ITAT overturns CIT(A) order on cash deposit addition during demonetization

The ITAT allowed the appeal filed by the assessee, overturning the CIT(A) order confirming the addition of Rs. 2,00,000 for cash deposits during demonetization. The ITAT found the sustained addition unjustified as the assessee had already deducted Rs. 2,92,870 for household expenses, leading to the deletion of the Rs. 2,00,000 addition.

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Issues:
Appeal against CIT(A) order confirming addition of cash deposits during demonetization period.

Analysis:
The appeal was filed against the CIT(A) order confirming the addition of Rs. 2,00,000 being the amount deposited in cash in bank accounts during demonetization. The assessee contended that the addition was made on whims and fancies without any basis and should be deleted. The AR submitted that some deposits were made from earlier cash withdrawals kept with the assessee's brother. The CIT(A) appreciated the facts, allowed the claim, and restricted the addition to Rs. 2.00 lacs, considering household expenses. The AR argued that the assessee had already deducted Rs. 2,92,870 for household expenses, making the sustained addition unjustified. The DR argued against further relief, noting that substantial relief had already been granted.

The ITAT examined the case and found that a total addition of Rs. 17,57,130 was made by the Assessing Officer. The assessee explained the sources of cash deposits, including receipts from the brother and withdrawals from the bank account. The CIT(A) acknowledged the submissions but upheld an addition of Rs. 2.00 lacs, assuming household expenses. However, the ITAT observed that the assessee had already reduced Rs. 2,92,872 for household expenses from the cash position on 18.11.2016. Consequently, the further sustenance of Rs. 2.00 lacs for assumed household expenses was deemed unjustified, leading to the deletion of the same. As a result, the appeal filed by the assessee was allowed, overturning the CIT(A) order.

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