Ullattil Sillu Vs ITO (ITAT Cochin)
Interval between date of cash withdrawal & deposit in bank does not warrant addition: ITAT Cochin
The case of Ullattil Sillu vs. ITO (ITAT Cochin) concerns the treatment of cash deposits made during the demonetization period. The assessee had filed a return declaring an income of Rs. 2,83,130, but the Assessing Officer (AO) added Rs. 2,42,000 as unexplained money, claiming that the deposits made into the bank were not substantiated. The assessee explained that the deposits were sourced from cash withdrawals made on August 5, 2016, amounting to Rs. 3,03,000. However, the AO rejected this explanation, citing a 106-day gap between the withdrawal and subsequent deposit. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee’s appeal ex parte, leading to a further appeal before the Income Tax Appellate Tribunal (ITAT) Cochin.
Upon review, the Tribunal found that the AO did not dispute the fact that the deposits originated from prior withdrawals. Instead, the AO rejected the explanation solely based on the time gap. The ITAT held that in the absence of any evidence showing that the withdrawn amount was used elsewhere, it should be considered available for later deposit. The Tribunal also cited CBDT Circular No.3 of 2017, which states that cash deposits below Rs. 2.5 lakh during demonetization need no further scrutiny. Based on these findings, the ITAT ruled in favor of the assessee and allowed the appeal, concluding that the addition made by the AO was unwarranted.
