KANDASAMY RAJENDRAN,SALEM vs. ITO WARD 1(1), SALEM

The only issue raised by the assessee in his grounds of appeal is the AO and ld.CIT(A) have erred in making addition of Rs.9,50,000/- of cash deposit made in SBNs during the demonetisation period as unexplained money u/s.69A of the Act.

The brief facts of the case are that the assessee is an individual retired from government service on 30.06.2013 filed his return of income for the A.Y. 2017-18 on 22.01.2018, declaring income of Rs.5,33,000/- (Pension of Rs.3,33,002/- and Other Sources of Rs.2,04,530/-). The case was selected for limited scrutiny under CASS to verify the cash deposit during demonetisation period of Rs.10,98,500/-. Accordingly, the statutory notices were issued to the assessee and the assessee submitted the details called for from time to time. The AO found that the assessee had deposited cash of Rs.10,98,500/- of SBNs during demonetisation period in Punjab National bank account. The assessee explained the source of cash deposit as he had a cash balance of Rs.42,00,000/- as on 08.11.2016 and usually the assessee holds cash balance to give hand loans. The assessee had filed the Return of Income regularly and had declared Gross total income of Rs.5,78,736/- for the A.Y.2015-16, Rs.5,44,347/- for the A.Y. 2016-17 and Rs.5,37,532/- during the impugned assessment year. The AO

Before the First appellate authority (FAA) the assessee reiterated the submissions made before the AO and submitted the details of retirement, income declared including the interest income earned from lending during the impugned assessment year and the details of income declared in the earlier A.Y. 2015-16 and 2016-17 along with the copies of return of income. However, the FAA was not convinced with the details and confirmed the order of the AO by passing an order dated 12.12.2024. 7. Aggrieved by the order of the ld.CIT(A), NFAC, Delhi AO the assessee preferred an appeal before us.

The ld.AR for the assessee submitted that the lower authorities have failed to appreciate the fact properly, though the assessee had furnished the details of :-4-: ITA. No.:712/Chny/2025

In support of the claim of the assessee, the ld.AR relied on the following decisions of the Tribunal, wherein in the similar facts and circumstances the Tribunal has held that the cash balance has been explained. - Col. Ranjan Sharma V. ITO – ITA No.101/Bang/2022 (A.Y. 2017-18) dated 01.06.2022 (Page No.27-30 of paper book) - Manish Kumar Dubey V.ITO – ITA No.2484/Del/2023 (A.Y. 2017-18) dated 05.09.2024 (Page No.31-45 of paper book) - ACIT V.Arul Raja – ITA No.2845/Chny/2024 (A.Y. 2021-22) dated 03.04.2025 (Page No.47-62 of paper book)

Per contra the ld.DR submitted that the cash balance claimed by the assessee to the tune of Rs.42.00 Lakhs as on 08.11.2016 is implausible and the interest income from money lending has been shown only in the A.Y. 2015-16 &

We have heard both the parties, perused materials available on record and gone through orders of the authorities below along with judicial precedents relied on. It is an undisputed fact that the assessee is retired form Government service and received retired benefits during the assessment year 2014-15 and only part of the amount of Rs.11.86 lakhs has been invested in partnership firm. The assessee had declared interest income to the tune of around Rs.2.00 Lakhs earned declared as income in his return of income filed for the earlier A.Y.2015- 16 and 2016-17 apart from the impugned assessment year. Further, we note that the assessee filed the cash flow statement as on 31.03.2016, 31.03.2017 and shown a cash balance of Rs.42.00 lakhs as on 08.11.2016 i.e. the date of announcement of demonetisation. Since the assessee is an aged person and retired from government service and carrying on money lending and declared interest income in his return of income, the source explained by the assessee for cash deposit cannot be denied entirely. Further, the lower authorities have not brought out any other material to show that the retirement benefits and income declared in the return of income had been spent away. Accordingly, in the facts and circumstances of the case, and to meet the ends of justice and fair play we are inclined to allow an estimated amount of Rs.7.50 Lakhs as an explained source of cash deposit out of Rs.9.50 Lakhs added by the lower authorities and sustain the addition of Rs.2.00 Lakhs. Since the revenue has not proved that the assessee had any other source of income to make an addition, we direct the AO

Accordingly, we set aside the order passed by the ld. CIT(A) and direct the AO to delete the addition of Rs.7,50,000/- and sustain the addition of Rs.2.00 lakhs under the head income from other sources.

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

अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF