Case Law Details
R. Raju Vs ITO (ITAT Chennai)
The assessee has explained cash deposits made during the demonetization period out of amount received from maturity of fixed deposits in SBI and Canara Bank. The assessee had also furnished necessary evidence before the AO and argued that, he had received a sum of Rs. 10,29,337/-towards maturity of insurance policy from Reliance Insurance. He had withdrawn cash out of its known source of income and re-deposited during demonetization period when the old currency notes of Rs. 500 and Rs. 1000 have been withdrawn from circulation. We find that, the AO as well as CIT(A) never disputed fact that the assessee has furnished necessary evidence with regard to maturity proceeds of fixed deposits and insurance policy. However, disregarded evidence filed by the assessee only for the reason that cash has been deposited during demonetization period. In our considered view, even during demonetization period cash deposits can be accepted, if source is explained to cover up said cash deposits. In this case, since the assessee has established source for cash deposits out of known source of income, in our considered view, the CIT(A) ought to have accepted explanation furnished by the assessee and deleted addition sustained to the extent of Rs. 3,13,000/-. Hence, we direct the AO to delete addition towards cash deposits amounting to Rs. 3,13,000/-, because the assessee has explained source for cash deposits.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order passed by the learned CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 02.09.2022 and pertains to assessment year 2017-18.
2. The brief facts of the case are that, the assessee is an individual, filed his return of income for the assessment year 2017-18 on 01.08.2017, admitting total income of Rs. 5,12,000/-. The case was selected for limited scrutiny under CASS to verify large value cash deposits during the demonetization period as compared to returned income. During the course of assessment proceedings, the assessee explained before the AO, that source for cash deposits is out of maturity proceeds of fixed deposits in SBI, and also amount withdrawn out of maturity proceeds of insurance policy. The assessee had explained that the account is held with joint name along with his wife and she had deposited a sum of Rs. 7,50,000/- out of her source. The AO, however was not convinced with the explanation furnished by the assessee and according to AO, except to the extent of income returned in the impugned assessment year amounting to Rs. 5,12,000/-, the assessee could not explain source of balance cash deposit. Therefore, the AO addition towards cash deposits as unexplained money u/s 69A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
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