SHANTABEN MANUBHAI PATEL,SURAT vs. ACIT, CIRCLE-1(3), SURAT, SURAT

Brief facts of the case are that the assessee is a senior citizen widow deriving income mainly from interest income and agricultural income. The return of income for A.Y. 2017-18 was filed on 13.11.2017 declaring total income of Rs.13,57,400/-. The case was selected for limited scrutiny for verification of cash deposits amounting to Rs.29,98,000/- made during the demonetisation period. During the course of assessment proceedings, the assessee explained that the impugned cash deposits were made out of cash balance available with her. It was submitted that the cash balance consisted primarily of opening cash-in-hand as on 01.04.2016 amounting to Rs.26,83,096/- and cash of Rs.3,02,267/- received on demise of her husband Late Shri Manubhai Ambalal Patel on 27.05.2016 as per his cash book.It was submitted that the cash balance had accumulated over earlier years mainly out of withdrawals from bank accounts.In support of the explanation, the assessee furnished cash book for the year under consideration and preceding years, monthly cash summaries, bank statements evidencing withdrawals and copy of cash book and return acknowledgment of her deceased husband.

1 The Assessing Officer, however, rejected the explanation observing that the assessee had no business activity, the cash book was created post facto, and the claim of holding huge cash balance for long period was improbable and against normal human conduct. The Assessing Officer accordingly treated the cash deposits of Rs.29,98,000/- as unexplained money under section 69A of the Act.

Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A) confirmed the addition by observing that the cash book was not reliable and the explanation of the assessee regarding retention of huge cash balance was not satisfactory.

Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.

Before us, the Ld. AR submitted that the authorities below erred in invoking provisions of section 69A despite the fact that the cash deposits were duly recorded - 4– in the books of account maintained by the assessee. The Ld. A.R. submitted that the assessee is a senior citizen widow lady having substantial capital and was mainly earning interest income. After the death of her husband, she preferred to keep cash- in-hand for personal safety and emergency requirements.The Ld. A.R. further submitted that the source of cash was fully explained through earlier bank withdrawals and cash received from the deceased husband. Attention was invited to the summary of cash book placed on record, which reflected continuous availability of cash balance over earlier years. It was argued that the Revenue authorities had not pointed out any defect in bank withdrawals or demonstrated that the cash withdrawn had been utilized elsewhere.

The Ld. DR, on the other hand, supported the orders of the lower authorities and submitted that the assessee had no business activity and there was no plausible explanation for maintaining huge cash balance for long period. The Ld. D.R. further submitted that the cash book was not produced earlier and was prepared only to explain demonetization deposits. Therefore, the Assessing Officer was justified in rejecting the books and invoking section 69A of the Act.

We have heard rival submissions and perused the material available on record.

1 The undisputed fact emerging from record is that the assessee had furnished cash books for the relevant year as well as preceding years, bank statements evidencing withdrawals and records relating to cash received from her deceased husband. The assessee has consistently explained before the lower authorities that the cash deposited during the demonetization period was sourced from opening cash-in-hand available as on 01.04.2016 and cash received on death of her husband. In support of the same, the assessee furnished cash books for the relevant year and preceding years along with bank statements evidencing withdrawals. The summary of cash book placed on record is reproduced as under:- - 5– A.Y. Opening Receipts Expenses Deposited Closing cash Other Withdrawals to Bank balance balance as as on 31st from bank on 1st March April 2014-15 13,17,954 - 18,50,000 4,90,700 6,10,000 20,67,254 2015-16 20,67,254 - 12,20,000 1,58,158 - 31,29,096 2016-17 31,29,096 - 10,95,000 2,40,000 13,01,000 26,83,096 2017-18 26,83,096 *3,02,267 1,00,173 60,000 29,99,500 34,336 ** 8,300 * Cash received on death of husband Late Shri Manubhai Ambalal Patel (Expired on 28.05.2016 – cash balandce as per his cash book. ** Agricultural income

2 From the aforesaid summary, it is evident that the cash balance available with the assessee was arising from withdrawals made from bank accounts over earlier years. The Revenue has not disputed the withdrawals reflected in the bank statements nor has any material been brought on record to establish that such withdrawals were utilized elsewhere.The entire addition has been sustained mainly on the premise that no prudent person would keep substantial cash-in-hand for a long period. In our considered opinion, such conclusion is based merely on assumptions regarding human conduct and not on any cogent material. The assessee being a senior citizen widow lady having substantial capital base of Rs.4.38 crores, her explanation regarding retention of cash for personal comfort, emergencies and security cannot be rejected merely on the basis of suspicion.

3 In view of the specific facts and circumstances of the instant case, we direct the Assessing Officer to delete the addition made under section 69A of the Act.

In the result, appeal of the assessee is allowed. Orderpronounced in the open Court on 17.06.2026. (SUCHITRA KAMBLE) VICE-PRESIDENT Ahmedabad; Dated 17.06.2026 **btk - 6–