The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has deleted an addition of ₹2.53 lakh made under Section 69A of the Income Tax Act, holding that cash deposits in the assessee’s bank account could not be treated as unexplained money when the deposits were substantially supported by cash withdrawals made in earlier years and the evidentiary material was ignored by the tax authorities.
The bench of Suchitra Kamble (Judicial Member), first condoned a delay of 186 days in filing the appeal after finding the reasons furnished by the assessee to be genuine.
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2012-13. The dispute centered around an addition of ₹2,53,000 made by the Assessing Officer (AO) under Section 69A of the Income Tax Act on account of cash deposits in the assessee’s bank account.
The assessment was reopened after the tax department observed that the assessee had entered into share trading transactions amounting to ₹10.43 crore but had not originally filed a return of income. Pursuant to the reopening notice issued under Section 148, the assessee filed a return declaring total income of ₹1.53 lakh and furnished details of commodity trading transactions, which reflected a loss of ₹2.32 lakh during the relevant assessment year.
During scrutiny of the assessee’s Bank of Baroda account, the AO noticed cash deposits aggregating ₹2.53 lakh during the year. Since the assessee allegedly failed to provide a satisfactory explanation in response to notices issued under Section 142(1), the AO treated the entire amount as unexplained money and added it to the assessee’s income under Section 69A.
The Commissioner (Appeals) subsequently upheld the addition, prompting the assessee to approach the ITAT.
The assessee argued that the cash deposited in the bank account was sourced from cash withdrawals made in earlier years, particularly during Financial Years 2009-10 and 2010-11. Detailed bank statements and tabulated records showing cash withdrawals were placed on record before the authorities. The assessee contended that these materials demonstrated the availability of sufficient cash in hand and that the deposits could not be treated as unexplained.
On merits, the Tribunal examined the documents placed on record and noted that the assessee had provided details of cash withdrawals from earlier years along with supporting bank statements. The Bench observed that the records indicated substantial cash withdrawals and the existence of sufficient cash in hand before the deposits were made during the relevant assessment year.
Importantly, the Tribunal found that these documents and explanations had neither been properly taken on record nor considered by the Assessing Officer and the Commissioner (Appeals), despite having been submitted before them.
Holding that the evidence furnished by the assessee adequately explained the source of the cash deposits, the ITAT concluded that the addition under Section 69A was unjustified. The Tribunal therefore deleted the addition of ₹2.53 lakh and allowed the appeal in favour of the assessee.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
