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Facts
A search action was conducted, and during assessment, the Assessing Officer noted a cash deposit of Rs. 1,00,000/- in the assessee's bank account. The assessee's explanation was not accepted, and the addition was made under Section 68 of the Income Tax Act.
Held
The Tribunal noted that the assessee is a regular income tax filer with sufficient declared income. Considering the deposited amount was not abnormal and a lenient view was taken, the addition made by the Assessing Officer was deleted.
Key Issues
Whether the cash deposit made by the assessee can be added as unexplained income under Section 68 of the Income Tax Act, especially when the assessee is a regular filer with sufficient declared income.
Sections Cited
68, 143(2), 142(1)
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PER PAWAN SINGH, JUDICIAL MEMBER:
This appeal by assessee is directed against the assessment order of ld. CIT(A), Pune-11 dated 13.03.2025 for A.Y. 2020-21. The assessee has raised revised following grounds of appeal:
“1. That, the learned CIT(A)-11, Pune has grossly erred in not considering the impugned blo0ck assessment order passed is against natural justice and bad in law. The AO may please be directed to annul the impugned block assessment order.
2. That, the learned CIT(A)-11, Pune is not justified in upheld the addition of Rs. 1,00,000/- on account of so-called unexplained cash deposit in the undersigned appellant’s bank account maintained with HDFC Bank. The Assessing Officer may please by directed to delete such addition.
3. The Appellant craves leave to add to, alter, and amend any ground/s of an appeal on or before hearing of the appeal.”
Brief facts of the case are that assessee is an individual and while filing return of income has shown income from house property and other sources. A search action was carried out in case of Patel RPL Realty Group including on assessee on 08.08.2019. Consequent upon case of assessee was centralised. The assessing officer after serving statutory notice under section 143(2) and 142(1) proceeded for assessment. During assessment, the assessing officer noted that during relevant financial year, assessee has made cash deposit of Rs. 1,00,000/- in a bank account in HDFC Bank. On show cause notice, the assessing officer recorded that assessee has not explained the source of such cash deposit and added under section 68 of Income Tax Act.
Aggrieved by the additions, the assessee filed appeal before ld. CIT(A).
Before ld. CIT(A), the assessee filed her submission dated 17.01.2023. The assessee in her submission stated that addition was made on the basis of bank account which is forming part of regular books of account. There is no incriminating material. Bank statement was furnished during assessment proceeding. The assessee submits that she is strongly objected about the finding of ld. AO that no explanation was offered about the cash deposit. Bank statement was a forming part of regular books of account and was considered while filing return of income. The bank account cannot be treated as incriminating material. The ld. CIT(A) after considering the submissions of assessee held that search action conducted on 08.08.2019, assessment year under consideration is assessment year 2020-21. The assessment year under consideration is a search year and is abated assessment year. The ld. AO is empowered to make addition on the basis of incriminating material as well as other material available including income declared in return. On merit, the ld. CIT(A) recorded that assessee made cash deposit of Rs. 45,000/- on 26.07.2019, Rs. 40,000/- on 07.08.2019 and Rs. 15,000/- on 14.08.2019, thus, aggregating of Rs. 1,00,000/-. The assessee has not filed copy of cash book. The accounts of assessee are not audited. The assessee has not explained the source of cash. The assessee’s earning rental income and interest income. No withdrawal is suggested from bank account with HDFC Bank. Further, aggrieved the assessee has filed present appeal before Tribunal.
We have heard the rival submissions of both the parties and have gone through the orders of lower authorities carefully. The learned authorised representative (ld. AR) of the assessee submits that a search action was carried out on Patel RPL Group on 08.08.2019. The assessee is daughter of head of group. During the search action, statement of key person of group was recorded. In the statement seized material was explained to the satisfaction of authorised officer. The assessee while filing return of income has declared income of Rs. 5,97,880/-. The assessing officer made addition of Rs. 1,00,000/- on account of cash deposit by holding that assessee has not explained. The assessee is having sufficient income and the addition is made on flimsy ground. Rs. 1,00,000/- is not a big amount, which is part of savings and was considered while filing return of income. The ld. AR prayed for deleting the addition as no cash was found at the time of search, moreover, the majority of cash was deposited prior to search action. The ld. AR prayed for deleting the entire addition.
On the other hand, learned Senior Departmental Representative (ld. Sr.
DR) for the revenue submits that assessee has not explained the source of cash deposit.
We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that small dispute is involved in the present appeal. The assessee is regular filer of income tax return. During the relevant financial year, the assessee has offered taxable income of approximately Rs. 6.00 lakhs and have paid tax of Rs. 35,481/-. The assessee has shown TDS of Rs. 42,743/-, out of which tax was adjusted and remaining amount of Rs. 7,252/- was claimed as refund. Considering the fact that amount deposited comparative to the return income is not abnormal. Even during demonetisation, which was extra ordinary circumstances, the CBDT vide its Circular No. 3/2027 directed to allow benefit of cash deposit up to Rs. 2.50 lakhs vide its therefore, taking a lenient view, the addition made by assessing officer is deleted.
In the result, the appeal of the assessee is allowed.
Order was pronounced in the open Court on 31/12/2025 as per Rule
34 of Income Tax (Appellate Tribunal) Rules-1963.