Unexplained cash deposits during demonetisation: addition sustained where source not plausibly explained; late evidence refused.

Cash deposits during the demonetisation period require a plausible, satisfactorily supported explanation of source and accumulation; where declared pension receipts and stated income do not credibly account for deposits, the unexplained portion may be treated as taxable unexplained money and added to income. In the present matter the appellate authority accepted part of the deposits as legitimate savings but sustained an addition of the unexplained balance and refused late-filed corroborative evidence as an afterthought, thereby confirming the addition against the assessee.

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Issues: Whether the Commissioner of Income Tax (Appeals) was justified in confirming an addition of Rs. 10,66,000 as unexplained money arising from cash deposits made during the demonetisation period in the assessee's bank accounts for Assessment Year 2017-18.

Analysis: The Tribunal considered the undisputed fact of cash deposits totalling Rs. 17,92,000 made between 9/11/2016 and 31/12/2016 and the assessee's explanation that these deposits were accumulated pension receipts of the assessee and his wife over three years. The Tribunal examined the explanation's plausibility in light of the stated monthly pension amounts, the pattern of deposits and subsequent placement of funds into fixed deposits. The Tribunal noted that the CIT(A) afforded partial relief by accepting that a portion (approximately Rs. 7,20,000) could be explained as legitimate savings but sustained the balance addition of Rs. 10,66,000 on grounds that the assessee failed to satisfactorily explain the accumulation of the entire cash amount. The Tribunal also declined to admit additional evidence filed by the assessee, treating it as an afterthought without adequate justification for its late production.

Conclusion: The Tribunal upheld the CIT(A)'s confirmation of the addition of Rs. 10,66,000 as unexplained money; the assessee's appeal is dismissed and the addition stands confirmed (decision against the assessee).

Ratio Decidendi: Where an assessee makes cash deposits during the demonetisation period and fails to satisfactorily and plausibly explain the source and accumulation of such cash in light of declared income and pension receipts, the assessing authority's addition of the unexplained portion may be sustained and additional evidence filed late may be refused admission.

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