Unexplained Cash Deposit During Demonetization: ITAT deletes Addition, Accepts Mother’s Savings Claim [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) deleted addition of Rs.9,00,500/- made by the Assessing Officer(AO) during demonetization, accepting the claim that a significant portion of the deposit came from the assessee's mother’s lifetime savings.

Devadass Suresh, appellant-assessee, filed a return of income on 25.09.2017, declaring Rs.2,99,310/-. During scrutiny, the AO found a cash deposit of Rs.9,00,500/- in the appellant's Post Office account between 09.11.2016 and 30.12.2016. Since the assessee failed to explain the deposit, the AO treated it as unexplained money under section 69A of the Act.

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The assessee appealed before the Commissioner of Income Tax (Appeals)[CIT(A)] who confirmed the addition. The assessee then appealed before the tribunal.

The assessee's counsel stated that the assessee, a salaried individual, had received professional fees from M/s. Shree Renuka Sugars Ltd. and later revised the return, declaring an income of Rs.3,37,600/- with a deduction of Rs.33,290/- under Chapter VIA.

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The counsel claimed that the cash deposit came from the assessee’s mother, a senior citizen with cancer, who had saved the money from her small shop. Medical certificates were submitted to support the claim, and the counsel requested the deletion of the addition.

Read More: Cash Deposit received from Mother as Gift during demonetization period properly Explained: ITAT deletes Addition u/s 69A

The revenue counsel argued that the assessee, a salaried employee, had no reason to keep a large amount in cash and claimed that the money could have been given to the assessee before demonetization and deposited earlier.

Read More:Production of Proof for Cash deposit during Demonetization: ITAT deletes Addition

The two member bench comprising Soundararajan K(Judicial Member) and Laxmi Prasad Sahu(Accountant Member) noted that during demonetization, Rs.9,00,500/- was deposited in the assessee’s Post Office savings account. The assessee submitted an affidavit from the mother, a 77-year-old, stating that she had given Rs.6,00,000/- to her son from her lifetime savings, as she had no bank account and ran a small shop. The remaining Rs.3,00,500/- was contributed by the assessee.

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Read More: Cash Deposit during Demonetization: ITAT partly deletes Rs. 3.5 lakh Addition based on CBDT Guidelines

The appellate tribunal also noted that the mother later transferred Rs.6,13,000/- and Rs.1,98,000/- to a cooperative bank, where the funds remained. The assessee filed an affidavit confirming he had received Rs.6,00,000/- from his mother.

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Although the assessee failed to provide conclusive proof of the cash deposit during demonetization, the tribunal accepted the mother’s cash contribution and gave the assessee the benefit of doubt for the remaining amount. It deleted the entire addition confirmed by the CIT(A).

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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