Arvind Kumar Rungta Vs ITO (ITAT Patna)
Cash Deposits During Demonetisation Explained by Prior Withdrawal for Medical Emergency — ITAT Deletes ₹8 Lakh Addition
The Patna Bench of the ITAT condoned a delay of 409 days in filing the appeal, holding the reasons to be bona fide, and proceeded to decide the matter on merits. The case involved addition of ₹8 lakh under section 69A on account of alleged unexplained cash deposits made during the demonetisation period.
The assessee, a salaried employee with no other source of income, had withdrawn ₹9 lakh in April 2016 for a proposed heart surgery, which ultimately did not take place. Due to demonetisation, the unutilised cash was redeposited into the bank account. While the AO treated the entire cash deposit as unexplained, the CIT(A) granted partial relief of ₹2 lakh but sustained addition of ₹8 lakh on the ground that earlier cash deposits prior to withdrawal were not explained.
The ITAT rejected this approach and held that the assessee’s explanation was reasonable and plausible. It observed that once the source of cash withdrawal is explained and linked to a genuine medical contingency, the redeposit during demonetisation cannot be treated as unexplained merely because prior deposits were questioned. Accordingly, the ITAT set aside the order of the CIT(A) and directed deletion of the entire addition of ₹8 lakh, allowing the appeal in full
FULL TEXT OF THE ORDER OF ITAT PATNA
