Cash deposits during demonetization explained by affidavits; tax additions deleted and appeal allowed

Affidavit evidence was relied upon to explain large cash deposits made during the demonetization period, with the assessee and an elderly family member attesting that cash from lifetime savings was handed over and subsequently deposited and transferred to cooperative bank accounts; the tribunal found the documentary gaps insufficient to rebut the supplied sworn explanations and granted benefit to the assessee for remaining deposits. As a result of accepting the explanation and evidence, the additions under the income assessment were deleted and the appeal was allowed.

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Issues: Whether the addition of Rs. 9,00,500/- under section 69A of the Income-tax Act, 1961, for cash deposits during the demonetisation period is justified.

Analysis: The Tribunal considered the material placed before it including affidavits of the assessee and his mother, medical certificates and documents showing prior savings and subsequent bank transfers. The assessee's mother, a senior citizen who ran a small shop and had no bank account earlier, deposed that she had lifetime savings held in cash which were handed over to the assessee to deposit during demonetisation; the assessee filed a corroborative affidavit confirming receipt of Rs. 6,00,000 from his mother and showing that the remaining deposits were from the assessee. The Revenue authorities had earlier treated the deposits as unexplained on account of absence of substantiation during earlier proceedings. The Tribunal evaluated the affidavits and supporting documents and found them sufficient to explain the source of the cash deposits.

Conclusion: The addition under section 69A is deleted and the appeal is allowed in favour of the assessee.

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