SHEELA HOLABASAPPA MUDAREDDI,NARAYANPUR, DHARWAD vs. INCOME TAX OFFICER, WARD 1(1), NAVANAGAR, HUBBALLI

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ITA 1155/BANG/2025Status: DisposedITAT Bangalore09 October 2025AY 2017-2018Bench: SHRI NARENDER KUMAR CHODHRY (Judicial Member), SHRI WASEEM AHMED (Accountant Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the withdrawal of ₹5,70,000 before demonetisation was admitted, with no evidence of it being spent elsewhere, making it available for redeposit. The basic exemption limit was also considered.

What were the facts?

The assessee, an individual, declared interest income only. The AO found a cash deposit of ₹6,00,000 during demonetisation, treating it as unexplained under Section 69A. The assessee claimed it was from a prior withdrawal and agricultural income.

What were the issues?

Whether the cash deposit made during demonetisation is unexplained, considering prior withdrawals and agricultural income, and if the basic exemption limit is applicable.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE

Before: SHRI NARENDER KUMAR CHODHRY & SHRI WASEEM AHMED

For Appellant: Shri Hemant Kumar M Shrupali, CA
For Respondent: Shri Ganesh R Ghale, Standing Counsel for Department
Hearing: 13.08.2025Pronounced: 09.10.2025

PER WASEEM AHMED, ACCOUNTANT MEMBER:

1.

This is an appeal filed by the assessee against the order passed by the Addl/JCIT(A)-1, Gurugram vide order dated 29/03/2025 in DIN No.ITBA/APL/S/250/2024-25/1075234426(1) for the assessment year 2017-18.

2.

The issue in dispute is the addition of ₹3,00,000 sustained by the CIT(A) out of the total addition of ₹6,00,000 made by the Assessing Officer.

3.

The assessee is an individual. She filed her return of income declaring only interest income of ₹15,200.00 only. During assessment, the AO found that the assessee deposited cash of ₹6,00,000 in her bank account during the demonetisation period. The assessee explained that there was a cash withdrawal of ₹5,70,000 earlier, which was redeposited. She also claimed agricultural income. The AO did not accept her explanation and treated the cash deposit as unexplained under section 69A of the Act.

4.

The ld. CIT(A) partly allowed relief. He deleted ₹3,00,000 and confirmed the balance ₹3,00,000 as unexplained money under section 69A of the Act. Aggrieved, the assessee filed the present appeal.

5.

The learned AR submitted that the entire deposit was explained. There was a cash withdrawal of ₹5,70,000 which was not shown to be used elsewhere. That cash was available for redeposit. Further, agricultural income was also there to support availability of cash. The assessee being an individual is entitled to a basic exemption limit of ₹2,50,000. So, no addition should have been made.

6.

On the other hand, the learned DR supported the orders of the lower authorities.

7.

We have heard both sides and considered the record. It is an admitted fact that cash of ₹5,70,000 was withdrawn by the assessee before demonetisation. There is no evidence on record that this withdrawn cash was spent elsewhere. In such situation, it is reasonable . to hold that the same cash was available for redeposit. Therefore, the explanation of the assessee cannot be rejected.

7.1 Further, even if there is any doubt, the assessee is entitled to the benefit of basic exemption of ₹2,50,000 under the Act. Thus, the addition made by the AO and sustained by the CIT(A) cannot be justified. Hence, the entire addition sustained by the ld. CIT(A) is deleted. In view of the above, we allow the ground of appeal of the assessee.

8.

In the result, the appeal of the assessee is allowed.

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