Nathabhai Parsana Vs ACIT (ITAT Rajkot)
The Income Tax Appellate Tribunal (ITAT) Rajkot heard an appeal filed by the assessee challenging additions made in the assessment year 2017-18. The original assessment was framed by the Assessing Officer (AO) under section 143(3) of the Income Tax Act, 1961, on 1 December 2019, and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)] through an order under section 250, dated 2 August 2023. The main grievance concerned cash deposits made during the demonetization period, which the AO had added to the assessee’s taxable income under section 69A read with section 115BBE.
The assessee, an individual, had declared total income of Rs.40,390 in the return filed on 4 August 2017, which was processed under section 143(1). The case was selected for limited scrutiny under the Centralized Scrutiny Selection (CASS) system due to large cash deposits made during demonetization in comparison to the declared income. Notices under sections 143(2) and 142(1) were issued, and the assessee responded by providing details through the e-filing portal.
The AO observed that the assessee had deposited Rs.37,65,000 in cash during demonetization. The assessee explained that these deposits were from proceeds of immovable property sales worth Rs.2,79,36,000 during FY 2014-15, out of which Rs.2,70,86,000 had been received in cash. The assessee stated that this cash had not been deposited in the bank in FY 2014-15 and 2015-16 and was available on hand as of November 2016, of which Rs.37,65,000 was subsequently deposited during demonetization. The assessee also provided the opening cash balance as per tax audit records to substantiate the deposits.
