ITAT Restricts Addition Made Under Section 69A to Rs. 5 Lakh:

The assessee is Late Kirtikant Vadilal Vora who had filed his return of income for AY 2017-18 declaring a total income of Rs. 3,96,212. During scrutiny proceedings initiated under Section 143(2) of the Income Tax Act, the AO noticed substantial cash deposits during the demonetisation period. Despite issuing notices under Sections 142(1) and 133(6), the AO was not satisfied with the explanation that the deposits were made out of earlier bank withdrawals and household cash savings. Accordingly, cash deposits of Rs. 4,44,500 in Union Bank of India and Rs. 9,44,600 in Central Bank of India, aggregating to Rs. 13,89,100, were treated as unexplained money under Section 69A of the Act. The addition was upheld by the JCIT (A) under Section 250.

The Tribunal observed that the Union Bank of India account number appearing in the wife's return of income was identical to the account in which the impugned deposits had been made. Considering the affidavit, the return of income and the fact that the account was jointly maintained, the Tribunal held that merely being a joint account holder did not establish ownership of the entire cash deposited. In the absence of any material establishing that the deposits belonged to the assessee, the addition of Rs. 4,44,500 under Section 69A was held to be unsustainable and directed to be deleted.

With respect to the Central Bank of India deposits, the Tribunal observed that the cash statement was not supported by independent or contemporaneous evidence establishing the actual availability of the entire cash balance on the dates of deposit. A statement prepared by reconciling earlier withdrawals and household drawings could not, by itself, conclusively establish that the withdrawn amounts had remained unutilised. However, the Tribunal also acknowledged that substantial cash withdrawals had been made during the relevant years and that a portion of such withdrawals could reasonably have remained unutilised and subsequently been redeposited.

Accordingly, adopting a balanced approach, the Tribunal accepted Rs. 4,44,600 out of the Central Bank of India deposits of Rs. 9,44,600 as reasonably explained through earlier cash withdrawals and directed its deletion. The remaining Rs. 5,00,000 was confirmed as unexplained money under Section 69A due to the absence of satisfactory supporting evidence.

Thus, the Tribunal directed deletion of the total addition of Rs. 8,89,100 out of Rs. 13,89,100 and restricted the sustained addition to Rs. 5,00,000. Accordingly, the appeal filed by the assessee was partly allowed.