The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the addition of cash deposits during demonetization on proper explanation as to utilization of the cash deposit.
During the course of the assessment proceedings, the Assessing Officer (AO) observed that the assessee, Usha Narayan Chaware, deposited cash worth Rs. 17 lakhs in his bank account on different dates during the demonetization period. On being called upon to explain the source, the assessee submitted that the assessee, along with his brother, sold certain agricultural land for a sum of Rs. 38 lakhs. The assessee’s share in such consideration was Rs. 19 lakhs.
The assessee stated that the cash was kept with his brother for the purchase of another property in the nearbyvicinity, but the transaction of the new purchase could not materialize. The AO called upon the assessee to furnishdetails regarding his monthly expenses, which were duly furnished by the assessee along with source documentation.
The AO refused to accept the source of the cash deposit of Rs. 17 lakhs in a bank account during thedemonetization period on the ground that the agricultural land was sold in 2013 and the cash was deposited in2016 and hence made the addition.
The assessee sold their ancestral agricultural land in 2013 for a sum of Rs. 38 lakhs along with his brother. The assessee’s share was Rs. 19 lakhs. The assessee’s share of Rs. 19 lakhs in cash were kept with his brother, who was looking after the agricultural operations previously, and both of them decided to purchase new agricultural land in their joint name.
Unfortunately, the brother passed away in the month of June 2016, and his sister-in-law handed over his share of cash in the months of August and September 201 6, which was deposited in the bank account in November 2016.
The Tribunal of RS Syal, Vice President noted that “Once the availability of cash in hands was established and it was not shown by the AO that such cash was spent elsewhere, I am of the considered opinion that the explanation of the assessee as to its utilization has to be accepted.”
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