ITAT Deletes Demonetisation Addition; Accepts Explained Family Cash Source

The assessee, an NRI individual, did not file a return of income for AY 2017-18. Based on information gathered under “Operation Clean Money,” the Assessing Officer noted cash deposits of Rs 14 lakh during the demonetisation period and treated the same as unexplained income under Section 69A.

During appellate proceedings, part of the addition was deleted, but Rs. 6.7 lakh was sustained on the ground that the assessee failed to establish the source. The assessee contended that the amount represented (i) savings from foreign currency converted for wedding expenses, (ii) cash gifts received during her daughter’s marriage, and (iii) funds originally belonging to her late mother, held by her brother and later handed over. The explanation was supported by an affidavit and surrounding facts.

Issue Raised: Whether cash deposits of Rs. 6.7 lakh during the demonetisation period could be treated as unexplained income under Section 69A despite the assessee furnishing a plausible explanation supported by an affidavit and the circumstances.

Tribunal Held: The Tribunal allowed the appeal and deleted the addition. It noted that the assessee had provided a consistent explanation regarding the source of funds, including family savings and wedding-related receipts. The explanation was supported by an affidavit and remained unrebutted by the Revenue. The Tribunal observed that in such peculiar facts where the money was claimed to be family savings of the deceased mother, later handed over for the benefit of grandchildren, the explanation could not be summarily rejected. The absence of contrary evidence from the Revenue further strengthened the assessee’s case. Therefore, the addition made under Section 69A was deleted.

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