RAJASEKARAN JOTHI,CHENNAI vs. ITO, NCW-19(1), CHENNAI

The assessee is an individual and employed with Government of India. The assessee has filed his return of income of Rs. 8,28,940/- on 04.08.2017.During demonetization period, the assessee has deposited cash of Rs.10,35,000/- and explained the source of cash deposit as savings from his salary, which he claimed to have received in cash up to the year 2013 and subsequent withdrawal from bank. However, the A.O did not accept assessee’s explanation and made addition of Rs.10,35,000/- u/s. 69A of the Act. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A), however, upheld the addition made by the A.O.

The Ld. Authorized Representative (A.R) of the assessee has submitted that the assessee, being a Government employee, had been receiving his salary in cash until 2013 and subsequently through bank and cash deposited was out of the past savings and withdrawals from his bank account.

On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities.

We have heard the rival submissions, and perused the materials available on record, including the bank statement and salary slips submitted by the Ld. A.R. The A.O has rejected the assessee’s explanation that the cash deposited represented his salary savings as assessee has deposited cash during demonetization period on multiple dates, and assessee had a history of depositing cash in bank. The A.O, based on the presumptions regarding human behavior, did not accept the assessee’s explanation and made addition of Rs.10,35,000/-. We do not agree with the A.O that assessee cannot keep cash for 5 to 6 years and cannot deposit cash in multiple occasions during demonetization. We find that the assessee has substantiated his claim with supporting documents, including bank statements and pay slips, indicating that he has sufficient funds to make such deposits. Therefore, the explanation offered by the assessee cannot be rejected solely based on the assumptions. In light of the above, we find no reason to doubt in the assessee’s explanation, and accordingly, the addition made by the A.O is deleted. Hence, the appeal filed by the assessee is allowed.