2025 (9) TMI 421 - AT - Income Tax

Addition under Section 68 deleted as demonetisation forced cash deposits; assessee's creditworthiness upheld and appeal allowed

ITAT upheld the CIT(A)'s deletion of an addition for unexplained cash deposits during demonetization, finding the assessee's creditworthiness not in ... Unexplained cash deposit in the bank - Credit worthiness of this amount is not in doubt, hence CIT(A) has deleted the addition and part sum was confirmed by the ld. CIT(A) because this amount was deposited during demonetization - HELD THAT:- We find that a small amount could represent past savings because all of a sudden, the currency notes of 1000 and 500 were discontinued, therefore, under compulsion savings available with the family had to be deposited in the account. It is very difficult in day today life to have a track of yearly savings and for what purpose the amount was kept by a human being. Therefore, to this extent, the explanation of the assessee ought to have been accepted by the Revenue Authorities. We allow this appeal and delete the addition. Assessee appeal is allowed. The appeal challenges the Commissioner of Income Tax (Appeals) order dated 20.09.2023 for assessment year 2017-18, contesting confirmation of an 'addition of Rs. 3,99,000/-' arising from unexplained bank deposits. The Assessing Officer had made total additions of Rs. 29,99,000/-, of which Rs. 26,00,000/- was deleted by the CIT(A) on finding that it represented a genuine loan from an identified person and that the 'credit worthiness of this amount is not in doubt.' The CIT(A) confirmed Rs. 3,99,000/- solely because it related to deposits made during demonetization. The Tribunal accepts the assessee's explanation that small cash deposits during demonetization likely represent past familial savings and observes practical difficulty in tracing yearly savings or their purpose. Holding that, 'the explanation of the assessee ought to have been accepted by the Revenue Authorities,' the Tribunal allows the appeal and deletes the remaining addition of Rs. 3,99,000/-.