SriLakshmi Devireddy Vs ITO (ITAT Visakhapatnam)
ITAT Allows ₹2.5 Lakh Relief for Household Savings but Confirms 60% Tax on Unexplained Cash Deposits – Key Takeaways
Introduction
The Income Tax Appellate Tribunal (ITAT) recently delivered an important ruling addressing two frequently litigated issues arising from demonetization-related assessments:
1. Applicability of the enhanced tax rate under Section 115BBE
2. Treatment of small cash deposits as household savings
The case involved unexplained cash deposits totaling ₹11,00,000 in the assessee’s bank account during the relevant financial year.
Background of the Case
The case was selected for Limited Scrutiny to verify the source of large cash deposits.
During assessment proceedings:
- The Assessing Officer (AO) requested supporting documentation explaining the source of funds.
- The assessee failed to provide satisfactory evidence.
- Consequently, the AO treated the entire ₹11,00,000 as unexplained money under Section 69A.
The addition was subsequently confirmed by the Commissioner of Income Tax (Appeals).
Procedural Issue: Delay in Filing Appeal
The assessee filed the appeal before the ITAT 161 days after the prescribed limitation period.
The delay was explained on medical grounds:
- An accident resulting in a fractured ankle
- Subsequent dengue fever
The Tribunal accepted these circumstances as reasonable and condoned the delay, allowing the appeal to be heard on merits.
