ITAT Partly Allows Assessee's Appeal, Directs Benefit of Rs.8 Lakhs for Unexplained Cash Deposits [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Ahmedabad, partly allowed the appeal filed by assessee, in relation to the unexplained cash deposits during the demonetization period for the Assessment Year (AY) 2017-18. Tribunal addressed a significant issue involving unexplained cash deposits under Section 69A of the Income-tax Act, 1961.

Manan Kiritbhai Shah,the appellant-assessee had challenged the decision made by the Commissioner of Income-tax (Appeals) under Section 250 of the Act, which had confirmed an addition of Rs. 10,21,000 as unexplained investment.

Common Mode of Tax Evasion

The income tax officer had initially passed the assessment order on December 17, 2019, determining the total income at Rs. 19,63,683 against the Assessee's return of Rs. 1,66,000. This additional income was attributed to unexplained cash deposits made in the appellant’s bank accounts.

The matter was further investigated by the CIT(A), who deleted the addition of Rs. 7,76,663, determining that the sum was linked to a third party. Regarding the balance amount of Rs. 10,21,000, the Assessee argued that the cash deposits of Rs. 5,20,000 in the Bank of Baroda and Rs. 5,01,000 in the State Bank of India (SBI) originated from the personal savings of family members, which included his father, mother, son, sister, and niece.

However, the CIT(A) did not accept the claim as the Assessee failed to provide documentary evidence supporting the source of the cash, including details of the occupations of the family members. Consequently, the CIT(A) upheld the addition.

Common Mode of Tax Evasion

Upon review, the Single member Bench of Dr.BRR Kumar(Vice-President)  observed that the Assessee's family, consisting of his father, mother, and son, did not maintain separate bank accounts, and thus, a reasonable portion of the deposits could be attributed to family savings. In this context, the ITAT decided to grant a benefit of Rs. 8 lakhs, reflecting the amount that could be reasonably considered as cash in hand belonging to the family.

Thus, the appeal was partly allowed, and the Assessing Officer was directed to revise the assessment to grant the benefit of Rs. 8 lakhs, providing some relief to the Assessee in the matter of unexplained cash deposits during the demonetization period.

To Read the full text of the Order CLICK HERE

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