No Tax Liability for Student: ITAT Deletes Rs 13.18 Lakh Addition and Penalty in Crypto Deposit Case:

No Tax Liability for Student: ITAT Deletes Rs 13.18 Lakh Addition and Penalty in Crypto Deposit Case The ITAT Ahmedabad allowed both the appeals filed by Manojbhai Chhaganbhai Mangukiya, challenging the Rs 13.18 lakh addition made for unexplained cash deposits in the bank account, and the penalty for not furnishing a reply to the notice passed by the tax department. The tribunal noted that during the case proceedings, the assessee was a student. The assessee had filed two appeals challenging two separate orders dated August 22, 2025, and June 18, 2025, passed by the CIT(A), NFAC, Delhi, under Section 250 of the Income Tax Act, 1961. The case pertains to the Assessment Year 2018-19.

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In the first appeal, ITA No. 1896/Ahd/2025, the assessee had challenged CIT(A)'s order, wherein the addition of Rs 13.18 lakh made to the assessee's income by the Assessing Officer (AO) on the grounds of unexplained cash deposits in the bank account was confirmed. The assessee claimed that at the time when the impugned deposits were made, he was a student and his account was used by some other person named Mr Kashyap Maganbhai Vaghasiya to carry out bitcoin transactions. A sum of about Rs 12.09 lakh was deposited into his bank account, which was used to purchase cryptocurrency, and the amount was immediately returned on receipt. The assessee claimed that he could earn only Rs 25,000 from this arrangement. When the tribunal analysed the case, it found the explanation given by the assessee genuine; the assessee was indeed not the beneficiary of the transaction in question. Consequently, deleted the Rs 13.18 lakh addition.

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In the second appeal, ITA No. 1412/Ahd/2025, the assessee challenged a sum of penalty imposed on the ground of not responding to the notices issued by the tax authorities. The assessee stated that, as mentioned above, during the year under consideration, the assessee was a student and hence not aware of the consequences of not responding to the notices or orders passed by the AO (Assessing Officer). Further claimed that non-appearance before the AO was not deliberate but was due to ignorance and fear of consequences. Considering the aforementioned circumstances, the tribunal deleted the impugned penalty. In conclusion, both appeals were allowed.