2026 (8) TMI 551

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....income from salary and other sources, filed her return of income for A.Y. 2017-18 on 23.03.2018 declaring total income of Rs. 8,85,950/-. The case was selected for limited scrutiny under CASS on account of cash deposits made during the demonetisation period. During assessment proceedings, it was noticed that the assessee had deposited cash of Rs. 20,35,000/- in her HDFC Bank account on 17.11.2016 and 18.11.2016. The assessee explained that the deposits represented accumulated salary savings kept as cash-in-hand over the years and relied upon self-prepared balance sheets, income and expenditure statements and details of salary earned by herself and her husband. The Assessing Officer (AO) rejected the explanation and treated the cash deposits....

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....in the preceding years to support the claim of accumulated cash savings and that the self-prepared balance sheets lacked evidentiary value in the absence of supporting primary records.The CIT(A) further noted that the entire amount deposited was subsequently transferred to M/s Jayachandran Alloys Pvt. Ltd., a company in which the assessee's husband was a Director, without any supporting agreement or documentation, thereby rendering the explanation commercially improbable. Applying the test of human probabilities, the CIT(A) held that it was highly unlikely for a salaried individual to retain Rs. 20 lakh in cash for years and deposit the same only during demonetisation before immediately transferring it to a related company. The plea bas....

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....ould not substitute primary evidence. She further contended that the immediate transfer of the deposited amount to the company in which the assessee's husband was a Director rendered the explanation implausible and justified invocation of section 69. Ld.DR therefore prayed that the order of the CIT(A) be upheld. 6. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee deposited cash of Rs. 20,35,000/- during the demonetisation period. The explanation furnished is that the deposits represented accumulated salary savings retained as cash over the years. However, except for self-prepared balance sheets and cash flow statements, no contemporaneous documentary evidence....