ITAT Sets Aside Rs.22.39 Lakh Addition, Validates Senior Citizen's Demonetization Deposits [Read Order]

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench ruled in favor of the assessee and set aside the addition of Rs.22.39 lakh made under Section 69A of the Income Tax Act, 1961. The tribunal held that the assessee had sufficiently explained the source of his cash deposits made during the demonetization period, and the tax authorities failed to disprove the claim.

The case involved Lakshmichand Pribhdas Jaisinghani, a resident of Vadodara, Gujarat, who filed his income tax return for Assessment Year (AY) 2017-18, declaring a taxable income of Rs.6,68,400. The Income Tax Department selected the case for limited scrutiny on the ground that the assessee had deposited Rs.21.45 lakh in multiple bank accounts between November 8, 2016, and December 31, 2016, during the demonetization period. The Assessing Officer (AO) issued a notice under Section 143(2) and sought explanations for the deposits.

Want a deeper insight into the Income Tax Bill, 2025? Click here

Shri Lakshmichand Pribhdas Jaisinghani explained that the cash deposits were proceeds from the sale of gold jewelry that belonged to his deceased wife. He submitted details of the purchasers, including Aadhaar and PAN numbers, and provided confirmation letters. However, the AO rejected this explanation, stating that the purchasers did not respond to notices issued under Section 133(6). The AO treated the amount as unexplained money under Section 69A and taxed it at 60% under Section 115BBE. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision, leading the assessee to file an appeal before the ITAT Ahmedabad.

The case was heard on December 5, 2024, with Shri Mohit Balani representing the assessee and Shri N.J. Vyas appearing for the Revenue. The ITAT reviewed all the documents provided by the assessee, including bank statements, transaction records, and responses to notices. The tribunal observed that the assessee had given reasonable explanations, and the Revenue had not provided any evidence to contradict the claim. It noted that the mere non-response of purchasers to Section 133(6) notices cannot be a valid reason for rejecting the transactions. The tribunal relied on judicial precedents, including Rohini Builders v. DCIT (2002) and CIT v. Orissa Corporation Pvt. Ltd. (1986), which established that once an assessee provides sufficient documentation, the burden of proof shifts to the department to disprove the claim.

The ruling was delivered by Suchitra Kamble (Judicial Member). The tribunal held that the addition of Rs.22.39 lakh was not justified and that the assessee had adequately demonstrated the source of the cash deposits. Consequently, the tribunal allowed the appeal and directed the removal of the addition.

Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc... Click Here

The ITAT Ahmedabad ruled in favor of Lakshmichand Pribhdas Jaisinghani and set aside the Rs.22.39 lakh addition. The tribunal reinforced that senior citizens should not be penalized for legitimate transactions if a reasonable explanation is provided. This decision highlights the importance of proper documentation in tax assessments and ensures that taxpayers are treated fairly in cases involving demonetization deposits.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates