) had disregarded evidence filed by the assessee and sustained additions.
D. Hema Bhupal on behalf of the revenue, contented that relief could not be granted to assessee as the assessee could not explain source for cash deposits except to the extent relief allowed by the AO as well as the CIT(A).
The Division Bench of Mahavir Singh (Vice President) and G. Manjunatha, (Accountant Member) deleted the addition, allowing the appeal observing that “We find that, the AO as well as CIT(A) never disputed fact that the assessee has furnished necessary evidence with regard to maturity proceeds of fixed deposits and insurance policy. However, disregarded evidence filed by the assessee only for the reason that cash has been deposited during demonetization period.”
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