9 hrs ago
ITAT Partly Accepts Explanation For ₹32 Lakh Cash Deposit
A taxpayer deposited ₹32 lakh in cash during the demonetisation period.
She said the money came from several sources, including gold sales and savings.
Tax officials accepted some of her explanation but questioned the rest.
The tribunal looked at the documents supporting each part of her claim.
It accepted ₹2.84 lakh connected to gold sold by her mother-in-law because confirmations were provided.
It rejected ₹8.37 lakh linked to sales because the documents did not name the buyers.
The tribunal therefore gave the taxpayer some additional relief but did not accept the entire explanation.
The case shows that people need clear records showing where large amounts of cash came from.
The taxpayer deposited ₹32 lakh in cash into a Syndicate Bank account on 10 November 2016, during the demonetisation period.
The Assessing Officer accepted ₹12.84 lakh and treated ₹19.15 lakh as unexplained under Section 69A of the Income-tax Act.
The ITAT accepted ₹2.84 lakh linked to the taxpayer’s mother-in-law’s gold sale because confirmations supported the transaction.
The tribunal rejected a further ₹8.37 lakh because cash-sale memos did not identify customers and purchaser confirmations were unavailable.
The ruling said cash deposits are not automatically unexplained, but taxpayers must provide credible evidence tracing the source of funds.
- Who
- Salama Mahmadsalim Dafedar, a jewellery maker and gold seller, and the Income Tax Department.
- What
- The Panaji bench of the Income Tax Appellate Tribunal partly allowed a challenge involving a ₹32 lakh cash deposit and unexplained-money additions.
- Where
- The cash was deposited into a Syndicate Bank account; the case was decided by the ITAT’s Panaji bench.
- When
- The deposit was made on 10 November 2016, and the ITAT order was pronounced on 3 September 2026 for assessment year 2017-18.
- Why
- The taxpayer sought credit for cash attributed to gold sales and other sources, while tax authorities questioned whether parts of the deposit were adequately documented.
Taxpayer’s Explanation
Tax Authorities’ Position
Source of the cash
Taxpayer’s Explanation
The taxpayer said the deposit came from opening cash, gold-sale proceeds, Pigmy deposit maturity proceeds and gold sold by her mother-in-law.
Tax Authorities’ Position
Tax authorities accepted only amounts supported by their assessment and treated the remaining portion as unexplained money.
Mother-in-law’s gold sale
Taxpayer’s Explanation
The taxpayer argued that proceeds from her mother-in-law Dilshad Dafedar’s gold sale should count toward explaining the deposit, supported by confirmations.
Tax Authorities’ Position
The authorities had denied credit for the amount, but the ITAT found that denial of ₹2.84 lakh was not justified.
Cash-sale memos
Taxpayer’s Explanation
The taxpayer relied on cash memos for gold sales to explain a further ₹8.37 lakh.
Tax Authorities’ Position
The authorities and tribunal found the memos insufficient because they did not identify customers and no purchaser confirmations were provided.
Key facts
- Cash deposit
- ₹32 lakh deposited on 10 November 2016.
- Amount initially accepted
- ₹12.84 lakh, comprising opening cash, gold-sale proceeds and Pigmy deposit maturity proceeds.
- Initial unexplained amount
- ₹19.15 lakh was treated as unexplained under Section 69A.
- Income assessed
- Total income was determined at ₹24.09 lakh versus ₹4.94 lakh declared.
- Earlier appellate relief
- The Commissioner of Income Tax (Appeals) granted relief of ₹7.95 lakh and sustained an addition of ₹11.21 lakh.
- Additional ITAT relief
- The ITAT directed deletion of a ₹2.84 lakh addition linked to the mother-in-law’s gold sale.
- Remaining disputed amount
- The tribunal upheld the remaining ₹8.37 lakh addition because the sale documents lacked customer details and confirmations.
Sources
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