Case Law Details
Geeta Pravin Vepari Vs ITO (ITAT Mumbai)
In this case, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai, challenging the order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 10.10.2025 for Assessment Year 2017–18. The dispute concerned an addition of ₹10.50 lakh (out of ₹12.50 lakh) made by the Assessing Officer (AO) under Section 69A of the Income-tax Act, 1961, treating cash deposits during the demonetisation period as unexplained money.
The assessee, an 82-year-old retired medical practitioner, had deposited cash into her bank account during demonetisation. The AO found the explanation regarding the source of cash unsatisfactory and treated the amount as unexplained under Section 69A. On appeal, the CIT(A) granted partial relief by accepting ₹1.50 lakh as explained savings but confirmed the remaining ₹10.50 lakh due to lack of sufficient documentary evidence supporting the claim that the money belonged to her siblings.
The assessee contended that the cash deposited originated from withdrawals made in 2013 amounting to ₹10.51 lakh after closure of a joint bank account held with her deceased parents. She explained that only ₹2.50 lakh was her share, while the remaining amount belonged to her siblings residing abroad. According to her, the siblings had permitted her to retain the cash until their visits to India, and during demonetisation, they consented to its deposit in her bank account. She supported her explanation with documentary evidence, including bank records of withdrawal and email communications with siblings.
The CIT(A), however, doubted the explanation on several grounds. It found it improbable that a well-educated individual would hold such a large sum of cash for several years without remitting it. It also observed that the email communications were post-demonetisation and did not conclusively establish prior joint ownership of the cash. Further, the CIT(A) noted that the amount had not been remitted to siblings even after demonetisation, undermining the claim. Nonetheless, considering the assessee’s age and professional background, limited relief of ₹1.50 lakh was granted on grounds of natural justice.
Before the Tribunal, the assessee reiterated that the AO had failed to properly consider the evidence submitted. It was argued that the explanation regarding the source of cash was supported by bank documents and correspondence, and that the AO did not bring any contrary evidence to disprove the claim. The assessee further contended that mere non-remittance of money to siblings could not justify treating it as undisclosed income. It was also argued that even if the explanation was not accepted, the amount could at most be treated as a gift from siblings, which would be exempt under Section 56.
Additionally, the assessee raised a legal ground challenging the applicability of the higher tax rate under Section 115BBE, arguing that it applied only from Assessment Year 2018–19 onwards. The Tribunal admitted this additional ground, relying on the principle laid down by NTPC Ltd vs CIT (1998) 229 ITR 383 (SC) that legal issues can be raised at any stage if relevant facts are already on record.
The Departmental Representative supported the orders of the lower authorities, emphasizing the time gap between withdrawal and deposit, absence of corroborative evidence from siblings, and lack of justification for holding large cash balances.
After considering the submissions and material on record, the Tribunal found that both the AO and CIT(A) had failed to adequately consider the evidence provided by the assessee. It observed that the bank records clearly showed withdrawal of funds and that email communications with siblings existed. Importantly, no inconsistencies or infirmities in these evidences were pointed out by the lower authorities, nor was any effort made to verify the assessee’s claims from the siblings.
The Tribunal held that the assessee had discharged the primary onus of explaining the nature and source of the cash. It noted that merely relying on the time gap between withdrawal and deposit, without disproving the explanation or conducting further verification, was insufficient to sustain an addition under Section 69A. The Tribunal also emphasized that the assessee was a super senior citizen and a retired professional with a history of tax compliance, and that the matter should have been considered holistically.
Accordingly, the Tribunal held that the addition of ₹10.50 lakh lacked justification and was unsustainable. It set aside the order of the CIT(A) and directed the AO to delete the entire addition. Since the main addition was deleted, the additional legal ground regarding taxation under Section 115BBE became academic and did not require adjudication.
In conclusion, the appeal of the assessee was allowed in full, and the addition under Section 69A was deleted.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal is preferred by the assessee against the order dated 10.10.2025 as passed by the Learned Commissioner of Income-tax, Appeal, ADDL/JCIT(A)-1, Siliguri [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 29.06.2019 for the Assessment Year [A.Y.] 2017-18.
2. The grounds of appeal are as under:
1. The Addl/JCIT (A)-1 Siliguri erred in confirming addition of Rs.10,50,000/-out of Rs.12,50,000/- made by the Income-tax Officer, Ward 16(2)(4), Mumbai (AO) as unexplained moneyu/s. 69A of the Act without considering the submissions and evidences filed by the appellant during the course of hearing.
2. The AO erred in making addition u/s. 69A of the Act purely on surmises and guesses without bringing any evidence on record.
3. The AO has not discharged the primary onus cast upon him before invoking the provisions of section 69A.
4. Each of the above grounds is without prejudice to one another.
Additional Grounds of Appeal:
1. Without prejudice to the contention of the appellant that the addition of Rs. 10,50,000/-made by the AO and confirmed by the CIT(A) u/s 69A of the Act is purely on surmises and guesses without bringing any evidence on record, the appellant submits that the AO erred in levying tax on addition of Rs.12,50,000/- made u/s. 69A of the Act at enhanced rate of 60% prescribed in section 115BBE of the Act. The provisions of section 115BBE are applicable only to transactions that have taken place on or after 1 April 2017 i.e. from the assessment year 2018-19 onwards and not for transactions that have taken place in the previous year relevant to assessment year 2017-18.
2. The appellant submits that the above additional ground of appeal is purely legal in nature and does not require investigation of fresh facts or any further evidence and craves leave of the Hon’ble ITAT for admission thereof.
3. Having gone through the contents of the additional ground of appeal, we are of the opinion that it deserves to be accepted as it involves a legal issue for which relevant facts are already on record. In the case of NTPC Ltd vs CIT(1998) 229 ITR 383(SC), it was held by the hon’ble Apex Court that the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee, in accordance with law. If a valid claim is made for the first time as long as the relevant facts are on record in respect of that item, there is no reason to restrict the powers of the tribunal. Accordingly, the additional ground is admitted for adjudication.
4. Briefly stated facts of the case are that the assessee is stated to be a Senior Citizen aged about 82 years who had been a practicing Doctor in a Charitable Clinic till she retired in December 2007. Ground nos.1 to 3 are against the addition of Rs. 10.50 lakh sustained by the ld.CIT(A) out of aggregate addition of Rs 12.50 lakh as made by the AO u/s 69A of the Act. The case was taken up for scrutiny by the AO for verification of the above cash deposit in the bank account of the assessee made during demonetization period. After finding the explanation given for the quantum of cash deposit unsatisfactory, he proceeded to treat the amount as unexplained money under Section 69A of the Act.
5. In the subsequent appeal before the appellate authority, the addition was contested claiming that after demise of her parents, she withdrew cash of Rs. 10,51,206/- on 05.01.2013, redeeming Fixed Deposit and closing of Savings bank account held jointly in the name of assessee and her parents who are having total four children i.e.two sons and two daughters including her. As per her submission, share pertaining to her was only Rs.2,50,000/- and rest of amount was share of her brothers and sister residing in USA. They had expressed their desire to avail of their share of money for spending when they visit India. In the meantime, demonetisation was declared by the Government and they consented to depositing the money in her account. As per her submission, she deposited the entire cash held with her into the bank account.
5.1 The ld.CIT(A) noted that the assessee had maintained a bank account alongwith her parents with Bank of Baroda. Her father expired in 1996 and her mother expired in 2010. She withdrew the cash of Rs. 10,51,206/- in the year 2013 and closed the bank A/c. Thereafter, it is stated that she has held the cash with her till demonetisation. She had furnished a copy of the email informing, her siblings to siblings to seek their consent that she was depositing the cash held by her in her Bank Account due to demonetization. He further observed that the assessee is a well educated professional and her husband is a Chartered Accountant by profession. Therefore, it was surprising that she had kept cash in hand for three years which was due for payment to her relatives for the reason that their physical presence was necessary. Furthermore, she presented electronic communication between her and her siblings seeking to establish that their consent was given to keep the said amount with her and do with that cash according to her discretion. The said communication had taken place post declaration of demonetisation and did not prove in any way that she was in possession of cash belonging to persons other than herself in the absence of any reliable material pertaining to joint possession of the said cash available before declaration of demonetisation.
5.2 It is further stated that during the course of assessment proceedings the AO found that till the date of assessment of the case, the amount had not been remitted, In her submission, the assessee had submitted, inter alia, that she could not remit any amount if the said sum of Rs. 10,50,000/- is settled with disputed tax liability which would be about Rs. 7,00,000/-, However, as regard her explanation that she could not remit the amount on the assumption of disputed tax liability, it may be mentioned here that the assessment proceedings had been initiated only on 09.08.2018, therefore, the question of disputed tax liability did not arise till the assessment proceedings was initiated. She had enough time to remit the amount post demonetisation.
5.3 However, keeping in view that the assessee is a Senior Citizen aged about 82 years and had been a practicing doctor in a Charitable Clinic till she retired in December 2007,the ld.CIT(A) observed that there was no doubt that savings could be accumulated in different prescribed ways including in the form of cash. Considering the facts and circumstances on the scale of natural justice, it is found that the appellant was eligible to get relief on account of the amount of cash deposit made by her during demonetization period which she has claimed to be her cash in hand, Rs. 1,50,000/-. However, the remaining addition of Rs. 10,50,000/- was confirmed due to the lack of enough supporting materials/ documents in support of the claim that it belonged to her brothers and sister. Accordingly, in the interest of natural justice, it was held that the cash of Rs.1,50,000/- deposited during demonetization period represented the quantum of cash held by the assessee in the form of past savings out of her income earned from her profession, Consequently out of the addition of Rs. 12,00,000/-made by the AO Rs 1,50,000/-was deleted and the balance addition was upheld.
6. Before us, the ld.AR has reiterated the same contentions as made before the lower authorities. Copies of written submissions and supporting details as furnished before the ld.CIT(A) were also filed. It is stated that the assessee had explained the source of money of Rs. 10,50,000/- deposited in the Bank Account during demonetization period and had offered the explanation about the nature and source of acquisition of money along with documentary evidences i.e. bank passbook of her father from where the amount was withdrawn in cash and copies of emails exchanged between the assessee and her siblings which was not rebutted by the AO. The addition made by the AO was only on the ground that the amount inherited by the assessee after the demise of her mother in 2010 was not remitted to her brothers and sister and treated the same as her undisclosed income. In this connection, it was submitted that both the brothers and sister of the assessee were Non-Residents and Foreign Citizens since at least 35 years. They had expressed their desire to avail of their share of money for spending when they visited India. The question therefore, of remitting the money to them did not arise and besides none of them had NRO Account in India and also the assessee could not remit any amount if the said sum of Rs. 10,50,000/-was settled with disputed tax liability which would be about Rs. 700,000/-.
6.1 The ld.AR has further argued that the AO has not considered the evidence filed by her during the course of assessment proceedings. The AO has not brought any evidence or given any cogent reason to reject the reasons given by the appellant with the documentary evidence in support of non-taxability of Rs. 10,50,000/-. He made the addition merely on the ground that the amount was not remitted to the assessee’s siblings till the date of assessment. The AO had not discharged the primary onus cast upon him before invoking the provisions of section 69A of the Act. It is argued that the explanation given had not been considered by the AO in proper perspective and he had also not given any cogent reasons for rejecting the same. However, assuming without admitting that the reasons given for addition by the AO, it is submitted that even if the amounts were not remitted to the siblings and were lying with the appellant, at the most it can be considered as deemed gifts from brothers and sister to the sister appellant and this is exempt u/s. 56 of the Act.
7. It is submitted that attention of the ld. CIT (A) was invited to the decision of the Delhi Tribunal in the case of ITO vs. Mrs Deepali Sehgal in ITA No. 5660/Del/2012. Relevant para of the Hon’ble Tribunal are reproduced herein below.
“The AO noted that the assessee had withdrawn huge cash from Bank Account and the same amount had been deposited after lapse of substantial time. The AO rejected the explanation and held that the assessee had cash deposit of Rs.24,38,000/- as unexplained money and the assessee was found to be the owner of money as he had not offered any acceptable and cogent explanation. The Delhi Tribunal held that the AO in his Remand Report could not bring out any fact that the cash withdrawn from the Savings Bank Account and Partnership Overdraft account was used for other purposes anywhere else then, merely because there was a time gap between withdrawal for cash and its further deposit to the Bank Account, the amount cannot be treated as income from undisclosed source u/s. 69 of the Act in the hands of the assessee. Hence the addition made by the AO without any legal and justified reason was rightly deleted by the CIT (A).”
7.1 It is also pleaded that section 69A of the Act pertained to a situation where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or other valuable article is not recorded in the books of accounts, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. A plain reading of the said provision makes it abundantly clear that the requirement of the section is that money or other asset must be found and the assessee is found to be the owner of article specified in the section. Further, this provision provides that if the assessee offers no explanation about the nature and source of acquisition of money, etc or the explanation offered by the assessee, in the opinion of the AO is not satisfactory then the AO may deem such money as income of the assessee for such financial year. It is submitted that in the case, the assessee had given the explanation to the AO regarding the nature and source of money deposited in her Bank Account during demonetization with evidence by the letter of the assessee dated 16th August 2018 addressed to the AO. It was for the AO to bring on record some cogent evidence to prove that the amount deposited by the assessee in her bank account represented undisclosed income. No such evidence had been brought on record by the AO and therefore the addition made by the AO be deleted.
8. The ld.DR on the other hand relied on the orders of the authorities below. He submitted that the assessee filed an affidavit to this effect supporting her contentions regarding inheritance of the impugned sum but not by the siblings. Moreover, there was substantial time gap between the date/year of withdrawal from bank account and the date of deposit during demonetisation period which was hard to believe. Moreover, despite availability of banking facilities, there was no justification for keeping the said amount idle in form cash.
9. We have given thoughtful consideration to the entire matrix of the case, rival submissions and materials on record. The ld.AR has drawn attention to the detailed submissions made before the ld.CIT(A) which is already narrated in the preceding paras. We find that both the lower authorities have not taken due cognizance of the evidences and explanations submitted during assessment and appellate proceedings. No infirmity was pointed out by them in the evidences in the form of cash withdrawal from bank reflected in the bank account,the e-mail communications with the siblings during demonetization period, which itself is much earlier to the case being picked for scrutiny by the AO. Such evidence could not have been be ignored with making any rebuttal by him. We agree with the ld.AR that the primary onus was already discharged by the assessee. The lower authorities did not take a holistic view of the matter involving a retired medical professional and super senior citizen who has been regularly paying due taxes to the exchequer. Merely for the fact that there was substantial time gap without pointing out any infirmity in the contentions of the assessee who also filed an affidavit to this effect and without making any effort to cross verify her contentions from the siblings, making such addition lacks any justification and is devoid of any merit.
9.1 In the light of above discussion, we allow the grounds of appeal setting aside the appellate order and directing the AO to delete the addition fully.
10. No adjudication is required on the additional ground since the entire addition made stands deleted.
11. As we have already held that the addition is unsustainable and directed the AO to delete the same, we do not find any reason to adjudicate the additional ground of appeal which has been rendered academic only.
12. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 15/04/2026.
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