Demonetization Period Cash Deposit: ITAT directs AO to Verify Source of ₹24L in SBI A/c [Read Order]

Also Read:Demonetization Cash Deposits with Explained Source Not Taxable under Income Tax Act: ITAT [Read Order]

The appellant-Assessee Tripuraneni Sarada Devi had made cash deposits to the extent of ₹ 24,55,030/- in her bank account, maintained with the State Bank of India (SBI), during the demonetization period. Upon enquiry about the source of the deposit the appellant illustrated its origin to the loan taken against the fixed deposit from the financial support provided by her children in the USA.

Upon considering the explanation, AO treated the deposit as unexplained money under section 69A read with section 115BBE of the Income Tax Act, 1961. Aggrieved with the same, the assessee filed an appeal before the CIT(A).

The CIT(A), after considering the submissions of the assessee, directed the AO to accept 50% of the cash deposits of ₹24,55,030. Thereby partly allowing the appeal before it.

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In the appeal before the ITAT, the authorized representative (AR) of the appellant reiterated the submission that the assessee is financially supported by her two sons, residing in the USA. Consequently the deposit in question was the result of this amount converted into Fixed Deposits (FD) in SBI.

It was further submitted that assessee availed loan on such FDs with a view to purchase immovable property. Since the assessee’s proposal for purchase of property fell through, assessee has re-deposited the amounts into her bank accounts.

To substantiate the same, the AR submitted supporting documents, including account statements, a confirmation letter, and affidavits from the assessee’s two sons confirming their financial support to their mother. Thereby establishing the sources of the cash deposits and rendering the addition made by the AO and partly sustained by the CIT(A) to be unwarranted and unjustified.

Also Read:CIT (A) and AO Fails to consider CBDT Guidelines on Cash Deposits during Demonetization Period: ITAT remands Case to AO for Fresh Consideration [Read Order]

The tribunal, consisting of K. Narasimha Chary (Judicial Member) and S. Balakrishnan (Accountant Member), examined the documents submitted and found merit in the arguments raised by the AR.

Consequently the Bench directed the AO to verify the loans availed by the assessee, which have been presented as the source for cash deposits in question. If found to be correct, such deposits may be treated by the AO as ‘explained’ and no addition may be made upon the same.