Cash Deposit of ₹10 Lakh Claimed as Gift from Deceased Grandmother Lacked Evidence: ITAT Grants Partial Relief by Deleting ₹5 Lakh [Read Order]

Vikram Narendra Patil,appellant-assessee, filed his return of income for A.Y. 2017-18 on 05.08.2017, declaring ₹3,19,250. His case was selected for Limited Scrutiny under CASS based on information regarding cash deposits during the demonetization period. A valid notice under section 143(2) was issued on 04.09.2018 and served through electronic mail, followed by a notice under section 142(1).

During the assessment, the Assessing Officer ( AO) found that the assessee had deposited ₹14.50 lakh in cash during the demonetization period. The assessee explained that the deposits came from the opening cash balance, cash withdrawals from the bank, income earned during the year, and a cash gift of ₹10 lakh received from his grandmother on 17.10.2016.

The AO was not convinced and added ₹14.50 lakh under section 69A, assessing the total income at ₹17,69,250.

On appeal, the Commissioner of Income Tax (Appeals)[CIT(A)] provided partial relief by deleting ₹4.50 lakh but upheld the addition of ₹10 lakh. The assessee then approached the tribunal, disputing the sustained addition.

The assessee counsel argued that the appellant had received a valid cash gift and could not now prove its genuineness as the donor had passed away. He also stated that the CIT(A) failed to consider other sources of cash, such as the opening balance, bank withdrawals, and income declared in the ITR.

The Departmental Representative, however, supported the order of the CIT(A).

A single member bench of Manish Borad (Accountant Member) heard both parties and reviewed the records. The assessee had challenged the addition of ₹10 lakh sustained by the CIT(A) out of the total ₹14.50 lakh added by the AO as unexplained cash deposits.

The tribunal noted that the CIT(A) had already granted relief of ₹4.50 lakh and examined the source of the remaining ₹10 lakh.The assessee claimed that the amount included a cash gift of ₹10 lakh received from his grandmother before demonetization.

However, the appellate tribunal found that the gift deed was neither notarized nor witnessed and only carried the thumb impression of the deceased grandmother. Since no sufficient evidence was provided to prove the genuineness of the gift or the donor’s financial capacity, the claim was rejected, and the finding of the CIT(A) on this point was upheld.

The ITAT further observed that the assessee had an opening cash balance, bank withdrawals, salary income, other income, and small gifts from family members below the threshold limit. Considering these sources, it held that an additional ₹5 lakh could be accepted.

Accordingly, the tribunal deleted ₹5 lakh from the sustained addition, giving partial relief, and partly allowed the appeal.

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