Source of cash deposit being savings and family support plausible to certain extent – ITAT

Source of cash deposit being savings and family support plausible to certain extent –ITAT deleted addition on account of cash deposit in bank.

In a recent judgment, ITAT Visakhapatnam partly deleted addition for cash deposit in bank considering that the assessee’s submission regarding accumulation of savings and receipt of  financial support from his family over time was plausible to a certain extent, considering his financial position and the circumstantial evidence.

ABCAUS Case Law Citation:
4397 (2025) (02) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC in confirming the addition made unexplained money under Section 69A of the Income Tax Act, 1961 (the Act) for cash deposited in bank account.

The assessee had not filed any return of income u/s 139 of the Act.  Consequently, a notice under Section 148A(d) was issued, followed by a notice under Section 148. In response, the assessee filed return of income.

During the assessment, it was observed that the assessee had deposited cash in his bank account which was later converted into fixed deposits. The assessee failed to provide documentary evidence or bank statements. The Assessing Officer found the explanation unsatisfactory and treated the amount as unexplained money under Section 69A read with Section 115BBE, adding it to the total income. 

Accordingly, the Assessing Officer completed the assessment under Section 143(3) read with Section 144B of the Act.

Before the Tribunal, the assessee submitted that the source of the cash deposits was from the accumulated savings of the assessee and also from the amounts received from his daughters and sons-in-law over time.  The assessee further submitted that initially the assessee intended to use these funds to purchase a house but later has not found a suitable property and as such, deposited the funds in fixed deposits to earn interest. The assessee further submitted that assessee being a retired government employee, had saved these amounts over several years and that he had no intention to evade taxes.

The Tribunal observed that it was evident that the assessee had provided conflicting explanations regarding the source of funds, which weakened the credibility of his claims. However, the assessee’s submission regarding accumulation of savings and receipt of financial support from his family over time was plausible to a certain extent, considering his financial position and the circumstantial evidence.

The Tribunal opined that the immediate conversion of the cash deposits into fixed deposits within four days, raised valid concerns; however, it does not entirely invalidate the possibility that a portion of the funds may have been legitimate savings.  The onus was on the assessee  to establish the genuineness of the sources for the cash deposits and the lack of corroborative evidence, such as affidavits from family members or proof of retirement benefits being given to his daughters, limits the acceptance of his explanations.

At the same time, the Tribunal observed that the assessee’s overall financial narrative and the absence of evidence indicating deliberate concealment suggest that the entire addition may not be justified. 

Considering the facts and circumstances, the Tribunal held that cash deposits to the extent of Rs.15,00,000/- may be reasonably attributed to accumulated savings and financial support from family members.  Therefore, the assessee was entitled to the relief of Rs.15,00,000/-  out of the total amount of Rs.17,50,000/-  and the addition was confirmed for the remaining amount.

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