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Facts
The assessee filed their return declaring an income of Rs. 4,20,310/-. The case was selected for limited scrutiny as the assessee had made cash deposits of Rs. 2,00,000/- during the demonetisation period. The Assessing Officer made additions for this deposit and disallowed deductions under Section 80C & 80D, completing the assessment at Rs. 8,30,879/-.
Held
The Tribunal found no justification in treating the cash deposit of Rs. 2,00,000/- during demonetisation as unexplained, considering it represented accumulated savings. The addition of Rs. 2,00,000/- under Section 69A was deleted. The ground regarding HRA and Conveyance Allowance was not pressed by the assessee, and the CIT(A)'s decision was upheld.
Key Issues
Whether the cash deposit of Rs. 2,00,000/- made during demonetisation period, explained as accumulated savings, can be treated as unexplained income under Section 69A. Whether the disallowance of HRA and Conveyance Allowance is justified.
Sections Cited
143(3), 80C, 80D, 69A, 10(13A), 18(C), 18(D)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SHRI NARENDRA PRASAD SINHA, AM:
This appeal is filed by the assessee against the order of Addl./Joint Commissioner of Income Tax(A)-3, Mumbai dated 28.02.2025 for the Assessment Year (A.Y.) 2017-18 in the proceedings under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the assessee had e-filed his return of income for the A.Y. 2017-18 on 14.06.2017 declaring total income of Rs.4,20,310//-. The case was selected for limited scrutiny to verify the salary income and the cash deposits made during the demonetisation period. The Assessing Officer had found that the assessee had made cash deposits of Rs.2,00,000/- in his savings account with HDFC Bank during the demonetisation period. It was explained that Ahd 2025 Assessment Year: 2017-18 Mitulkumar Ajitkumar Desai vs. DCIT Page 2 of 4 this deposit was made out of past savings. However, the Assessing Officer had made the addition for the reason that no details of savings were furnished. In addition, deduction claimed under Section 80C & 80D was also disallowed by the Assessing Officer. The assessment was completed under Section 143(3) of the Act on 16.12.2019, at a total income of Rs.8,30,879/-.
3. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.
Now the assessee is in second appeal before us. The following grounds have been taken by the assessee in this appeal: -
1. The ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.2,00,000/- u/s. 69A of the Act. Addition was made for cash deposited in bank during demonetization period. The Appellant stated that he has deposited his life time savings being in old currency notes to his savings bank account during demonetization period. The appellant prays that addition may be deleted.
2. Ground No.2 - House Rent Allowance: The Id. CIT(A) has erred in law and on facts in confirming the addition of Rs.48,000/- of HRA Payments, whereas, the appellant has furnished details to AO in email, copy attached. The Id. CIT(A) has erred in law and on facts in confirming the addition of Rs.19,200/- for Conveyance Expenses and Rs.2,400/- Professional Tax Expenses, which are duly reported in Form no.16B. The appellant prays that addition may be deleted.
The appellant reserves its right to submit further details in connection with additions made by AO as fresh evidence at the time of hearing of appal.”
4. Your appellant craves liberty to add, to alter, to modify, to amend or to withdraw/delete any of the grounds of appeal at any time on or before the final hearing of appeal.”
Ahd 2025 Assessment Year: 2017-18 Mitulkumar Ajitkumar Desai vs. DCIT Page 3 of 4 5. The first ground pertains to addition of Rs.2,00,000/- under Section 69A of the Act in respect of cash deposits during demonetisation period. Shri Darshan B. Gandhi, Ld. AR of the assessee submitted that the savings of the entire family members in the old denomination notes were deposited during the demonetisation period. He explained that the deposit of Rs.2,00,000/- were nominal and the Assessing Officer was not correct in treating the same as unexplained.
Per contra, Shri Umesh Kumar Agrawal, Ld. Sr. DR supported the orders of the lower authorities.
We have considered the rival submissions. We do not find any justification in treating the cash deposit of Rs.2,00,000/- during the demonetisation period in the old denomination notes as unexplained. The sum of Rs.2,00,000/-was not such a huge amount to deny the explanation of the assessee that it represented the accumulated savings of the assessee as well as his other family members which was lying in the form of old denomination of notes. Therefore, the addition of Rs.2,00,000/- made under Section 69A of the Act in respect of cash deposit of old denomination notes is deleted. The ground of the assessee is allowed.
Ground no.2 pertains to disallowance of House Rent Allowance (HRA) and Conveyance Allowance. The Ld. AR explained that the Assessing Officer made addition of Rs.2,10,569/- in the assessment order on account of various deductions claimed under Chapter VI-A of the Act. The Ld. CIT(A), after examining the facts of the case, had already allowed substantial relief to the assessee. Therefore, the Ld. AR did not press this ground. It is found that the Ld. CIT(A) has already considered the explanation and evidences brought on record before him and allowed substantial relief to the assessee in respect of deduction under Section Ahd 2025 Assessment Year: 2017-18 Mitulkumar Ajitkumar Desai vs. DCIT Page 4 of 4 10(13A), Section 18(C) and under Section 18(D) of the Act. Since the assessee is not inclined to press this ground, the decision of the Ld. CIT(A) on this issue is upheld. The ground taken by the assessee is dismissed.
Other grounds taken by the assessee are general in nature and, therefore, are dismissed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on this 12th August, 2025.