Appeal partly allowed: Tax authority directed to limit cash-deposit addition to Rs. 1 lakh and recompute income

ITAT partially allowed the appeal, finding that the assessee - a regular taxpayer with declared income accepted by the AO - could not have past savings accumulation entirely ruled out. While the AO's rejection of the explanation for cash deposits was noted, no other use of the idle cash was established. To end litigation the Tribunal directed the AO to restrict the impugned additions to Rs. 1 lakh and to re-compute the assessee's income accordingly; the appeal was partly allowed.

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Appeal under Assessment Year 2017-18 arises from assessment framed u/s. 143(3) dated 19-12-2019 and CIT(A) order dated 25-03-2025, challenging addition of cash deposits of Rs. 11.50 lacs. Assessee declared income of Rs. 5.20 lacs (accepted by AO) and explained deposits as from "past savings and earlier withdrawals." AO rejected explanation for lack of proof that cash was "kept idle and not utilized for any other purposes" and made the addition; CIT(A) confirmed. Tribunal notes assessee is a regular taxpayer since AY 2014-15 with declared income exceeding Rs. 6 lacs in prior years, so accumulation of past savings "could not, altogether, be ruled out." As no other application of the cash was identified, Tribunal partially allowed the appeal and directed AO to "restrict the impugned additions to the extent of Rs. 1 Lacs and re-compute the income of the assessee." Appeal partly allowed.

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