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Facts
The assessee deposited Rs. 17 lakhs in cash during the demonetization period, claiming the source as accumulated savings disclosed in her wealth tax returns for assessment years 2014-15 and 2015-16, where cash in hand of Rs. 18.79 lakhs and Rs. 20.05 lakhs respectively was declared. The AO made an addition of Rs. 17 lakhs under section 69A as unexplained money, which was sustained by the CIT(A).
Held
The Tribunal held that the cash deposited by the assessee during the demonetization period was adequately explained as it originated from accumulated savings regularly disclosed in wealth tax returns filed before the demonetization. Since the revenue could not provide evidence that the cash was utilized elsewhere, the addition made by the AO and sustained by the CIT(A) was deleted.
Key Issues
Whether cash deposited during demonetization, previously declared as accumulated savings in wealth tax returns, can be treated as unexplained money under Section 69A of the Income Tax Act.
Sections Cited
250 of the Income Tax Act, 1961, 143(3) of the Income Tax Act, 1961, 69A of the Income Tax Act, 2(ea)(vi) of the Wealth Tax Act
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. UDAYAN DASGUPTA & SH. KHETTRA MOHAN ROY
This appeal is filed by the assessee against the order of the ld. CIT (A) NFAC, Delhi dated 30.07.2024 passed u/s 250 of the Income Tax Act, 1961 which has emanated from the order of the AO, Ward-2, Phagwara passed u/s 143(3) of the Act, 1961 dated 28.12.2019.
Grounds of appeal taken by the assessee in Form No. 36 are as follows:
“1. That the Ld.CIT(A) has erred in dismissing the appeal of the assessee and confirming the addition on account of cash deposits in her regular bank account, ignoring the detailed reply filed by the assessee.
2. That the Ld.CIT(A) has grossly failed to appreciate that the assessee is not maintaining any regular books of accounts and she had cash in hand declared in her wealth tax returns, which was deposited in her bank account and the CIT(A) has rejected the bonafide explanation, without assigning any reasons or by pointing out any defect in the explanation put forth by the assessee.
3. That the finding of the Ld. CIT(A) that no argument has been advanced regarding the source of cash is wholly misconceived, incorrect and there is complete non application of mind by the Ld. CIT(A) on the detailed submissions filed by the assessee.
4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
Brief facts emerging from record are that the assessee has deposited an amount of Rs.17 lakhs in her savings bank account in cash during the demonetization period, which the assessee has claimed to have been deposited out of her accumulated savings for past many years. The assessee is receiving salary from M/s Chaman Lal Subhash Chander & Bros. and she has submitted her return in ITR-1 for the assessment year under appeal disclosing a total income of Rs.1,65,840/- and is an income tax assessee for past many years, and she has also been filing her wealth tax assessment year 2014-15 and 2015-16 are also part of the record).
The return of the assessee was selected for scrutiny under CASS (as limited scrutiny) for verification of the cash deposited in bank during the demonetization period. In course of proceedings, submissions were filed explaining the source of cash deposit in bank account to have been made out of accumulated savings of the assessee for so many years and as evidence the copies of wealth tax returns filed by the assessee were produced before us, where cash in hand amounting to Rs.15,82,521/- was found to be reflected (disclosed) in the wealth tax return as on 31.03.2014 (assessment year 2014-15) and an amount of Rs.18,79,209/- was reflected as cash in hand as on 31st March, 2015 (assessment year 2015-16) along with other assets as disclosed in the wealth tax return.
However, it is seen that no cognizance to the said wealth tax return has been given by the AO in course of assessment proceedings and the same has been completely ignored and the assessment has been completed on a total income of Rs.18,65,840/- (which included the addition of Rs.17 lakhs u/s 69A being the cash deposited in bank during the demonetization period).
The matter was carried in appeal and the ld. first appellate authority has dismissed the appeal by sustaining the addition observing as follows: (reproduced)
“6.2 After due consideration of all the facts available on record, it has been categorically stated by the AO in the assessment order that the nature and source of the cash deposits made in the bank accounts during the year under consideration were not at all explained. The appellant failed to offer an explanation to the satisfaction of the AO or furnish any supporting evidence. Accordingly, the AO invoked the provisions of section 69A of the Income Tax Act and treated the amount of cash deposit Rs. 17,00,000/- as unexplained money.
6.3 At the appellate stage, the appellant has furnished his written submission in support of his claim. No arguments have been advanced by him in his statement of facts and grounds of appeal to rebut the applicability of the deeming provisions by the AO. The appellant has failed to furnish a cogent explanation of the cash deposits along with reliable evidence in support of the contentions and grounds of appeal despite ample opportunity and time allowed during the appellate proceedings. Accordingly, the appeal is being decided keeping in view the facts brought on record by the AO in the assessment order and by the appellant in the grounds of appeal, statement of facts and written submission.
6.4 It is a trite law that once the to discharge the onus cast on him to explain the nature and source of any sum of money and does not prove the Identity and creditworthiness of the person along with the genuineness of the transactions, the amount is deemed to be the income of the appellant as per the deeming provisions of sections 69A of the IT Act. The genuineness of transactions could not be proved to the satisfaction of the AO during the assessment proceedings.
6.5 Based on the facts mentioned above, detailed discussion in the assessment order by the AO and I am not inclined to interfere with the decision of the AO.” the memorandum of appeal. In course of hearing, the ld. AR of the assessee submitted a short paper book containing copies of income tax return for the assessment year under appeal, copies of screenshots of the income tax portal reflecting records of income tax returns filed by the assessee from the assessment year 2012-13 to 2020-21, copies of replies filed before the AO in course of assessment proceedings, and copy of submissions filed before the first appellate authority. He further filed copies of wealth tax returns submitted by the assessee for the assessment year 2014-15 and 2015-16 (placed in paper book pgs. 3 to 10) and submitted that the assessee has regularly filed wealth tax returns and the last wealth tax return has been filed for the assessment year 2015-16 where net wealth has been declared at Rs.51.80 lakhs which includes cash in hand of Rs.18.79 lakhs (as per Scheduled MP) u/s 2(ea)(vi) of the W.T. Act and referred to the fact that wealth tax has also been paid amounting to Rs.23,327/- on 30.03.2016. He further referred to a copy of balance sheet as on 31.03.2016 to claim that cash in hand as on 31.03.2016 was Rs.20.05 lakhs and claimed that all these documentary evidences are existing on record and the same has been accepted in regular proceedings. He further submitted that there is no evidence with the revenue that the said amount of cash balance as on 31.03.2015 has been otherwise utilized and as such the benefit of the said cash along with the total income declared for the subsequent year should be allowed to the has been deposited in the bank account during the demonetization period. In other words, the assessee’s submission is that the amount of Rs.17 lakhs deposited during the demonetization period in cash was already held by the assessee as accumulated savings for many previous years and was already disclosed to the department in regular returns under the Wealth Tax Act and it is the same amount held in old currency that has been deposited in the bank during demo period and the same cannot be treated to be unexplained and the addition wrongly made by the Assessing Officer and sustained by the ld. CIT(A) may please be deleted.
The ld. DR relied on the order of the ld. CIT(A) but could not controvert the claim of the assessee regarding cash holdings of Rs.20.05 lakhs as on 31.03.2016 (as
per balance sheet and supported by brought forward cash balance of earlier year as reflected in W.T. Returns).
We have heard the rival submissions and considered the materials on record and we find that the wealth tax returns has been submitted on 30.03.2016, much before the date of declaration of demonetization period (and the same cannot be considered as an afterthought) and as such the benefit of the assets reflected in such wealth tax returns cannot be refused. Moreover, it is not the case of the revenue that the cash held by the assessee has been utilized elsewhere.
that the cash deposited by the assessee amounting to Rs.17 lakhs during the demonetization period is explained by the cash availability with the assessee out of accumulated savings over the years and duly reflected in regular wealth tax return for the A.Y. 2015-16, and subsequent income tax balance sheets.
As such, the addition of Rs.17 lakhs on this ground is deleted to have been properly explained.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in open court as on 22.08.2025.