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Facts
The assessee filed their return of income, which was selected for scrutiny due to significant cash deposits in their savings account. The Assessing Officer (AO) made an addition of ₹12,11,000/- on account of these cash deposits, rejecting the assessee's cash flow statement. The CIT(A) upheld the AO's addition.
Held
The Tribunal found that the CIT(A)'s observation regarding demonetization was incorrect as the deposits occurred prior to that period. The Tribunal accepted the assessee's explanation that the cash was withdrawn and held for the medical treatment of his ailing wife, supported by a cash flow statement. Therefore, the addition made by the AO was set aside.
Key Issues
Whether the addition on account of cash deposits into the bank account is justified when the assessee provided a cash flow statement and explanation for the source.
Sections Cited
143(2), 142(1), 143(3), 56(2)(viib)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals) ADDL/JCIT(A)-2, Gurugram(hereinafter referred to as the “Ld. CIT(A)”] dated 06.12.2024 for the AY 2016-17.
The only issue raised by the assessee is against the confirmation of addition of ₹12,11,000/- by the ld. CIT (A) as made by the ld. AO on account of cash deposits during the year by the assessee into the bank account.
In the appellate proceedings, the assessee raised only the issue of cash deposit as the other issue was conceded and not pressed before the ld. CIT (A). The ld. CIT (A) in the appellate proceedings, dismissed the appeal of the assessee by observing and holding as under:-
“6.5 During the FY. 2015-16 the appellant had made an aggregate cash deposit of Rs. 12, 11,000/- in his savings a/c no-00290100006546 with the Bank of Baroda. India Exchange Place branch Kolkata. In the course of the assessment proceeding the A.O. had directed the appellant to explain the source of the said cash deposits in response there to, the appellant had furnished a cash flow statement for the running period covering five financial years i.e. 2011-12 to 2015-16 along with copy of Bank statements. On close scrutiny of the said cash-flow statement, read with the bank statements from It can be discemed that the appellant had regularly withdrawn and deposited cash in his aforesaid bank a/c at regular intervals.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.02.2026.