Cash Deposits made From Parent's Accumulated Savings and Income from Agricultural Activities: ITAT Deletes Income Tax Addition u/s 69A [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the Income tax addition of unexplained money. It was found that the cash deposit was made from the assessee's parent’s accumulated savings and income from agricultural activities.

Vivek Prahladbhai Patel, the assessee filed his return of income, declaring his total taxable income. The case was selected for limited scrutiny through CASS as, during the period of demonetization, the assessee made substantial cash deposits in his bank account amounting to Rs. 9,04,000. Out of the total amount, the Assessing Officer (AO) treated Rs. 4,28,000 as unexplained money and added it to the income of the assessee under Section 69A of the Income Tax Act, 1961.

The provision under Section 69A deals with unexplained money, etc., to be considered in the exercise of aggregation of income under Chapter VI of the Act. The assessee contended that the cash deposits were from the accumulated savings and agricultural income of his parents. In support of the contention, the assessee filed affidavits from his father and mother before the AO. However, the AO was not satisfied with the explanation and proceed with the addition.

The CIT (A) upheld the order of the AO without giving due consideration to the affidavits and the explanation provided by the assessee. The CIT(A) did not appreciate that the affidavits submitted were from credible sources, the parents of the assessee, and did not investigate the matter to ascertain the veracity of the claims.

The two member bench of Suchitra Kamble (Judicial Member) and Makarand V. Mahadeokar (Accountant Member) has observed that the AO did not conduct any independent verification or inquiry into the claims made in the affidavits. The AO has simply dismissed the affidavits without assigning any cogent reasons. The CIT (A), too, has upheld the AO's order without addressing the merits of the affidavits or the explanation provided by the assessee.

The tribunal found that the addition made under Section 69A is not sustainable as the AO and CIT (A) have failed to discharge their duty of conducting a thorough and fair investigation into the source of the cash deposits. The affidavits provided by the assessee's parents should have been subjected to verification, and the explanation provided should have been considered in a judicious manner.

The ITAT while allowing the appeal, set aside the order of the CIT (A) and directed the AO to delete the addition of Rs. 4,28,000 made under Section 69A of the Income Tax Act.

To Read the full text of the Order CLICK HERE

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