2025 (6) TMI 1041 - AT - Income Tax

Cash Deposits During Demonetization Upheld as Legitimate Household Savings Based on Income and Official Guidance

ITAT Ahmedabad allowed taxpayer's appeal regarding unexplained cash deposits during demonetization. Referencing CBDT Instruction No.3/2017, the tribunal ... Addition of unexplained money u/s.69A - unexplained cash deposits - HELD THAT:- As assessee has deposited cash in his bank account during the Demonetization period. We have gone through the instruction No.3/2017 of CBDT dated 21.02.2017, wherein it was advised to fill information in the case of an individual not having any business income an amount upto Rs. 2,50,000/- may be treated as household savings. In this case, the assessee is also having commission income from Gas Agency and the total deposits were to the tune of Rs. 2,82,500/-. Owing to the overall facts that money earned out of Gas Agency represents the entire cash deposits and keeping view the smallness of amount, we have no hesitation to say that assessee could have had Rs. 2,82,500/- as cash in hand. Hence, the same cannot be treated as undisclosed income of the assessee. Appeal of the assessee is allowed. The Appellate Tribunal (ITAT Ahmedabad), per Dr. B.R.R. Kumar, Vice-President, allowed the assessee's appeal against the CIT(A)'s order for AY 2017-18. The issue concerned the addition of Rs. 2,82,500/- under Section 69A as unexplained cash deposits during the Demonetization period. The Tribunal referenced CBDT Instruction No.3/2017, which permits treating amounts up to Rs. 2,50,000/- as household savings for individuals without business income. Noting the assessee's commission income from a Gas Agency and the modest amount involved, the Tribunal held that 'the assessee could have had Rs. 2,82,500/- as cash in hand,' and thus the addition could not be sustained as undisclosed income. The appeal was accordingly allowed.