There is no statutory requirement to maintain cash book for salaried individual – ITAT

ITAT deleted addition towards cash deposited in bank account observing that there is no statutory requirement to maintain cash book for salaried individual.

In a recent judgment, ITAT Delhi has deleted addition u/s 69A towards cash deposited in bank account and held that there is no statutory requirement to maintain cash book for salaried individual.

ABCAUS Case Law Citation:
5142 (2026) (05) abacus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming addition made by the Assessing Officer (AO) towards cash deposit in bank account.

The appellant assessee filed her return of income electronically declaring income under the head income from salary/pension, Income from House Property and other source. The case was selected for scrutiny under CASS for deposit of substantial cash during demonetization period as compared to returned income.

The assessee stated that she was salaried person and the sources of sources of cash deposit was cash withdrawal from her savings account.  However, after perusing the bank statement, the AO was not satisfied with the details and asked for the assessee to give the narration of the some debit and credit entries but no reply was filed.

Accordingly, the AO added back the cash deposited to the income of the assessee as unexplained money u/s 69A and charged tax as per section 115BBE of the Income Tax Act.

The CIT(A) dismissed the appeal of the assessee observing that appellant’s explanation, including the claim that the amount was retained in cash for several months, was not supported by any contemporaneous record of cash flow, cash book, or household withdrawals to prove that the cash was preserved unutilized.

The Tribunal observed from the bank statement that the withdrawals made prior to demonetization were duly reflected in the bank statement and the same redeposited during demonetization and the same did not represent any unexplained income.

The Tribunal further observed that the AO made the addition merely on the ground of alleged non-compliance and absence of detailed explanation during assessment proceedings, however, no independent inquiry had been conducted to establish that the cash deposited were from undisclosed sources.

The Tribunal further observed that it is settled law that addition u/s 69A can be made only when the assessee is found to be the owner of unexplained money and fails to offer a satisfactory explanation and in the present case, the explanation was reasonable, supported by salary income and prior withdrawals.  Further we observed that the assessee being a salaried government employee with disclosed sources of income, there was no justification for invoking section 69A.

The Tribunal further noted that Co-ordinate Bench of ITAT has held that merely because there was a time gap between the withdrawal and corresponding cash deposit, the assessee’s explanation not to be rejected, and hence the addition confirmed by the CIT(A) was not correct.

The Tribunal opined that CIT(A) erred in law and on facts in confirming the addition u/s 69A without appreciating the fact that bank withdrawals were substantially higher and the assessee had proved the source and genuineness, once withdrawals are accepted, onus shifts to Revenue to prove utilization of the funds were elsewhere.

The Tribunal held that CIT(A) wrongly shifted burden back to assessee to prove “continuity of cash” and there is no statutory requirement to maintain cash book for salaried individual. 

Accordingly, relying on judicial precedents and finding that cash deposited was more than the withdrawals, the Tribunal held that there was direct source of cash available on record, the assessee had proved the source.

As a result, the Tribunal deleted the addition and accordingly allowed the grounds raised by the assessee.

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