ITAT Mumbai Upholds Rs 2.60 Lakh Addition After Rejecting Unsupported Cash Deposit Explanation

The ITAT Mumbai partly allowed the appeal filed by taxpayer Kavish Dilip Kumar Solanki regarding an addition made under Section 68 of the Income Tax Act for unexplained cash deposits.

The assessee had filed his income tax return for Assessment Year 2018-19 declaring a total income of Rs 5.65 lakh. During scrutiny, the Assessing Officer noticed cash deposits of Rs 4.60 lakh in the assessee’s bank account between June 19 and June 28, 2017. The assessee initially explained that the deposits came from past savings, gifts from relatives, and repayment of loans given to friends and family members. However, no supporting documents were submitted before the tax authorities.

The Assessing Officer treated the entire amount as unexplained cash credit under Section 68 and added it to the assessee’s income. Though the CIT(A) deleted another addition relating to property valuation differences, it confirmed the addition of Rs 4.60 lakh due to lack of evidence.

Before the ITAT, the assessee changed his explanation and claimed that the cash came from labour charges earned from gold ornament work during April and May 2017. A cash generation statement was also submitted. However, the Tribunal observed that the assessee still failed to provide proper supporting documents for such income.

After considering the facts, the ITAT held that it would be reasonable to presume that the assessee had a cash balance of Rs. 2 lakh available with him. Accordingly, the Tribunal granted relief of Rs 2 lakh and sustained the remaining addition of Rs 2.60 lakh under Section 68 of the Income Tax Act.