Jamshed Naval Karanjia Vs CIT (ITAT Mumbai)
Demonetisation Cash Addition Deleted – ITAT Accepts Family Savings Explanation Backed by Affidavit
The ITAT Mumbai deleted the addition of ₹6.70 lakhs made under Section 69A, holding that the assessee’s explanation regarding source of cash deposits during demonetisation was plausible and supported by evidence.
In this case, the assessee, a non-resident individual, had deposited cash during the demonetisation period. The AO treated the amount as unexplained and made addition under Section 69A, which was partly sustained by the CIT(A).
Before the Tribunal, the assessee explained that:
- The cash was sourced from foreign currency converted for daughter’s wedding,
- Cash gifts received during the wedding were also deposited, and
- A portion of the money represented lifetime savings of the assessee’s late mother, held by the brother and handed over later.
The Tribunal observed (pages 10–12) that:
- The explanation was supported by an affidavit and surrounding circumstances,
- The AO failed to rebut or disprove the explanation, and
- In such cases, reasonable and plausible explanations cannot be rejected mechanically.
It was also noted that though CBDT SOPs on demonetisation cases were cited, the decision primarily rested on factual appreciation and credibility of explanation.
Accordingly, the ITAT:
- Deleted the addition, and
- Allowed the appeal in full.
The ruling reinforces that cash deposits during demonetisation cannot be taxed blindly, and credible family-source explanations, especially supported by affidavit, must be duly considered.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
