Explanation as Past Savings of HUF and Members, No other Deposits during Demonetization: ITAT deletes Income Tax Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Allahabad Bench deleted Income Tax Addition on the ground that the explanation was past savings of HUF and its members and no other deposits were made during demonetization.

The assessee, Sudhir Kumar Tiwari is a HUF and filed its return of income for the year under consideration on March 2018 declaring a total income of Rs. 40,743/-. The case was selected for limited scrutiny through CASS on the issue of a cash deposits in the bank account during the demonetization period. The Assessing Officer issued a notice under section 143(2) and also issued notices under section 142(1) asking the assessee to submit the source of cash deposit during the demonetization period.

Finally, the Assessing Officer after considering the actual amount of deposit in the bank account has made an addition of Rs. 1,00,000/- as unexplained money and assessed the same to tax under the provisions of section 115BBE of the Act at 60% plus surcharge at 25% and a cess at 3%. The assessee challenged the action of the Assessing Officer before the CIT(A) and submitted that the source of the deposit of Rs. 1,00,000/- in the bank account on 21.11.2016 in the demonetized notes of Rs. 500-1000/- is from the past savings of the HUF consisting of its Karta and coparceners.

The assessee has further submitted that the assessee declared the said deposit in the return of income and it was due to the fact that these currency notes of Rs. 500 to 1000/- were declared as not a legal tender after demonetization and accordingly, the same was required to be deposited in the bank account before the date prescribed. Hence, the assessee contended before the CIT(A) that the assessment of the said income of the assessee under the provisions of section 115BBE is unjustified and arbitrary. The CIT(A) was not impressed with the explanation of the assessee and confirmed the addition made by the Assessing Officer.

A Single Bench of the Tribunal consisting of Vijay Pal Rao, Judicial Member observed that “Accordingly, in the facts and circumstances of the case when the assessee has explained the source of Rs. 1,00,000/- as past savings of the assessee HUF and its members and there are no other deposits during the demonetization the addition made by the Assessing Officer is deleted.”

To Read the full text of the Order CLICK HERE

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