Sicily Paul Vs ITO (ITAT Cochin)
The Income Tax Appellate Tribunal (ITAT), Cochin Bench, has allowed an appeal filed by Sicily Paul, an individual assessee, against an addition of ₹12.29 lakh made by the Income Tax Officer (ITO) during the demonetisation period. The ITAT’s ruling sets a precedent for cases where the source of cash deposits is a plausible explanation, even with a time gap between withdrawal and deposit.
The case, Sicily Paul vs. ITO, involved a cash deposit of ₹12.29 lakh made by the appellant during the demonetisation period of 2016. When questioned by the Assessing Officer (AO), the appellant explained that the cash came from two sources: personal savings from her pension and a significant sum left with her by her son-in-law, a non-resident Indian, for house construction. She provided proof that her son-in-law had withdrawn money from his Non-Resident External (NRE) account in August and September 2016.
The AO, however, rejected this explanation, making a full addition of the deposited amount to her income. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision, citing an “inordinate delay” between the withdrawal of the money and its deposit. The CIT(A) concluded that the withdrawn funds could have been used for other purposes, rejecting the appellant’s explanation without any supporting evidence.
