Demonetization Cash Addition Deleted as ITAT Accepts NRI Remittance Explanation

Arun BUSSI Vs ACIT (ITAT Delhi)

The case before the Income Tax Appellate Tribunal Delhi involved two interconnected appeals arising from orders passed under Section 250 of the Income Tax Act, 1961. The primary issue concerned an addition of ₹11,18,500 made by the Assessing Officer on account of cash deposits during the demonetization period in November–December 2016. The assessee, a non-resident Indian residing in the United States, explained through an affidavit that the deposited amount represented accumulated cash given to his aged parents over several years through remittances and personal visits to India. The funds were reportedly withdrawn from his US bank account, brought to India during visits between financial years 2013–14 and 2016–17, and retained by his parents for their needs. During his visit to India in November–December 2016, the assessee deposited the unutilized cash lying with his parents into his bank account due to demonetization.

The Assessing Officer rejected the explanation and treated the deposit as unexplained income. The assessee contended that sufficient evidence had been provided, including money transfer receipts, bank statements, and passport records, demonstrating the source and movement of funds. It was also argued that neither the assessee nor his family had any income source in India except bank interest, and therefore the explanation of foreign remittances was credible. Additionally, in a connected appeal, the assessee challenged the application of Section 115BBE for taxing the addition at a higher rate, asserting that the provision was introduced from 01.04.2017 and was debatable in its applicability.

Upon examining the submissions and evidence, the Tribunal held that the overall facts supported the assessee’s explanation. It observed that the funds were likely derived from disclosed sources, namely remittances from abroad, and that the parents, being senior citizens, could not be expected to maintain precise records of accumulated cash. The Tribunal also noted that the Assessing Officer had not identified any alternative source of income for either the assessee or his parents.

In light of these findings, the Tribunal granted the benefit of doubt to the assessee and directed deletion of the addition of ₹11,18,500. Consequently, the related appeal concerning taxation under Section 115BBE did not survive and required no further adjudication. Both appeals were allowed in favour of the assessee, and the order was pronounced on 08.04.2026.

FULL TEXT OF THE ORDER OF ITAT DELHI

This is a batch of two appeals pertaining to the same assesse. Since the issues are interconnected, these two cases are being disposed of through a common order. While ITA No.231/Del/2021 emanates from order u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), dated 20.11.2020 passed by Ld. CIT(A), Delhi-42, the appeal in ITA 2171/Del/2023 arises from order u/s 250 of the Act dated 01.06.2023. While ITA 231/Del/2021 is the substantive appeal, ITA 2171 is an appeal against an order of AO u/s 154 of the Act.

2. On the last date of hearing, the Ld. AR pointed out the facts of the case and extensively referred to an affidavit dated 05.01.2024 filed by the assesse, who is residing abroad as a US citizen. For the sake of catching the facts some portions from this affidavit may be extracted: –

“4. The issue involved in these proceedings is my deposit of cash during demonetization period amounting to Rs.11,18,500/- in my Bank Account in India (Saving Bank Account Number 28601075302), ICICI Bank, Jor Bagh Branch New Delhi), the detail of which as below:-

It is submitted that I am staying and working in USA and my parents NOTAR are staying in India, both are senior citizen and are under regular GEORGIA medical treatment including having heart surgery and I have been giving money to them from time to time for their needs since 2006. The evidence for giving this money is money transferred from USA through Moneygram (Receipt attached) and I have withdrawn money from my bank account in USA and brought this money with me at different dates of my various visits to India. Proof of withdrawing money from bank in USA (bank statement) and proof of visit to India (copy of Passport) are attached. I had submitted the source of such deposits of having brought money to India during my number of visits during the period 2014-15, 2015-16 and 2016-17 during assessment proceedings and this money was kept with my parent’s which was given to them for their needs. The said money had accumulated in number of years. My parents who are senior citizen and the need of money is required for their sudden needs. I have moral duty towards my aged parents.

6. I visited India in F.Y.2016-17 with dated of arrival 19/11/2016 and date of departure 04/12/2016. During my visit to India I found that unutilized cash amounting to Rs.11,18,500/- was lying with my parents out of the money given to them by me from time to time. Due to the Government Scheme of Demonetization, I had deposited the said amount of Rs.11,18,500/- in my saving bank account as stated above.

During the assessment proceedings the source of cash was provided to Ld. AO but the same was not accepted. AO in one of the reason as stated in the assessment order had stated that in my salary slip in USA placed on record, my designation in job is not defined, whereas the said document contains my designation copy annexed is made part of this Affidavit.

7. It is submitted that I am NRI living in USA with my family and has no source of Income either business or other income in India except OTARY Interest on Bank account. Neither I nor my wife or my children EORGIA reside in India and have no occasion to earn any amount in India thus, there is a valid explanation given for my money lying in cash in the house with my old parents, the source of which had been explained as having brought this money from USA during my number of visits and the transfer through Moneygram and the balance lying with parents amounting to Rs.11,18,500/-deposited in my saving bank account. The deposited money has been brought to India during the F.Y.2013-14, 2014-15, 2015-16 and 2016-17 and the date of my visit are also reconciled with my passport for which the same as an evidence to this effect of my arrival in India. As such there is no reason with AO not to accept my genuine explanation keeping in view my records of visit/staying in India for normal periods.

8. I have deposited this amount Rs.11,18,500/- in my bank account personally when I was in India from 19/11/2016 to 04/12/2016.”

2.1 The Ld. AR argued that considering the facts and circumstances of the case there was no reason why the Ld. AO would disbelieve the assesse when he stated that an amount of Rs.11 ,18,500/- was available with the aged parents of the assesse, out of amounts sent to them routinely from US and the same needed to be deposited in the bank account during demonetization.

2.2 Regarding the appeal no 2171 it was stated that the Ld. AO applied the provisions of section 115BBE of the Act to tax the impugned addition at enhanced rate of taxation. It was averred that this was a debatable issue considering that the said provision itself had been introduced form 01.04.2017 only.

3. The Ld. DR relied on the orders of the authorities below.

4. We have carefully considered the submissions of Ld. AR/DR and we have perused the documents before us, including the affidavit filed by the assesse. After considering the entire gamut of facts and circumstances of this case, it is felt that the benefit of presumption has to be given to the assesse since the totality of facts would suggest that the impugned amount would be from disclosed sources and aged parents would not be expected to be alert about maintaining proper records of the money available with them. We find that the Ld. AO has not indicated any other source of income, except the remittances from abroad, of the parents or even of the assesse. In light of this the assessee deserves relief on the impugned addition, which is directed to be deleted.

4.1 Regarding ITA No.2171, since the quantum addition has been deleted, hence, this appeal would not survive for any further adjudication.

5. In the result, both the appeals of the assesse are allowed.

Order pronounced in the open court on 08.04.2026