ITAT Deletes ₹10.42 Lakh Addition u/s 69A as Cash Deposits during Demonetization Explained by Withdrawals [Read Order]
The tribunal noted that the assessee had withdrawn ₹14.50 lakh during the year, which sufficiently covered the deposits, and there was no evidence of any unexplained source.
ITAT - Cash Deposits - Withdrawals - taxscan
ITAT - Cash Deposits - Withdrawals - taxscan
The Ranchi Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of ₹10.42 lakh under section 69A of Income Tax Act,1961, holding that cash deposits made during the demonetization period were fully explained by prior withdrawals
Anubhav Kumar,appellant-assessee, filed his income tax return for AY 2017-18 declaring total income of Rs.5,23,718/-, which was processed as filed. His case was selected for limited scrutiny due to substantial cash deposits during the demonetization period. The assessee deposited Rs.10,42,000/- across multiple bank accounts between 9 November and 31 December 2016.
Despite submitting explanations to the Assessing Officer (AO), the addition of Rs.10,42,000/- under section 69A was made, raising total income to Rs.15,65,718/-. On appeal, the Commissioner of Income Tax(Appeals)[CIT(A)] noted that the assessee had withdrawn Rs.14,50,800/- during the year and deposited Rs.10,42,000/- late in the demonetization period, but found no justification for holding large cash balances, and therefore sustained the AO’s addition and dismissed the appeal.
The assessee counsel stated that the CIT(A) noted withdrawals of Rs.14,50,800/- during the demonetization period but did not consider that the assessee had enough cash in hand to make the deposits.
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The AO did not claim that the assessee needed to explain how he managed the cash. Since there was no evidence that the deposits came from any source other than these withdrawals, the addition could not be sustained.
The Departmental counsel supported the lower authorities but could not show that the cash came from other sources.
The two member bench comprising Sonjoy Sarma (Judicial Member) and Ratnesh Nandan Sahay(Accountant Member) after examining the submissions and records, noted that the assessee had withdrawn Rs.14,50,800/- during the year and deposited Rs.10,42,000/- in various bank accounts. Management of cash and bank deposits was solely at the discretion of the assessee.
The AO had not shown that the deposits originated from any source other than the withdrawals, and the timing during the demonetization period was not a valid reason to question them. The tribunal concluded that the assessee had adequately explained the deposits, deleted the addition, and set aside the CIT(A)’s order.
Accordingly the appeal was allowed.
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