Senior Citizen’s Demonetization ₹10.46L Deposits Explained as Prior Withdrawals: ITAT Sets Aside Cash Deposit Addition u/s 69A [Read Order]

The assessee, Malti Garg, a senior citizen, had deposited ₹10,46,000 in specified bank notes into her bank account during November 2016 and was subjected to scrutiny for the Assessment Year (AY) 2017-18. The Assessing Officer (AO) treated the deposits as unexplained money under section 69A on the ground that the assessee had failed to substantiate the source of cash.

On appeal, the Commissioner of Income Tax (Appeals) (CIT(A)) upheld the addition and held that the assessee had not demonstrated that the deposits were out of genuine sources.

Before the Tribunal, the assessee contended that she had regularly withdrawn substantial sums in cash from her bank account before demonetization, along with her accumulated household savings, explaining the availability of sufficient cash in hand. The assessee also produced the bank passbooks and withdrawal entries to substantiate the claim.

The Bench comprising Vikram Singh Yadav (Accountant Member) and Paresh M. Joshi (Judicial Member) observed that the AO had ignored the pattern of earlier withdrawals, which showed that an adequate cash balance was available with the assessee at the time of deposit. The Tribunal held that the assessee had explained the source through banking records and the explanation was reasonable. Therefore, the deposits could not be treated as unexplained under section 69A.

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Accordingly, the ITAT concluded that the cash deposits made during the demonetization period were explained and deleted the addition of ₹10,46,500 made under section 69A.

The assessee was represented by Nikhil Goya along with Ashok Goyal and Rana Gurtez Singh, while the revenue was represented by Shakti Singh.

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