Cash deposit addition during demonetisation reduced where agricultural income and savings plausibly explained the bank deposits.

Cash deposits in the assessee's bank account during the demonetisation period were explained by agricultural income, past savings, low household expenditure and ownership of agricultural land. Land records supported cultivation, and the possibility of agricultural receipts and accumulated savings could not be excluded. Considering these surrounding circumstances, including the assessee's age, widowhood, absence of family support and agricultural background, the ITAT further moderated the addition. The addition, which had already been restricted by the first appellate authority, was reduced to 25% of the cash deposits and the balance was deleted, resulting in partial relief to the assessee.

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Issues: Whether the addition made on account of cash deposits in the assessee's bank account during the demonetisation period was to be sustained in full, partly sustained, or deleted.

Analysis: The assessee relied on agricultural income, past savings, low household expenditure, and ownership of agricultural land to explain the deposits. The land records showed cultivation, and the possibility of agricultural income and accumulated savings could not be ruled out. The previous appellate authority had already restricted the addition to 50% of the deposits, but the surrounding circumstances, including the assessee's age, widowhood, absence of family members, and agricultural background, justified further moderation of the addition.

Conclusion: The addition was reduced to 25% of the cash deposits and the balance was directed to be deleted; the appeal was partly allowed in favour of the assessee.

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