RAADHYA CHANDRACHUD ,MUMBAI vs. INCOME TAX OFFICER WARD 23 3 1 MUMBAI , PAREL MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “H(SMC)” BENCH MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 755/Mum/2026 (Assessment Year: 2017-18) Raadhya Chandrachud ITO 23(3)(1), 401/A, Kanti Appts, Room No. 701, 7th Mount Mary Road, Vs. Floor, Piramal Bandra West, Mumbai – Chamber, Lalbaug, 400 050 Mumbai-400 012 PAN/GIR No. AKXPM8235G (Applicant) (Respondent) Assessee by Shri Jitendra Singh & Ms. Shivali Mhatre, Ld. ARs Revenue by Shri Ajay Chandra & Shri Pravin Salunkhe, Ld. DRs Date of Hearing 30.04.2026 Date of Pronouncement 18.05.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: The present appeal is filed by the assessee against the order dated 27.11.2025 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as "CIT(A)"], under section 250 of the Income Tax Act, 1961, [hereinafter referred to as "the Act"]arising

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out of the assessment order dated 02.12.2019 passed by the Assessing Officer, Income Tax Officer, Ward 23(3)(1), Mumbai[hereinafter referred to as "Assessing Officer or AO"], under section 143(3) of the Act for the Assessment Year 2017-18. Facts of the Case 2. The assessee, an individual, filed her return of income on 31.03.2018 declaring total income of Rs. 8,27,690/-. The case was selected for limited scrutiny for the purpose of verification of cash deposits during the demonetisation period. During the course of assessment proceedings, the Assessing Officer observed that the assessee had deposited cash aggregating to Rs. 23,54,500/- in various bank accounts during the financial year relevant to the year under consideration. The Assessing Officer issued notices under section 143(2) and section 142(1) calling upon the assessee to explain the source of such cash deposits. In response, the assessee, through her authorised representative, submitted that out of the total cash deposits, a sum of Rs. 21,14,500/- was received from her mother-in-law, Late Smt. Suhasini Sadashiv Chandrachud, and the same was claimed to be inheritance and already disclosed as exempt income in Assessment Year 2016-17. It was further submitted that the said amount was out of cash withdrawals made by the deceased in earlier years aggregating to Rs. 58,12,000/-, after considering deposits and personal withdrawals, and that the balance was transferred to the assessee. However, the Assessing Officer

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observed that the assessee failed to furnish documentary evidences in support of the said claim, such as bank pass books of earlier years, bank statements of the deceased, any gift deed or instrument evidencing transfer, capital account or cash book. The Assessing Officer further noted that the submissions were not supported by any proper authority letter and remained unsubstantiated. Accordingly, the Assessing Officer held that the assessee failed to explain the nature and source of cash deposits and treated the entire amount of Rs. 23,54,500/- as unexplained money under section 69A of the Act and brought the same to tax under section 115BBE. 3. Aggrieved, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated that the cash deposits represented inheritance received from her late mother- in-law and that the same had already been disclosed in the return of income for Assessment Year 2016-17. The assessee also contended that the Assessing Officer failed to verify the details furnished, including bank account particulars, by issuing notice under section 133(6). It was further submitted that an affidavit from legal heirs confirming the transfer of funds was obtained and sought to be filed as additional evidence. The assessee also explained that due to illness of her son, she could not effectively comply with the notices during the assessment proceedings. 4. The CIT(A), however, observed that the assessee had not filed any application under Rule 46A for admission of additional

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evidence and had failed to justify the reasons for non-production of such evidence before the Assessing Officer. It was further observed that there were contradictions in the submissions of the assessee regarding the amount transferred and that no supporting evidence such as gift deed or contemporaneous records were furnished. The CIT(A) held that the assessee failed to discharge the onus cast upon her to explain the source of cash deposits. Accordingly, relying upon judicial precedents, the CIT(A) confirmed the addition made by the Assessing Officer under section 69A read with section 115BBE of the Act and dismissed the appeal of the assessee.

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section 69A of the Act. Hence the addition of Rs. 23,54,500/- under section 69A of the Act is without any basis and the same must be deleted. b. The Ld. CIT(A) failed to appreciate that the cash amounting to Rs.21,14,500/- deposited in the bank account represents amounts received by the Appellant as inheritance from her late mother-in-law, Late Smt. Suhasini Sadashiv Chandrachud and the same was duly disclosed in the return filed for A.Y. 2016-17, much prior to the demonetisation period and which was available on the records of the Income Tax Department. Therefore, said amount could not have been treated as unexplained income under section 69A of the Act for A.Y. 2017-18. Hence the addition of Rs.21,14,500/- under section 69A of the Act made by Ld. AO is bad in law and same must be deleted. c. The Ld. CIT(A) further failed to appreciate that the balance amount of Rs.2,40,000/- was cash available with the Appellant from the past savings and the same can never be treated as unexplained money under section 69A of the Act. Hence, the addition of Rs.2,40,000/- under section 69A of the Act is unjustified and the same may be deleted.” 3. The Appellant denies any liability to pay interest under section 234B and 234C of the Act. Hence, the same are not leviable. 4. The Appellant craves leave to add, alter, amend, delete, rescind, or withdraw any of the grounds of appeal mentioned hereinabove. 6. The Learned Authorised Representative (AR) before us reiterated the factual submissions as were made before the Assessing Officer, and drew our attention to the written submissions placed on record. It was submitted that the assessee is deriving income only from interest and is not carrying on any business activity, and therefore is not required to maintain regular books of account.

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Officer that the total cash deposits of Rs. 23,54,500/- represented explained sources. It was specifically contended that the assessee had received an amount of Rs. 21,14,500/- from her mother-in-law, Late Smt. Suhasini Sadashiv Chandrachud. It was explained that the said amount was out of accumulated cash withdrawals made by the deceased over several years aggregating to Rs. 58,12,000/-, out of which Rs. 59,000/- had been redeposited and Rs. 36,38,500/- had been utilised for personal withdrawals, leaving a balance of Rs. 21,14,500/- which was transferred to the assessee. It was further submitted that the said amount had already been disclosed as exempt income in A.Y. 2016-17 and was duly reflected in the computation of income and exempt income schedule (paper book page No. 8). The Authorised Representative further submitted that copies of bank statements of the deceased were enclosed to substantiate the withdrawals. 8. The Learned AR further invited our attention to the affidavit of the legal heirs placed at page Nos. 56–57 of the paper book, and reiterated that the said document substantiates the claim of inheritance as advanced before the lower authorities. 9. As per the said affidavit, the deponent, being the legal heir and representatives of Late Smt. Suhasini Sadashiv Chandrachud, have affirmed that the deceased expired on 14.01.2014 and was possessed of cash aggregating to Rs. 58,12,000/- which had been withdrawn from various bank accounts over the years. It has been further stated therein that

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after considering deposits of Rs. 59,000/- and personal withdrawals of Rs. 36,38,500/-, the balance cash of Rs. 57,53,000/- remained available at the time of her death. The deponents have categorically affirmed that it was the wish of the deceased that the said amount be transferred to her daughter-in- law, i.e., the assessee. The affidavit further records that the legal heirs, out of their own volition and without any coercion, have relinquished their respective rights and interests in the said cash balance in favour of the assessee, and have acknowledged the assessee as the full and absolute owner of the said amount. The affidavit is stated to have been sworn before a Notary Public and bears the notarial endorsement and registration details. 10. Relying upon the aforesaid affidavit, the Learned AR submitted that the source of cash deposits stands duly explained as inheritance received from the deceased mother-in-law, duly corroborated by the statement of legal heirs, and therefore, the addition made under section 69A of the Act is unsustainable both on facts and in law. 11. The Learned AR further placed reliance on the decision of the Coordinate Bench in the case of Om Parkash Nahar vs. ITO (ITA No.960/Del/2021)and submitted that under similar facts, the Co-ordinate Bench has accepted the explanation of the assessee where cash deposits during the demonetisation period were explained as being out of past withdrawals from bank accounts.

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order of the CIT(A), the written submissions of the assessee, the affidavit of the legal heirs placed in the paper book, and the judicial precedent relied upon by the Learned AR. 15. The undisputed facts are that the assessee is an individual deriving income from interest and is not carrying on any business activity. The addition in the present case has been made under section 69A of the Act on account of cash deposits of Rs. 23,54,500/- during the demonetisation period. The explanation of the assessee, as consistently advanced before the lower authorities and reiterated before us, is that the major portion of the deposits amounting to Rs. 21,14,500/- represents inheritance received from her late mother-in-law, which was already disclosed as exempt income in A.Y. 2016-17, and the balance amount represents past savings. 16. We find that the assessee has furnished a plausible explanation supported by documentary evidences placed on record. The claim of inheritance is corroborated by the affidavit of the legal heirs, wherein it has been affirmed that the deceased was in possession of substantial cash withdrawn from bank accounts over a period of time and that the legal heirs have relinquished their rights in favour of the assessee. The existence of cash withdrawals in the hands of the deceased has also been supported by bank statements placed on record. Further, the assessee has demonstrated that the amount claimed to have been

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received was already disclosed in the earlier year as exempt income, which has not been controverted by the Revenue. 17. The objections raised by the Learned DR, namely absence of a will and alleged inconsistencies in the figures, in our considered view, do not by themselves negate the explanation of the assessee. It is a settled position that inheritance need not necessarily be evidenced by a formal will in all cases, and family arrangements supported by affidavits and surrounding circumstances constitute relevant evidences. The alleged variation in figures, as explained by the assessee, arises on account of utilisation of part of the cash over a period of time, and the Revenue has not brought any cogent material on record to disprove the availability of cash or to establish that the deposits emanate from any undisclosed source. 18. At this juncture, it would be relevant to refer to the decision of the Coordinate Bench in the case of Om Parkash Nahar vs. ITO (ITA No. 960/Del/2021), wherein under similar circumstances, the Bench has held as under: “Under these facts and circumstances stated by the assessee, it cannot be held to be improbability that assessee did not have any availability of cash at the time of demonetisation… the explanation of the assessee to be reasonable and plausible and preponderance of probability is in the favour of the assessee and without any adverse material it cannot be presumed that the cash deposited by the assessee is out of some his undisclosed source.” (para 10) 19. The ratio laid down in the aforesaid decision squarely applies to the facts of the present case. In the absence of any

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adverse material brought on record by the Revenue, the explanation furnished by the assessee, which is supported by contemporaneous evidences and affidavit of legal heirs, cannot be rejected merely on the basis of suspicion or conjectures.

Order pronounced in the open court on 18.05.2026.

Sd/- Sd/- (KAVITHA RAJAGOPAL) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 18/05/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. संबंधधत आयकर आयुक्त / The CIT(A) 3. आयकर आयुक्त(अपील) / Concerned CIT 4. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai