2025 (8) TMI 1600 - AT - Income Tax

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 ... Addition of cash deposit - deposits were attributed to past savings and earlier withdrawals - AO rejected the explanation on the ground that the assessee failed to substantiate the fact that the cash was kept idle and not utilized for any other purposes HELD THAT:- It emerges that the assessee has declared income of Rs. 5.20 Lacs which has been accepted by AO. Assessee is regular taxpayer since AY 2014-15 having returned income of more than Rs. 6 Lacs in each of the years and therefore, accumulation of past savings could not, altogether, be ruled out. Though there is time gap between withdrawals and deposits, no other usage of idle cash has been identified. With a view to put an end to litigation, we partially accept assessee’s claim and direct Ld. AO to restrict the impugned additions to the extent of Rs. 1 Lacs and re-compute the income of the assessee. Appeal stands partly allowed. 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.