2024 (4) TMI 1295 - AT - Income Tax

ITAT reduces Rs.4.5 lakh addition under Section 69A on cash deposits after considering bank statements and savings

ITAT Pune reduced the addition under section 69A related to cash deposits in Dena Bank from Rs.14.5 lakhs to Rs.10 lakhs, acknowledging the assessee's ... Addition u/s 69A - cash deposits made in Dena Bank - HELD THAT:- As both the learned lower authorities have held the assessee to have failed in filing reasonable explanation attributing the source of the impugned cash deposits. The fact however remains that they have nowhere considered the assessee’s explanation quoting various bank statement(s) and accumulated past savings in the preceding assessment years. We deem it appropriate that a lump sum addition of Rs.10 lakhs only out of Rs.14.50 lakhs would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets relief of Rs.4.5 lakhs in otherwords. Necessary computation shall follow as per law. ISSUES: Whether the addition of cash deposit under section 69A of the Income Tax Act, 1961 is justified when the assessee fails to satisfactorily explain the source of such deposit.Whether the principle of natural justice was violated in confirming the addition without considering the assessee's submissions and evidence.Whether the quantum of addition made under section 69A should be adjusted considering partial explanation and evidence submitted by the assessee. RULINGS / HOLDINGS: The addition of Rs. 14,50,000/- as unexplained money under section 69A was upheld by the assessing officer and the appellate authority on the ground that the assessee failed to provide a satisfactory explanation or supporting documents for the source of the cash deposit during the demonetization period.The appellate tribunal found that the lower authorities did not duly consider the assessee's explanation regarding accumulated past savings and bank statements, and accordingly reduced the addition to Rs. 10,00,000/- with a rider that this adjustment shall not be treated as precedent.There was no finding of violation of natural justice; however, the tribunal exercised discretion to partly allow the appeal by reducing the addition based on the assessee's partial explanation and submissions. RATIONALE: The legal framework applied includes section 69A of the Income Tax Act, 1961, which permits treating unexplained cash deposits as income if the assessee fails to satisfactorily explain the source.The assessing officer relied on the 'human probability test' and precedents from the Supreme Court (Roshan Di Hatti vs. CIT and Kale Khan Mohammad Hanif vs. CIT) establishing that unexplained receipts can be treated as income.The tribunal recognized the assessee's submissions of accumulated past savings and medical expenses but noted the absence of corroborative bank statements for previous years, leading to a partial reduction in addition.This decision reflects a discretionary and fact-specific approach to the quantum of unexplained money additions, balancing strict application of section 69A with consideration of partial evidence.