ITAT Deletes Cash Deposit Addition of ₹25.25 Lakh for Illiterate Agriculturist accepting Them as Own Account Redeposits [Read Order]

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The Chandigarh Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the cash deposit addition of ₹25.25 lakh for an illiterate agriculturist, accepting the deposits as redeposits from his own accounts.

Labh Singh,appellant-assessee,was an illiterate agriculturist from a remote village. His assessment was reopened under section 147, and ₹25,25,000 in cash deposits was found in his bank account. As he did not respond to notices, the assessment was completed ex-parte under section 144, treating the deposits as undisclosed income. The Commissioner of Income Tax (Appeals)[CIT(A)],confirmed the addition due to lack of evidence.

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The assessee counsel stated that the cash deposits were not income but redeposits of money withdrawn from the assessee’s own accounts. He explained that withdrawals from the SBI account in 2010 and 2011 were partly redeposited in the Sarva Haryana Gramin Bank, and bank statements were filed to support this.

Being illiterate and facing difficulties during the COVID-19 pandemic, the assessee could not provide certified copies or attend hearings properly, and it was requested that the matter be remanded for verification.

The Departmental counsel argued that the assessee failed to provide certified bank copies or evidence of land compensation despite multiple opportunities. He added that the pandemic could not excuse non-compliance, and the CIT(A)’s confirmation of the addition required no interference.

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A single member bench of Laliet Kumar (Judicial Member) reviewed the submissions and records. It found that Rs. 36,38,041 was credited to the assessee’s account on FDR maturity, and withdrawals and subsequent deposits into Sarva Haryana Gramin Bank were clearly shown in the bank statements.

Despite the Revenue claiming the statements were unreadable, they sufficiently explained the source of deposits. Documents ignored by the Revenue were readable, making the rejection baseless. The alleged failure to show HUDA compensation was irrelevant as the amounts were reflected in the bank.

The tribunal held that the lower authorities erred in making the addition. The CIT(A)’s order was reversed, the additions by the AO were deleted, and the assessee’s appeal was allowed.