2025 (8) TMI 282 - AT - Income Tax

Assessee's appeal allowed under unexplained cash deposits rule; gold loan for dairy business explained as source

The ITAT Chandigarh allowed the appeal of the assessee regarding unexplained cash deposits during the demonetization period. The assessee satisfactorily ... Unexplained cash deposits during demonetization period - Assessee explained before the AO that the source of said amount was gold loan taken by the Assessee to start the dairy farming business but due to the family circumstances, could not start the dairy farming business and the unutilized amount was deposited in the bank account - HELD THAT:- Assessee has duly explained the source of deposit. The Assessee has also explained that she intended to start dairy farming business but due to family circumstances, she could not utilize the aforesaid amount. The Assessee is a lady. There is no evidence that the Assessee is involved in any other type of business transaction and it is quite obvious that the amount might have been kept for some time by her at house after withdrawal of the same from the bank account. There is nothing on record to show that the Assessee has made any purchase or utilized the loan amount after withdrawal of the same from the bank account. Appeal of the Assessee stands allowed. The Appellate Tribunal (ITAT Chandigarh) allowed the assessee's appeal against the addition of Rs. 10,00,000/- as unexplained cash deposits for AY 2017-18, confirmed by the CIT(A) and AO. The AO had disbelieved the assessee's explanation that the amount, deposited during demonetization, originated from a gold loan taken to start a dairy farming business, noting a six-month gap between withdrawal and deposit. The Tribunal found the assessee's explanation credible, emphasizing that she is a teacher and not engaged in other business transactions, and that there was no evidence of misuse of the loan amount. The Tribunal held that 'there is nothing on record to show that the Assessee has made any purchase or utilized the loan amount after withdrawal,' and concluded that 'I do not find any justification on the part of the lower authorities in making the impugned addition.' Accordingly, the addition was deleted and the appeal allowed.