ITAT Deletes Cash Deposit Addition; Source Linked to Property Sale Advance received by father

Aashish Luthra Vs ITO (ITAT Mumbai)

The case of Aashish Luthra vs. ITO, heard at the ITAT Mumbai, revolves around the addition of cash deposits made into the assessee’s bank account during the assessment year 2006-07. The Assessing Officer (AO) raised concerns based on AIR information, prompting the reopening of the assessment under section 147 of the Income Tax Act, 1961.

The AO contended that the entire cash deposits of Rs. 25,98,250/- should be treated as undisclosed income of the assessee under section 68 of the Act. However, the assessee argued that a portion of the deposits was made by the father from his own funds, substantiated by an affidavit admitting the source as advance proceeds from a property sale and tenancy rights transfer.

The CIT(A) partially upheld the addition, restricting it to 1/3rd of the deposits based on the premise that the joint account held by the assessee with his mother and father implied shared ownership and responsibility.

Upon review, the ITAT observed that the assessee had sufficient funds reflected in the financial statements for the year ended 31.03.2005 to account for the deposits made until the date of his departure from India. Furthermore, the affidavit provided by the father corroborated the source of the remaining deposits.

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