Yogini Sureshkumar Shukla Vs ITO (ITAT Ahmedabad)
Summary: ITAT Ahmedabad allowed the assessee’s appeal for AY 2017-18 and deleted the entire addition of Rs.10,60,000/- made on account of cash deposited in her bank account during the demonetisation period. The assessee had filed her return on 24.03.2018 declaring total income of Rs.2,67,040/-. Her case was selected for scrutiny under CASS, and the Assessing Officer, being dissatisfied with the explanation regarding the source of cash deposits of Rs.10,60,000/-, treated the deposits as unexplained and completed the assessment under section 143(3) on 31.10.2019 at total income of Rs.13,27,040/-. The Addl./JCIT(A) dismissed her first appeal. Before the Tribunal, the assessee challenged the addition of Rs.10,60,000/- as unexplained money under section 69A, the computation of tax at 60% under section 115BBE, and initiation of penalty proceedings under section 271AAC(1).
The assessee explained that she was a senior citizen residing alone in Ahmedabad and that both her sons were residing in the USA. Her husband had expired on 15.10.2016. After his death, she came to know about a joint bank account held with him, from which she withdrew Rs.2,50,000/- and retained the amount in cash. She explained that, being a widow and senior citizen living alone in India and not conversant with banking transactions, she preferred to keep cash with herself. Her two sons also gave her cash during their visits to India for personal expenses and repairs to the house. According to the assessee, the cash deposited during demonetisation represented her past savings, withdrawals from bank accounts and gifts received from her sons. The Revenue contended that there was no nexus between the earlier cash withdrawals and the subsequent deposits and that the alleged cash gifts from the sons were not substantiated.
The Tribunal held that the explanation had to be examined having regard to the totality of the surrounding circumstances rather than by insisting on a one-to-one correlation between each earlier withdrawal and the subsequent cash deposit. The withdrawal of Rs.2,50,000/- from the joint bank account after the death of the assessee’s husband was supported by the bank transaction and constituted an identifiable source of cash. The Assessing Officer had denied credit merely because of the absence of proximity between withdrawal and redeposit, even though the withdrawal itself was undisputed. The Tribunal also noted that availability of cash from the deceased husband’s savings and the assessee’s own savings could not be ruled out, particularly as she was a retired teacher. Further, the assessee had withdrawn Rs.2,75,000/- from her own bank account during the year, a fact not controverted by the Assessing Officer.
Regarding Rs.5,60,000/- stated to have been received from the assessee’s two sons, confirmations were placed on record showing cash gifts of Rs.3,00,000/- and Rs.2,60,000/- respectively. Evidence also showed that both sons had visited India during the relevant year, and the Tribunal therefore found that the claim of cash gifts was not unfounded. It further observed that the assessee was not engaged in any business generating unexplained cash and that no material had been brought on record to establish that the deposits represented undisclosed business receipts or any other identifiable undisclosed source. Her explanation was consistent with the surrounding circumstances and supported by bank records and other documentary evidence; it could not be rejected merely because documentary evidence was unavailable for every component of accumulated cash. Considering her status as a senior citizen and widow living alone, identifiable withdrawals, accumulated savings, gifts from her sons and the absence of evidence of an alternative undisclosed source, the Tribunal accepted the explanation, deleted the Rs.10,60,000/- addition and allowed the grounds taken by the assessee. Consequently, the appeal was allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT AHMEDABAD
This appeal is filed by the Assessee against the order of Addl/JCIT (Appeal)-1, Ludhiana [hereinafter referred to as “Addl. CIT(A)”] dated 18.11.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 143(3) of the Income Tax Act [hereinafter referred as “the Act”].
2. The brief facts of the case are that the assessee had filed her return of income for A.Y. 2017-18 on 24.03.2018 declaring total income of Rs.2,67,040/-. The case was selected for scrutiny under CASS. In the course of assessment, the AO had noticed that assessee had made cash deposit of Rs.10,60,000/- in her bank account during the demonetization period. The AO was not satisfied with the explanation of the assessee regarding the source of the cash deposits. Accordingly, the source of cash deposits made during the demonetization period was treated as unexplained and added to income. The assessment was completed u/s. 143(3) of the Act on 31.10.2019 at total income of Rs.13,27,040/-.
3. Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority which was decided by the Ld. Addl. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.pa
4. Now, the assessee is in second appeal before us. The following grounds have been taken in this appeal:
1. Addition of Rs. 10,60,000/- on account of Unexplained Money u/s 69A:
On facts and in the circumstances of the case and in law, the Ld. Addl/JCIT by confirming the order passed by the Ld. AO has grossly erred in making addition of Rs. 10,60,000/- to the income of the appellant on account of considering the unexplained money u/s. 69A.
2. The Ld. AO passed order calculating tax @ 60% as per section 115BBE of the Income Tax Act.
On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in calculating tax @ 60% as per section 115BBE of the Income Tax Act for Asst.Year 2017-18. The tax rate for the Asst.Year 2017-18 was 30% as per section 115BBE of the Act.
3. Initiating penalty proceeding u/s. 271AAC(1) of the Act:
On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in initiating the proceedings for levy of penalty u/s 271AAC(1) of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated.
5. Ms. Vidhi V. Pandya, the Ld. AR of the assessee submitted that the assessee is a senior citizen residing alone at Ahmedabad. Both his sons are residing in USA. The husband of the assessee had expired on 15.10.2016. After the expiry of her husband, the assessee came to know about a joint account of the husband along with her. She had withdrawn Rs. 2,50,000/- from the said joint account and kept the cash with herself. The Ld. AR explained that the assessee being a widow, senior citizen and staying alone in India, was not conversant with the banking transactions and preferred keeping the cash with herself. Further, the two sons of the assessee also used to give her cash on their visits to India for her personal expenses as well as for repair of the house. The Ld. AR explained that the cash available with the assessee out of her past savings, withdrawal from the bank accounts and the gifts received from the two sons were re-deposited in the bank account at the time of demonetization. She submitted that considering the explanation of the assessee the AO was not correct in treating the source of the cash deposits in the bank account as unexplained.
6. Per contra, Shri Rakesh Rathi, the Ld. SR-DR supported the order of lower authorities. He submitted that there was no nexus between the cash withdrawals and re-deposit thereof in the bank account during demonetization period. Further, the explanation of the assessee regarding cash gifts from the two sons was also unsubstantiated.
7. We have considered the rival submissions. The explanation of the assessee has to be examined having regard to the totality of the surrounding circumstances rather than insisting upon a one-to-one correlation between every earlier withdrawal and the subsequent cash deposit. In the present case, the assessee is admittedly a senior citizen and a widow residing alone. The assessee has explained the circumstances in which she came to hold cash with herself. The fact that a sum of Rs.2,50,000/- was withdrawn from the joint bank account after the demise of her husband is supported by the bank transaction relied upon by the assessee. Such withdrawal constitutes an identifiable source of cash available to the assessee. The AO did not allow benefit of re-deposit of this amount in the bank account during demonetization period for the reason that there was no proximity between the withdrawal and re-deposit thereof. As explained by the assessee she was a senior citizen and living alone in India. The fact that the cash of Rs. 2,50,000/- was withdrawn from the joint account is not under dispute. Therefore, the AO was not correct in disallowing benefit to re-deposit of this amount in the bank account. Further, the cash being available out of the savings of the deceased husband of the assessee as well as her own savings (the assessee being a retired teacher) was not ruled out. Similarly, the assessee had also withdrawn cash of Rs. 2,75,000/- from her own bank account during the year itself and this fact has also not been controverted by the AO.
8. As regarding sum of Rs. 5,60,000/- received from her two sons, the assessee had brought on record a confirmation of the two sons whereby they had confirmed having made cash gift of Rs. 3,00,000/- and Rs. 2,60,000/- respectively to her mother at the time of their visit in India. From the evidences brought on record, it is found that the two sons had also visited India during the year and, therefore, the claim of the assessee regarding cash gift from them was not unfounded. Considering the explanation of the assessee and the evidences as brought on record, the AO was not correct in treating the source of cash deposit of Rs. 10,60,000/- in the bank account of the assessee as unexplained. The assessee is not engaged in any business involving generation of unexplained cash. There is also no material brought on record to indicate that the cash deposits represented any undisclosed business receipts or any other identifiable source of undisclosed income. The explanation furnished by the assessee is consistent with the circumstances stated by her and supported by the available bank records and other documentary evidences which cannot be rejected merely because documentary evidence is not available for every component of the accumulated cash. In the circumstances, considering the assessee’s status as a senior citizen and widow residing alone, the identifiable cash withdrawals, the explanation regarding accumulated savings, gifts from sons and the absence of any material establishing an alternative undisclosed source of the deposits, we are of the view that the explanation furnished by the assessee merits acceptance. Accordingly, the addition of Rs.10,60,000/- on account of unexplained cash deposit in the bank account is deleted and the grounds taken by the assessee are allowed.
9. In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 09/09/2026 at Ahmedabad.
