ITAT: Deletes Addition of cash deposit of Rs.17 lakh made by the Assessing Officer During Demonetization

ITAT: Deletes Addition of cash deposit of Rs.17 lakh made by the Assessing Officer During Demonetization

The Income Tax Appellate Tribunal (ITAT), Pune bench deleted the addition of cash deposits during demonetization.

The appeal was filed by the assessee- Mrs. Usha Narayan Chaware against the order dated 15th December, 2021 passed by the Commissioner of Income Tax (Appeals) [CIT(A)] in National Faceless Appeal Centre, Delhi in relation to the assessment year 2017-18.

The only issue raised in the appeal was against the confirmation of addition of Rs.17 lakh made by the Assessing Officer (AO) towards cash deposited by the assessee in his Bank Account during demonetization period.

The facts of the case are that during the course of assessment proceedings, the AO observed that the assessee deposited cash of Rs.17 lakh in his bank account on different dates during the demonetization period. On being called upon to explain the source, the assessee submitted that he along with his brother, Shri Vilas Dattatraya Chaware, sold certain agricultural land for a sum of Rs. 38 lakh on 12-04-2013.

The assessee's share in such sale consideration was Rs.19 lakh. It was stated that the cash was kept with his brother for purchase of another property in the nearby vicinity, but the transaction of new purchase could not materialize. The AO called upon the assessee to furnish details of his monthly expenses which was duly furnished along with source thereof.

The AO refused to accept the source of cash deposit of Rs.17 lakh in bank account during demonetization period on the ground that the agricultural land was sold in 2013 and the cash was deposited in 2016. He, therefore, made the addition of the said sum under Section 69A read with Section 115BBE of the Act. No relief was allowed by the CIT(A), against which the assessee approached the ITAT.

The ITAT found as an admitted position that the assessee did sell its ancestral agricultural land in the year 2013 for a sum of Rs.38 lakh along with his brother. The assessee's share in such sale consideration was Rs.19 lakh. The assessee submitted before the AO that his share of cash of Rs.19 lakh was kept with his brother who was looking after the agricultural operations previously and both of them decided to purchase a new agricultural land in their joint name.

The ITAT noted that, the brother passed away in the month of June, 2016 and his sister-in-law handed over his share of cash in the months of August and September, 2016, which was deposited in the bank account during November, 2016. The fact that the assessee along with his brother sold agricultural land for a sum of Rs. 38 lakh has not been denied by the AO.

The single member R.S. Syal (Vice President) observed, "once the availability of cash in hands was established and it was not shown by the AO that such cash was spent elsewhere, I am of the considered opinion that the explanation of the assessee as to its utilization has to be accepted."

Further, the assessee had explained before the ITAT about his monthly domestic expenses and the sources thereof, which was also disputed by the AO.

Accordingly, the ITAT was satisfied and ordered the deletion of addition.