The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the Addition cannot be made against an individual who is earning income from salary and has deposited an amount of Rs.2,30,000/- during the demonetization period, as per the relevant CBDT circular.
The fact of the case is that the Appellant is a qualified professional (ICWA). The main source of income of the appellant is a salary income and the appellant is regularly filing ITR. For the concerned assessment year, the appellant had filed the ITR declaring a gross total income of Rs. 5,13,458/-. In the year under consideration the appellant has also deposited cash in his bank account amounting to Rs.2,30,000/- (Two Lakhs Thirty Thousand only) during the demonetization period which was from his past savings and out of the cash gifts received on the occasion of birthdays/ festivals from his friends/relatives.
The case of the appellant was selected for limited scrutiny through CASS to ‘verify the Large Value cash deposits during demonetization period as compared to returned income’. During the assessment proceedings, the appellant explained the source of the cash deposit but the AO without correctly appreciating the factual and legal issue of the case made an addition of Rs. 2,30,000/- on account of cash deposit as unexplained cash deposits u/s 69 of The Income Tax Act, 1961
The appellant contended that his case should not be scrutinized as the cash deposit was Rs 2,30,000 which is less than Rs 2,50,000 as per the instruction of CBDT No. 03/2017 dated 21.02.2017. Further, the Hon’ble CIT (Appeals) had also upheld the addition made by A.O. without considering the contention of the appellant that the case of the appellant should not be scrutinized as the cash deposit is only Rs. 2,30,000/- which is less than Rs.2,50,000/- as per the instruction of CBDT.
After hearing the contention of both the parties Shri Chandra Mohan Garg, a Judicial member observed that when the CBDT Circulars clearly provide, no further clarification and verification is required to be made in the case of an individual who is earning income from a salary filing return of income has deposited amount of Rs.2,30,000/- during demonetization period. Therefore, the addition made by the Assessing Officer and confirmed by the CIT (Appeals) cannot be held as sustainable as the same is clearly against the Instruction issued by the CBDT. Therefore, the sale ground of appeal of the assessee is allowed.
Shri Aniket Agarwal vs Income Tax Officer
ITA. No. 627/Del/2021
Decision in favour of: AssesseeN THE INCOME TAX APPELLATE TRIBUNAL, [ DELHI BENCH “SMC”: NEW DELHI ]