Ashwini Mysore Sathya Kumar Vs ITO (ITAT Bangalore)
CBDT Instruction No.3/2017 Shields Small Deposits from Scrutiny– Gift from Grandmother Accepted- Tribunal Deletes Addition-Student Assessee Gets Relief – ₹2 Lakh Deposit Not Unexplained Investment
Assessee, a student, had deposited ₹2 lakhs received as gift from grandmother into her bank account on 11.04.2017 & converted it into a term deposit. AO, noting that no return was filed, initiated proceedings u/s 144 & treated the deposit as unexplained investment u/s 69, relying on Operation Clean Money instructions. CIT(A) confirmed the addition, citing that AO followed CBDT’s Standard Operating Procedure.
Before ITAT, Assessee argued that total deposits were below the ₹2.5 lakh threshold mentioned in CBDT Instruction No.3/2017 (21.02.2017), where no verification is required for individuals without business income. Reliance was also placed on ITAT Bangalore decision in ITA No.953/Bang/2024 (20.06.2024).
Tribunal held that since the assessee’s deposits were less than ₹2.5 lakhs, initiation of scrutiny itself was contrary to CBDT’s instruction. Therefore, both AO & CIT(A) erred in sustaining the addition. The addition of ₹2 lakhs was directed to be deleted in full.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. This appeal is filed by Ashwini Mysore Sathya Kumar (the assessee/appellant) for the assessment year 3027-28 against the appellate order passed by the CIT(Appeals)-1, Guwahati [ld. CIT(A)] dated 27.5.2025 wherein the appeal filed by the assessee against the assessment order passed u/s. 144 of the Income-tax Act, 1961 [the Act] dated 17.12. 2019 by the ITO, Ward 5(3)(2), Bangalore [ld. AO] was dismissed, wherein the learned assessing officer made an addition of rupees to lakhs.
