Unexplained cash deposits during demonetisation remanded for fresh verification of fee-collection explanation and supporting records.

Cash deposits in specified bank notes during demonetisation were alleged to be unexplained money of an assessee trust running educational institutions. The trust claimed the deposits represented student fee collections supported by books of account and related records. As that explanation had not been examined on its merits by the Assessing Officer, and the first appellate authority had confirmed the addition without verification, the ITAT remanded the matter for fresh consideration. The Assessing Officer was directed to examine the veracity of the explanation on the basis of records and evidence to be produced, so the addition was not finally sustained.

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Issues: Whether the cash deposits in specified bank notes during the demonetisation period were rightly treated as unexplained money of the assessee trust.

Analysis: The assessee trust, running educational institutions, explained that the cash deposits represented fee collections from students and relied upon the books of account and related records. The explanation had not been examined by the Assessing Officer on its merits, as the matter was confirmed by the first appellate authority without such verification. The Tribunal found it appropriate to restore the matter to the Assessing Officer for examination of the veracity of the explanation on the basis of records and evidence to be produced.

Conclusion: The addition was not finally sustained and the issue was remanded to the Assessing Officer for fresh consideration.

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