Cash Deposits during Demonetization Period Explained by Bank Withdrawals and “Pin Money” Household Savings: ITAT deletes Addition [Read Order]
The Tribunal placed reliance on bank and cash flow statements evidencing withdrawals for a failed land purchase, along with judicial precedents validating household “pin money” savings, to accept the appellant’s explanation
Cash Deposits, ITAT Chennai, Demonetization Period,
Cash Deposits, ITAT Chennai, Demonetization Period,
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, allowed the appeal by holding that cash deposits made during demonetization could not be taxed as unexplained money under Section 69A of the Income Tax Act, 1961, when backed by bank records and the recognized concept of household “pin money” savings. The Tribunal found the explanation credible and directed deletion of the addition.
The appellant is an individual salaried employee deriving income solely from salary and interest. For Assessment Year 2017-18, she declared a total income of ₹5,71,350.
The case was selected for scrutiny owing to a cash deposit of ₹15,30,000 made in her IDBI Bank account on 30.11.2016 during demonetization. She explained that the deposit comprised ₹14,00,000 withdrawn earlier for a failed agricultural land purchase and ₹1,30,000 as accumulated household “pin money” savings.
The appellant, represented by Advocate Mr. J. Saravanan, argued that the deposit was fully explained through bank statements and a detailed cash flow statement. She emphasized that her consistent explanation had been ignored by the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)], who wrongly presumed that retaining cash for several months was improbable.
It was also stated that judicial precedents including CIT v. Paramanand Uttamchand (1984) 146 ITR 430 (Mad) and R.B.N.J. Naidu v. CIT (1956) 29 ITR 194 (Nag), which recognizes “pin money” savings. It was further clarified that the letter given to the bank manager, citing repayment of a hand loan, was made under pressure during demonetization and did not contradict her actual source of funds.
The Revenue Authorities, represented by Ms. Anitha, Additional CIT, supported the orders of the lower authorities. It was contended that the nexus between the withdrawals and the redeposit was not satisfactorily established and that the appellant’s explanation lacked proper documentation for the aborted land transaction.
The Bench comprising of Manu Kumar Giri, Judicial Member and S.R. Raghunatha, Accountant Member observed that the assessee had furnished a credible explanation backed by documentary evidence, including bank statements and cash flow records.
The Tribunal held that the deposit of ₹15,30,000 was genuinely explained, considering both the earlier withdrawals and household savings. The AO was also directed by the tribunal to delete the addition made under Section 69A of the Income Tax Act, 1961.
Accordingly, the appeal was allowed.
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