The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that cash received as marriage gifts and retained at home for genuine household and medical contingencies cannot be treated as unexplained money merely because it was deposited several months later during the demonetisation period. 

The bench of Anikesh Banerjee (Judicial Member) and Om Prakash Kant (Accountant Member) has  deleted an addition of ₹6.89 lakh made under Section 69A of the Income Tax Act and taxable under Section 115BBE, observing that the Revenue had failed to bring any material on record to establish that the cash represented undisclosed income. 

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The assessee had filed her income tax return declaring a total income of ₹69,290, comprising salary income and interest income. During scrutiny assessment, the Assessing Officer noticed that the assessee had deposited ₹11.40 lakh in cash across three bank accounts during the demonetisation period between 8 November 2016 and 30 December 2016. 

In response to the scrutiny notice, the assessee explained that the deposits originated from cash gifts received during her marriage held on 1 May 2016; accumulated personal savings; and cash retained at home to meet possible medical emergencies involving her specially-abled step-son and ailing mother-in-law. 

During assessment proceedings, the assessee furnished confirmations supporting cash gifts amounting to approximately ₹4.51 lakh, which were accepted by the Assessing Officer. However, the balance ₹6.89 lakh was treated as unexplained money under Section 69A and taxed under Section 115BBE on the ground that the assessee had failed to satisfactorily establish its source. 

The Commissioner of Income Tax (Appeals) affirmed the assessment order, holding that the alleged marriage gifts were not fully substantiated by documentary evidence; confirmations from all donors were not available; there was a considerable gap between the marriage in May 2016 and the deposits made during demonetisation; the assessee failed to establish that the cash had remained intact throughout the intervening period; and earlier bank withdrawals weakened the claim that substantial cash was already available as savings. 

Consequently, the CIT(A) confirmed the addition of ₹6.89 lakh under Section 69A along with taxation under Section 115BBE. 

Before the Tribunal, the assessee contended that the remaining cash also represented genuine marriage gifts and accumulated household savings. It was argued that the cash had been intentionally retained at home considering the family’s medical requirements, particularly those of her specially-abled step-son and elderly mother-in-law, and was eventually deposited only because of demonetisation. The assessee submitted that these surrounding circumstances sufficiently explained the source and retention of cash. 

The department argued that the assessee had failed to produce cogent documentary evidence supporting the balance amount and had not satisfactorily explained why the cash remained unutilised for several months before its deposit. 

After examining the record, the Tribunal noted that the fact of the assessee’s marriage in May 2016 was undisputed. It observed that receiving cash gifts at the time of marriage is a common social practice in India, and it is equally normal for a bride to retain such cash for future household or medical contingencies. 

The Tribunal further held that the explanation regarding retention of cash for the medical needs of the assessee’s specially-abled step-son and ailing mother-in-law could not be rejected merely on conjectures. It emphasised that the Revenue had not produced any evidence indicating that the cash represented income from an undisclosed source or that the assessee had engaged in any unaccounted business activity. 

The Tribunal observed that the mere passage of a few months between the marriage and the demonetisation deposits does not, by itself, render the explanation implausible. In its view, the absence of complete documentary evidence for every rupee of the cash, without any contrary material from the Revenue, was insufficient to invoke Section 69A. 

The Tribunal concluded that the assessee had furnished a reasonable and satisfactory explanation regarding the source of the cash deposits. It directed deletion of the addition of ₹6.89 lakh made under Section 69A and consequently set aside its taxation under Section 115BBE.

Accordingly, the appeal filed by the assessee was allowed. 

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