Unexplained Income Addition of ₹5.78 Lakh: ITAT Orders AO to Delete Addition Based on Past Savings Explanation [Read Order]
While the CIT(A) upheld the addition, the ITAT accepted the assessee's explanation of past savings, given his business, financial position, and the usual practice of saving in cash
![Unexplained Income Addition of ₹5.78 Lakh: ITAT Orders AO to Delete Addition Based on Past Savings Explanation [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/01/Unexplained-Income-ITAT-ITAT-Orders-Assessing-Officer-Section-69A-Income-tax-Income-tax-news-ITAT-news-SBNs-assessment-Lucknow-Bench-of-ITAT-Taxscan.jpg "Unexplained Income Addition of ₹5.78 Lakh: ITAT Orders AO to Delete Addition Based on Past Savings Explanation [Read Order]")
The Lucknow Bench of Income Tax Appellate Tribunal(ITAT) directed the Assessing Officer (AO) to delete the unexplained income addition of ₹5.78 lakh made under Section 69A of Income Tax Act,1961 based on the assessee's explanation of past savings. Jai Singh,appellant-assessee,an assessment order dated 30/12/2019 under Section 143(3) of the Act. The AO assessed his total income...
The Lucknow Bench of Income Tax Appellate Tribunal(ITAT) directed the Assessing Officer (AO) to delete the unexplained income addition of ₹5.78 lakh made under Section 69A of Income Tax Act,1961 based on the assessee's explanation of past savings.
Jai Singh,appellant-assessee,an assessment order dated 30/12/2019 under Section 143(3) of the Act. The AO assessed his total income at ₹1,55,70,340, which included an addition of ₹1,41,78,000 as unexplained income under Section 69A for depositing specified bank notes (SBNs).
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Out of this, ₹1,36,00,000 was linked to his travel agency business account, while ₹5,78,000 was deposited in his savings account. On appeal, the Commissioner of Income Tax (Appeals)[CIT(A)] deleted the addition of ₹1,36,00,000 but upheld ₹5,78,000, partly allowing relief.
The assessee filed a cross-appeal regarding an addition of ₹5,78,000, which was upheld by the CIT(A). The CIT(A) observed that the assessee deposited ₹5,78,000 in savings accounts during the demonetization period but failed to provide any evidence to support the claim that the funds came from past savings. Consequently, the addition made by the AO under Section 69A, read with Section 115BBE, was sustained.
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The assessee also challenged the application of Section 69A, but the CIT(A) dismissed these objections, stating that no satisfactory explanation for the cash deposits was provided. It was concluded that the AO was justified in making the addition.
The assessee’s counsel argued that the amount should be accepted as past savings, citing the nature of the assessee’s business, financial standing, and the common practice of saving household funds in cash.
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The Revenue’s counsel, however, supported the decisions of the AO and the CIT(A).
The two member bench comprising Subhash Malguria(Judicial Member) and Anadee Nath Misshra(Accountant Member) reviewed the records and arguments and found the explanation of ₹5,78,000 as past savings reasonable. Considering the assessee’s business, financial standing, and common household practices, the amount was not deemed excessive. It directed the AO to delete the addition of ₹5,78,000.
In short,the appeal filed by the assessee was allowed.
To Read the full text of the Order CLICK HERE
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