ITAT deleted addition of amount borrowed for treatment of father and deposited in bank

ITAT deleted addition of amount borrowed for treatment of father and deposited in bank account considering cost of medical treatment in the present day.

In a recent judgment, ITAT Lucknow deleted addition for cash deposit of Rs. 10 Lakhs claimed to have borrowed for treatment of his father as the amount was not unreasonably high or excessive having regard to the cost of medical treatment in the present day.

ABCAUS Case Law Citation:
4828 (2025) (11) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in partly confirming the addition to income of Rs. 10 lakhs cash deposited in bank account.

In this case assessment order was passed u/s 147 of the Income Tax Act, 1961 (the Act) whereby the assessee’s total income against returned income was determined by making addition as unexplained cash credits under section 69A of the Act on account of cash deposited in bank account. 

Aggrieved, the assessee’s appealed against the assessment order before the CIT(A). The CIT(A) opined that the assessee in response to notice, probably under some advice declared income under presumptive section 44AD to avoid the complexities. However, the AO added the amount of cash deposited as unexplained credits.

The CIT(A) observed that the assessee stated that he was an ex-servicemen. His father fell ill and for his father’s treatment, the assessee borrowed money from all and sundry and deposited it in his bank account.

The CIT(A) opined that the recourse to section 44AD as chosen by the assessee was not appropriate as it is meant for some income under a head of income as prescribed in the Act, particularly business income.

The CIT(A) opined that the explanation given by the assessee was not entirely unbelievable. The explanation given was very probable in the given circumstances of medical emergency where a economically weaker person borrows money from whosoever agreeing. Therefore, it would be harsh to reject the explanation of the assessee completely.

In view of the above the CITA(A) held that end of justice shall meet if 50 percent of the addition is considered as explained. Accordingly he deleted the helf of the impugned addition.

The Tribunal observed that the CIT(A) had accepted the assessee’s explanation that the assessee, an ex-service man, was not a well placed person economically and it was quite probable that he borrowed money for emergency i.e. for the treatment of illness of his father. 

The Tribunal further observed that despite accepting the explanation, the CIT(A) in a summary and ad hoc manner, without explaining any reason sustained addition towards 50% of the amount claimed by the assessee to have been received as loan for meeting emergency expenses towards treatment of his father suffering from illness. 

The Tribunal opined that the amount of Rs. 10 lakhs claimed by the assessee to have been received for treatment of his father suffering from illness was not unreasonably high or excessive amount having regard to the cost of medical treatment in the present day, specially having regard to the circumstances of the assessee.  

In view of the above, the Assessing Officer was directed to delete the remaining addition which the CIT(A) had sustained in his impugned appellate order.  In effect the Assessing Officer was directed to delete the entire amount of addition.

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