ITAT Confirms Addition of ₹28 Lakhs Cash Deposit During Demonetization; Rejects “Past Savings” Plea
Issue
Whether cash deposits of ₹28,00,000/- made during the demonetization period can be treated as explained based on the claim that the amount was accumulated through withdrawals over a period of 55 months for parents’ medical expenses, despite no evidence of such expenses being incurred.
Facts
The Deposit: The assessee deposited ₹28,00,000/- in her bank account during the demonetization period (post-November 8, 2016).
Assessee’s Explanation: She claimed the source was cash withdrawn from her Punjab National Bank account intermittently over a period of 55 months (April 2012 – November 2016).
Purpose: She argued the cash was kept at home with her parents to meet their expected medical expenses.
CIT(A)’s Findings: The First Appellate Authority rejected the explanation as “highly implausible” and an “afterthought” because:
It is unlikely a prudent person would withdraw cash and hold it idle for 4.5 years, foregoing interest.
No medical prescriptions or bills were produced to substantiate the “urgent medical needs.”
It appeared to be a case of “reverse calculation”—picking a start date (Jan 2012) just to match the total withdrawals with the deposit amount.
Tribunal Proceedings: The assessee did not appear before the Tribunal despite notices. Notices sent by speed post were returned with the remark “No such person.”
Decision
The ITAT Delhi Bench dismissed the assessee’s appeal.
Affirmation: The Tribunal affirmed the order of the CIT(A), agreeing that the assessee failed to discharge the onus of proof under Section 69A.
Lack of Evidence: Since no supportive evidence (such as medical bills or a logical explanation for hoarding cash for 55 months) was brought on record to deviate from the lower authorities’ findings, the addition was confirmed.
Key Takeaways
Human Probability Test: Tax authorities often reject claims of “past savings” if they defy normal human conduct—such as holding large amounts of cash idle for years without earning interest or spending it.
Documentation is Mandatory: Merely showing withdrawals from a bank is not enough. The assessee must prove the availability of that cash on the date of deposit. The absence of medical bills weakened the specific claim regarding health emergencies.
Section 69A Burden: The burden to explain the nature and source of valuable articles or cash found (or deposited) lies entirely on the assessee.
Address Updation: Taxpayers must ensure their address is updated in Form 36/IT records. Failure to do so leads to ex-parte orders where the case is decided without their representation.
THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “SMC”: NEW DELHI
Seema Katar, N-42, 2nd Kirti Nagar,
New Delhi-110015
Vs
Income Tax Officer,
Ward 49(2), Delhi.
ITA No. 5567/DEL/2025
Date of pronouncement 06.11.2025
Judgement :- 1763027537-sxER2F-1-TO