No Further Verification Required If Cash Deposit Is Up To Rs 2.5 Lakhs During The Demonetization: ITAT Delhi

The assessee Aniket Agarwal filed his income tax return, which was selected for limited scrutiny to verify the cash deposited by the assessee during the demonetization period. The assessee explained the source of cash deposits during the assessment proceedings. The Assessing Officer (AO) made certain additions to assessee's income on the ground that the cash deposited in assessee's bank account during the demonetization period represented unexplained cash deposits under Section 69 of the Income Tax Act, 1961. Against this order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) (CIT (A)), who upheld the order of the AO. The assessee filed an appeal before the ITAT against the order of the CIT (A).

The assessee Aniket Agarwal contended before the ITAT that as per the CBDT Instruction No. 03/2017 (dated 21.02.2017), no further verification is required to be made in case of individuals not having any business income, if the total cash deposit is up to Rs 2,50,000.

The assessee submitted that the CBDT Instructions are binding on the income tax authorities, therefore, the cash of Rs 2,30,000 deposited by the assessee in his bank account from his past savings and out of the cash gifts received by him should not have been brought to tax as per the CBDT Instructions. Thus, the assessee averred that since it was earning income only from salary, additions made by the AO and confirmed by the CIT (A) were unsustainable and invalid in law.

The ITAT observed that as per the CBDT Instructions, no further verification is required in the case where an individual earning income from salary has deposited an amount of up to Rs 2,50,000 during the demonetization period.

The ITAT thus ruled that the additions made by the AO and confirmed by the CIT (A) could not be held to be sustainable since they were clearly against the Instructions issued by the CBDT.

The ITAT therefore allowed the appeal of the assessee.

Dated: 11/05/2022 (Delhi ITAT)

Representative for the Appellant/Assessee: Mr. Sahil Gupta, C.A. and Mr. Mukesh Kumar Jain, C.A.

Representative for the Respondent/Revenue Department: Mr. Om Prakash, Sr. D.R

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