Top Stories Cash Deposit received from Mother as Gift during demonetization period properly Explained: ITAT deletes Addition u/s 69A [Read Order] The primary liability on the assessee is to prove the source of the fund and he proved the same. By Aiswarya Krishnadas – On March 13, 2024 5:28 pm – 2 mins read The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled in favor of the taxpayer, overturning the addition made under section 69A of Income Tax Act, 1961. The tribunal found that the cash deposit, received as a gift from the taxpayer’s mother during the demonetization period, was adequately accounted for. In the case, the assessment order was issued under section 143(3) by the Income Tax Officer, International Taxation, Ward-2(1), Bangalore, adding Rs. 25,00,000/- to the taxpayer’s Vijaya Bank Account as a deposit of Specified Bank Notes ( SBN ) during demonetization. The taxpayer appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], challenging both the legal grounds and the merits of the addition under section 69. However, the CIT(A) upheld the assessing officer’s decision.

Mr. Annamalai, representing the taxpayer, submitted that sufficient evidence had been provided to explain the nature and source of the cash deposits, thus warranting deletion of the addition by the CIT(A). Moreover, it was contended that the CIT(A) incorrectly upheld the application of a 60% tax rate under Section 115BBE, which applies only to transactions occurring after 15/12/2016, not to those prior to that date. On the other hand, the revenue’s counsel, Mr. Ganesh R Ghale, contended that there were insufficient sources for the Rs. 25,00,000/- deposited during demonetization, accusing the taxpayer of fabricating explanations to evade taxes. The tribunal observed that the taxpayer had adequately explained the source of the bank deposit, shifting the burden of proof to the department. It emphasized the need for an unbiased inquiry by tax authorities into the genuineness of the funds, cautioning against arbitrary rejection of the taxpayer’s explanation. A single-member bench of Chandra Poojari (Accountant member), concluded that the addition made by the assessing officer could not be upheld as the assessee clearly provided the explanation of the cash deposit. The ITAT determined that the Rs. 25,00,000/- deposit into the taxpayer’s bank account had been properly explained, leading to the deletion of the contested addition. As a result, the taxpayer’s appeal was allowed.