2022 (11) TMI 653 - AT - Income Tax

Undisclosed income - Addition towards cash deposited in bank account during demonetization period - As submitted assessee has regularly earned salary substantially to cover cash deposit - HELD THAT - Admittedly, it is noted that assessee has earned salary income of Rs.4,00,000/- during the year and filed the return of income with total income - Deposit of cash has been claimed to be out of current year s salary income and past savings of the assessee. After hearing the rival contentions, we are of the considered view that assessee had duly explained the source of deposit i.e her previous years savings and we safely presume that this amount is the accumulation out of past savings and current year s income. Accordingly, we direct the Ld. AO to delete the addition made. The ground of appeal is allowed.

Summary

Issues:
1. Addition of cash deposit during demonetization period as undisclosed income.
2. Validity of assessment order based on revised return.

Analysis:
1. The appellant contested the addition of Rs.155,000 as undisclosed income, arguing that the cash deposited during demonetization was from salary earnings and past savings. The AO added the amount as undisclosed income, citing lack of supporting documents. The CIT(A) dismissed the appeal, noting the absence of evidence such as Form 16, bank statements, or contracts to substantiate the claim. The appellant failed to provide documentation despite multiple opportunities. The Tribunal found the explanation reasonable, considering the salary income and past savings, and directed the AO to delete the addition, ruling in favor of the appellant.

2. The appellant challenged the assessment order based on the revised return, arguing it was non-est as the original return was substituted. The Tribunal did not address this issue explicitly in the judgment but focused on the addition of cash deposit. The appeal was allowed based on the merits of the addition of undisclosed income, without delving into the validity of the assessment order concerning the revised return.

In conclusion, the Tribunal ruled in favor of the appellant, directing the deletion of the addition of Rs.155,000 as undisclosed income. The judgment emphasized the importance of providing supporting documentation to substantiate claims and considered the appellant's explanation regarding the source of the cash deposit during demonetization as valid. The judgment did not delve into the validity of the assessment order based on the revised return, focusing primarily on the addition of cash deposit as undisclosed income during demonetization.