TULJA SINGH MADABALOO,HYDERABAD vs. ITO,, WARD-7(2), HYDERABAD

Facts

The assessee, a laundryman, filed a return declaring income of Rs.3,50,300 for AY 2017-18. His case was selected for scrutiny due to large cash deposits (Rs.23,84,240) during demonetization, which the AO treated as unexplained cash credits under Section 68 and also disallowed a Chapter VIA deduction of Rs.34,000. Due to the illness and subsequent demise of his Chartered Accountant, the assessee could not represent his case, leading to ex-parte orders from both the AO and CIT(A).

Held

The tribunal admitted additional evidence, including details of bounced cheques for Rs.21 lakhs, clarifying they were not cash deposits. It restricted the addition under Section 68 to Rs.84,240, accepting Rs.2 lakhs as accumulated savings for the remaining Rs.2.82 lakhs. Furthermore, the tribunal directed the AO to re-adjudicate the claim for deduction under Chapter VIA after considering the submitted tuition fee receipts.

Key Issues

1. Whether the cash deposits made during the demonetization period constitute unexplained cash credits under Section 68 of the Income Tax Act. 2. Whether the disallowance of deduction claimed under Chapter VIA was justified. 3. Whether additional evidence could be admitted given the non-appearance due to the Chartered Accountant's illness and demise.