Sunil Kumar Vij Vs ITO (ITAT Delhi)
Cash Deposits During Demonetization Explained by Prior Withdrawals – ITAT Deletes Addition u/s 69A
Delhi ITAT has held that where an Assessee substantiates cash deposits during the demonetization period with sufficient prior withdrawals, such deposits cannot be treated as unexplained u/s 69A.
Assessee, a retired Railway employee, filed his return declaring income from pension, savings bank interest & arrear salary. During assessment, AO noticed cash deposits of ₹15.35 lakh during demonetization in Assessee’s bank account with Indian Overseas Bank. When called upon to explain, Assessee submitted that deposits were from earlier withdrawals, but AO rejected the explanation & made addition u/s 69A. On appeal, Addl. CIT(A) also confirmed the addition despite detailed evidence of withdrawals being placed on record.
Before Tribunal, Assessee submitted that he had withdrawn over ₹35 lakh between May & Nov 2016, with frequent large withdrawals (₹2–4 lakh on multiple occasions). AO’s reliance on an email stating that withdrawals were “used for construction & son’s marriage” was misplaced, as the son’s marriage had not taken place till 31.12.2016, i.e., even after the demonetization period. Hence, deposits during demonetization represented redeposit of earlier withdrawals & were not unexplained.
Tribunal verified the withdrawal chart & found that Assessee indeed made large & frequent withdrawals prior to demonetization. Revenue did not dispute the existence of such withdrawals. Tribunal held that redeposit of ₹15.35 lakh was well supported by cash withdrawals of ₹35 lakh. AO’s presumption that withdrawals had been spent was not borne out by evidence. ITAT held that the cash deposits were duly explained, deleted the addition of ₹15.35 lakh u/s 69A, & allowed the Assessee’s appeal in full.
