Salaried Person Not Required To Maintain Cash Book: ITAT Deletes Rs. 12.08 Lakh Demonetisation Cash Deposit Addition

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted an addition of ₹12.08 lakh made under Section 69A of the Income Tax Act against a salaried government scientist for cash deposits made during the demonetisation period, holding that a salaried individual cannot be compelled to maintain a cash book and that mere time gap between withdrawal and redeposit cannot justify an addition. The bench of Vimal Kumar (Judicial Member) and Rifaurrahman (Accountant Member) observed that once the assessee establishes that the cash deposited originated from earlier withdrawals reflected in bank statements, the burden shifts to the Revenue to prove that the money had been utilized elsewhere. In the absence of such evidence, the addition could not survive. The appeal was filed by Ms. Vinita Nitin Chaudhary against the order of the JCIT(A), Panchkula, for Assessment Year 2017-18. As per the case records, the assessee had filed her income tax return declaring total income of ₹8.01 lakh. The scrutiny was initiated under CASS on the ground that substantial cash had been deposited during the demonetisation period compared to the returned income. During assessment proceedings, the Assessing Officer noted that cash deposits amounting to ₹12.08 lakh had been made in the assessee’s bank account during demonetisation. Since the officer was not satisfied with the explanation furnished regarding the source of the deposits, an addition of ₹10.43 lakh was ultimately made under Section 69A as unexplained money and taxed under Section 115BBE. Buy Now: Income Tax Judgments E-Compilation : April 2026 The assessee explained that she was employed as Scientist ‘E’ in the Department of Biotechnology, Government of India, and that the cash deposited during demonetisation represented redeposit of earlier cash withdrawals made from the same bank account out of salary income and savings. The Tribunal noted that the withdrawals made prior to demonetisation were duly reflected in the bank statements and that the cash redeposited during demonetisation did not constitute unexplained income. The assessee further argued that there is no legal requirement compelling a salaried person to maintain a cash book or prove “continuity of cash” for personal savings kept at home. Reliance was placed on several judicial precedents holding that cash withdrawn earlier and redeposited later cannot automatically be treated as unexplained merely because of a time gap between withdrawal and redeposit. The ITAT accepted these submissions and observed that the Assessing Officer had made the addition merely on the basis of alleged non-compliance and absence of detailed explanation during assessment proceedings, without conducting any independent inquiry to establish that the cash deposits actually represented undisclosed income. Importantly, the Tribunal emphasized that Section 69A can be invoked only where the assessee fails to provide a satisfactory explanation regarding ownership and source of money. In the present case, the explanation was supported by salary income and prior bank withdrawals. The Bench also rejected the reasoning adopted by the CIT(A) that the assessee failed to prove “continuity of cash” between withdrawals and redeposits. The Tribunal held that once withdrawals are accepted as genuine, the onus shifts to the department to prove that the withdrawn funds had been spent elsewhere. The ITAT further noted that there is no statutory requirement for a salaried individual to maintain a cash book. Referring to earlier judicial precedents, including CIT vs Baldevraj Charla, the Tribunal reiterated that mere time gap between withdrawal and redeposit cannot be the sole basis for treating cash deposits as unexplained. Another important factor considered by the Tribunal was that the total withdrawals made by the assessee exceeded the cash deposits questioned by the department. The Bench observed that a direct source of cash was available on record and the assessee had successfully proved the genuineness of the deposits. The Delhi ITAT deleted the addition made under Section 69A and allowed the appeal of the assessee. Case Details Case Title: Vinita Nitin Chaudhary Versus ITO Citation: JURISHOUR-1149-ITA-2026(DEL) Case No.: ITANo.6156 /DEL/2025 Date: 06.05.2026 Counsel For Appellant: Amit Mishra, Advocate Counsel For Respondent: Mahesh Kumar, CIT DR Click Here To Read Order Read More: WhatsApp Chats Alone Can’t Prove Bogus Transactions: ITAT Deletes Rs. 89.50 Lakh Addition On Gifts From NRI Father-In-Law

Salaried Person Not Required To Maintain Cash Book: ITAT Deletes Rs. 12.08 Lakh Demonetisation Cash Deposit Addition

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