₹24 Lakh Cash in SBI Account During Demonetisation: ITAT Raises Questions, Orders Verification

During the demonetisation period, several cash deposits raised questions under the Income Tax Act. One such case involved ₹24.55 lakh deposited in a State Bank of India (SBI) account by Tripuraneni Sarada Devi. The Income Tax Appellate Tribunal (ITAT) has now directed the Assessing Officer (AO) to verify the source of the funds, which the assessee claims came from loans taken against fixed deposits supported by her children living in the USA.

SBI Demonetisation Cash Deposit Under ITAT Scrutiny

Tripuraneni Sarada Devi, the appellant in this case, deposited ₹24,55,030 in her SBI account during the demonetisation window. Upon enquiry, she submitted that these funds were sourced from loans taken against fixed deposits. These fixed deposits were claimed to be funded by financial contributions from her 2 sons residing in the USA.

Despite this explanation, the AO classified the deposits as unexplained income under section 69A read with section 115BBE of the Income Tax Act, 1961. The appellant subsequently filed an appeal against this classification before the Commissioner of Income Tax (Appeals) or CIT(A).

CIT(A) Partially Accepts the Assessee’s Claim

The CIT(A), after evaluating the details provided, chose to partly allow the appeal. The order directed the AO to accept only 50% of the cash deposits as explained, leaving the remaining portion to be treated as unexplained income. Dissatisfied with this decision, the appellant approached the ITAT.

Evidence Submitted by the Appellant’s Representative

During the ITAT hearing, the authorised representative (AR) of the appellant reiterated that the deposits were made using loan amounts taken against fixed deposits. These fixed deposits, in turn, were formed through funds transferred by the assessee’s sons in the USA.

The AR submitted relevant documents to support the claim, including:

• Bank account statements
   
• Confirmation letters from the sons
   
• Affidavits declaring their financial assistance
   
• Details of fixed deposits and loans availed

According to the AR, the assessee had initially planned to use the funds for buying immovable property. However, when the transaction did not materialise, the funds were redeposited into her bank account.

Tribunal’s Observations and Final Direction

After reviewing the submissions and accompanying documentation, the ITAT bench — comprising Judicial Member K. Narasimha Chary and Accountant Member S. Balakrishnan — found merit in the explanation provided.

The tribunal directed the AO to examine the loan records and fixed deposits claimed as the source for the cash deposits. If the documentation confirms the narrative, the cash deposits will be considered explained, and no additions shall be made under section 69A.

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Conclusion 

This case serves as a reference point for instances where legitimate funds may appear questionable due to timing or lack of documentation. Keywords relevant here include Income Tax Appellate Tribunal, ₹24 lakh cash deposit, demonetisation, SBI account, fixed deposit loan, unexplained income, and financial support from abroad.

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