Big Demonetisation Relief: ITAT Delhi Deletes Cash Addition on Marriage Gift Explanation

The assessee, an individual, filed his return for AY 2017-18 declaring income of Rs. 2.73 lakh from salary and other sources. The case was selected for complete scrutiny under CASS due to cash deposits during the demonetisation period.

During assessment, the Assessing Officer noted cash deposits aggregating to Rs. 30.70 lakh in the assessee’s bank accounts and treated the same as unexplained money under Section 69A, taxing it under Section 115BBE. The assessee explained that the cash represented marriage gifts (“sagan”) received from relatives and friends at the time of his marriage held on 21.02.2016, which had been retained in cash and later deposited due to demonetization. The addition was sustained by the CIT(A).

Main Issue: Whether cash deposited during demonetisation could be treated as unexplained under Section 69A when the assessee explained it as marriage gifts supported by documentary evidence.

ITAT’s Ruling: The ITAT allowed the appeal and deleted the addition. The Tribunal held that the assessee had satisfactorily explained the source of cash deposits as marriage gifts received on the occasion of his wedding. The assessee produced a detailed list of donors, marriage invitation, and affidavits from family members and managers confirming receipt of ‘sagan’. These documents were found sufficient to establish the source of funds.

Therefore, the addition of Rs. 30.70 lakh under Section 69A read with Section 115BBE was held to be unjustified. The Tribunal also noted that Section 115BBE could not be applied retrospectively prior to 01.04.2017, relying on the Hon’ble High Court decision in SMILE Microfinance Ltd.

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