70-Year-Old Depositor’s Rs. 2,50,000 Demonetization Cash Treated as Unexplained: ITAT Deletes Addition citing CBDT Exemption Limit [Read Order]
The tribunal noted that the deposited amount fell within the exempted limit specified by the CBDT for small depositors, including housewives and artisans, and allowed the appeal
ITAT Rajkot, Demonetization Cash, CBDT
ITAT Rajkot, Demonetization Cash, CBDT
The Rajkot Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 2,50,000 cash, which had been treated as unexplained, for a 70-year-old depositor, citing the Central Board of Direct Taxes (CBDT) exemption limit during demonetization.
Savitaben Nathalal Vadi, appellant-assessee, did not file her income tax return for AY 2017-18. During the demonetization period (09.11.2016 to 30.12.2016), she deposited Rs. 2,50,000 in cash in her Navanagar Co-Op Bank account. Since she did not file her return, the source of this deposit remained unexplained.
The Assessing Officer (AO) reopened the assessment under section 148 on 31.03.2021 and asked her to file the return within 30 days, but she did not comply. A notice under section 142(1) was later issued on 15.11.2021.
As she failed to explain the source of the cash, the AO treated Rs. 2,50,000 as unexplained and added it to her income under section 69A. The assessee appealed to the Commissioner of Income Tax (Appeals)[CIT(A)], who set aside the AO’s order and directed a fresh assessment. Aggrieved, she filed an appeal before the tribunal.
The assessee counsel stated that the assessee deposited Rs. 2,50,000 during the demonetization period, which was the maximum amount not taxable as per the CBDT Circular. He added that the assessee had submitted all necessary details and documents regarding the source of the deposit during the assessment proceedings, but the Assessing Officer did not consider them. He argued that the addition of Rs. 2,50,000 should be deleted.
The Departmental counsel relied on the AO’s findings.
A delay of 153 days occurred in filing the appeal. The assessee, a 70-year-old woman, was unaware of the CIT(A)’s ex-parte order as notices were not served to her. She learned about the order only when she received a tax recovery notice and immediately filed the appeal.
The departmental counsel opposed the condonation, stating the reasons were insufficient.
Considering her age, the lack of prior notice, and the steps taken immediately after learning of the order, the delay was condoned.
A single member bench of Dr.Arjunlal Saini (Accountant Member) noted that the CBDT had issued instructions and a press release stating that small depositors, including artisans, workers, housewives, and other small taxpayers, would not be questioned for cash deposits up to Rs. 2,50,000 per person during the demonetization period.
The assessee’s case was reopened under section 147 by a notice dated 31.03.2021, as she had deposited Rs. 2,50,000 in her Nawanagar Co-op Bank account. The AO added this amount under section 69A as unexplained income.
The tribunal observed that the deposited amount was within the exempted limit specified by the CBDT, and the assessee was therefore not liable to pay tax on it. The addition of Rs. 2,50,000 was deleted.
Accordingly the appeal was allowed.
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