Cash Deposited by Son from His Mother’s Savings During Demonetization: ITAT Deletes Penalty

The assessee, Shri Devadass Suresh, is a salaried individual residing in Bangalore. He filed a return of income for A.Y. 2017–1,8 declaring ₹2,99,310. During demonetization (from 9 November to 30 December 2016), he deposited ₹9,00,500 in a Post Office Savings Account. The Assessing Officer (AO) found no explanation for the source of these funds and treated the amount as unexplained money under Section 69A of the Income Tax Act. The CIT(A) upheld the AO’s addition, leading to an appeal before the Tribunal.

The assessee argued that the amount deposited was partly from his (₹3,00,500) and partly from his mother’s savings (₹6,00,000), who is a senior citizen suffering from cancer. His mother ran a small shop selling homemade products, had no bank account, and saved the amount over time. Medical certificates and an affidavit by the mother (aged 77) supported the claim. An affidavit by the assessee confirmed the mother’s contribution and explained the timing of the deposit.

On the other hand, the revenue argued that the assessee was a salaried individual and had no need to hold large cash in hand. Revenue contended that if the cash belonged to his mother, it could have been deposited before the demonetization announcement.

Tribunal’s Decision & Rationale

The Tribunal accepted that although the assessee could not produce evidence before the Revenue authorities, he had submitted detailed affidavits and corroborative documents at the appellate stage.

The mother’s affidavit clearly stated:

• She gave ₹6 lakh to her son during demonetization for deposit.
• She had saved the amount from running a petty shop and selling small commodities.
• The funds were unbanked savings held in cash due to a lack of a bank account.

Supporting medical certificates substantiated her health condition, and her affidavit was found credible.

Additionally, the remaining ₹3,00,500 was claimed by the assessee as from his own income/savings, which was also accepted by the Tribunal.

Based on the totality of the evidence, the Tribunal deleted the entire addition of ₹9,00,500 made under Section 69A.

Download the Order for more information.