ITAT Ahmedabad Deletes Rs. 10.09 Lakh Addition on Demonetisation Cash Deposits

The ITAT Ahmedabad allowed the assessee’s appeal, holding that the cash deposits during demonetisation were properly explained and the addition of Rs. 10,09,000 under section 69A was unjustified.

Kirankumar Amrutlal Shah has filed the present appeal against the ITO in the Income Tax Appellate Tribunal (ITAT) in Ahmedabad “SMC” Bench, challenging an order passed by the NFAC, Delhi, dated March 31, 2024, for the assessment year 2017-18.

The assessee has not filed a return of income for A.Y. 2017-18. The AO observed that during the demonetisation period the assessee deposited cash worth Rs. 10,09,000 in the Bank of Baroda, Thara Branch and The Pragati Co-Op Bank, Thara Branch. The cash was selected for investigation and notices were also issued to the assessee. However, notices under section 133(6) of the Act were issued to Bank of Baroda, Thara Branch and the Pragati Co-Op Bank, Thara Branch on various dates.

The bank has reported all the details of the assessee’s bank statement. On November 25, 2019, the assessee filed the reply, which contained copies of the return with the balance sheet, ledger account and other documents. However, AO made an addition of Rs 10,09,000 as unexplained money under section 69A of the Act.

The assessee was not satisfied with the addition made by AO, so filed an appeal before the CIT(A). But CIT(A) dismissed the appeal of the assessee.

The assessee further approached ITAT; during the hearing, AR submitted that in this year, the assessee could not file the income tax return as the assessee’s income was non-taxable.

After considering all the facts, the tribunal said, ‘It is clear that the assessee regularly deposited cash into his bank account because he received cash on a daily basis.’ This fact was not disputed by either the Assessing Officer (AO) or the CIT(A). The remand report also clearly states that the assessee had submitted all the required details, and it does not mention that any further explanation was needed from him. The assessee properly explained the cash deposits before both authorities. Therefore, the AO and the CIT(A) were not justified in making the addition to the income. ITAT ruled that the appeal of the assessee is allowed.