The Jodhpur Bench of the Income Tax Appellate Tribunal(ITAT) has held that cash deposited by a 77-year-old age assessee looking to save for old age holding cannot be added under section 68 of the Income Tax Act, 1961. Aayodhya Jajra, the appellant e filed the return of income for the assessment year in ITR-1 declaring a total income of Rs. 4,10,500/- The case was selected for scrutiny under CASS. The first notice under section 143(2) of the Act was issued on 13.08.2018. Thereafter the fresh notices under section 142(1) of the Act were issued and the assessee was requested to furnish relevant details/information electronically through E-filing mode. The source of the cash deposit of Rs. 11,00,000/- comes out from cash in hand, a complete copy of narration of each entry for AY. 2017-18 enclosed. Opening cash balance as of 01/04/2016 was Rs. 09,50,597/- and thereafter added the income as per details, cash.

The contention of the assessee is beyond any imagination. The assessee claims to earn this amount from menial tasks like tailoring and stitching which are generally not paid this much also the assessee claims to have accumulated years of Income in his hand and has not book, then out of cash in Hand, cash was deposited in the demonetization period, which is verifiable from the cash book also. The assessing officer was not satisfied with the explanation of the assessee and the records produced by the assessee. The  AO noted that the explanation of the assessee was not satisfactory and contradictory therefore, the assessee was issued another notice invoking the provision of section 145(3) of the Act in response to that notice the assessee submitted a justification of cash balance cashbook. The assessee submitted that she has been filing returns since 1998 wherein the nature of income is already shown as tailoring. All the contention of the assessee is not considered on merits and the  AO based on the cash book not accepting the source of income and considering the aspect of the matter that various other family members have also deposited heavy cash during the demonetisation and therefore on the similar line the deposit of cash of ₹11,00,000 in the hands of the assessee not considered as genuine and the same was treated as unexplained within the provision of section 68 of the Act.  The case was selected for scrutiny under CASS. The case was selected for scrutiny under section 143(3) of the Act by CASS and the type of scrutiny was “limited” and the issues identified for examination per notice under section 143(2) were “cash deposit during demonetisation period”. The assessing officer was not satisfied with the explanation of the assessee and the records produced by the assessee.

A two-member bench of Dr S Seethalakshmi, Judicial Member & Shri Rathod Kamlesh Jayantbhai, Accountant Member observed that the assessee is 77 years age and looking to the old age holding the cash out of the accumulated savings to the extent of Rs. 9,50,597/- cannot be doubted. The court viewed that the assessee has deposited cash into her bank account for an amount of Rs. 11,00,000/- cannot be added as unexplained income under section 68 of the Act for the year under consideration and directed to delete the addition made in hands of the assessee. While allowing the appeal, the ITAT directed to delete the addition made in the hands of the assessee.