11 hrs ago
ITAT Ahmedabad Deletes ₹33.50 Lakh Addition Against Homemaker
Tax officials found notebooks at a family home that listed cash movements under a homemaker’s name.
They believed the money might be unexplained and added ₹33.50 lakh to her taxable income.
The woman said the cash belonged to her father-in-law.
She explained that he sometimes gave it to her to keep safely at home.
The tribunal noted that she lived with him and had no independent income source.
It also found records showing that her father-in-law had withdrawn much more cash than the amount questioned.
Because those withdrawals could explain the cash movements, the tribunal said the same money should not be treated as unexplained twice.
It therefore removed the full ₹33.50 lakh addition.
The Income Tax Department added ₹33.50 lakh to a homemaker’s income under Section 69C after finding diary entries in her name.
The diaries were seized during a November 23, 2021, search at her father-in-law’s residence in Gujarat.
The taxpayer said her father-in-law gave her cash for safekeeping because they lived in the same joint-family home.
The Ahmedabad ITAT found that her father-in-law’s recorded cash withdrawals provided a sufficient source for the transactions.
On September 11, 2026, the tribunal applied the telescoping principle and deleted the entire addition.
- Who
- A homemaker, her father-in-law, the Income Tax Department, and the Income Tax Appellate Tribunal, Ahmedabad.
- What
- The Ahmedabad ITAT deleted a ₹33.50 lakh unexplained-expenditure addition made against the homemaker.
- Where
- At the father-in-law’s residential premises in Gujarat, with the appeal decided by the Ahmedabad ITAT.
- When
- The search occurred on November 23, 2021; the tribunal granted relief on September 11, 2026.
- Why
- The tribunal accepted that the cash could have come from the father-in-law’s recorded withdrawals and had been kept by the homemaker for safekeeping.
Taxpayer’s Position
Tax Department’s Position
Meaning of the diary entries
Taxpayer’s Position
The entries did not represent the homemaker’s personal transactions; they recorded cash her father-in-law gave her for safekeeping and later took back.
Tax Department’s Position
The assessing officer treated the net incremental negative peak balance in accounts maintained in her name as unexplained expenditure.
Source of the cash
Taxpayer’s Position
The father-in-law’s cash withdrawals, including ₹1.16 crore in FY 2012-13, were sufficient to explain the ₹33.50 lakh in question.
Tax Department’s Position
The taxpayer’s explanation was rejected by the assessing officer and the Commissioner of Income Tax (Appeals), who upheld the addition.
Treatment of overlapping cash
Taxpayer’s Position
The telescoping principle should prevent the same funds from being taxed again when an established source explains another cash movement.
Tax Department’s Position
The department’s representative was unable to distinguish the case from an earlier ITAT ruling involving the same diaries and similar facts.
Key facts
- Original declared income
- ₹4.48 lakh, reported in the return filed on July 26, 2012
- Tax addition
- ₹33.50 lakh under Section 69C of the Income-tax Act
- Search date
- November 23, 2021
- Seized material
- Handwritten diaries and loose papers covering assessment years 2010-11 to 2021-22
- Father-in-law’s withdrawals
- ₹1.16 crore in FY 2012-13 and about ₹6.72 crore from FY 2009-10 to FY 2020-21
- Final ruling
- Ahmedabad ITAT deleted the entire addition using the principle of telescoping
- Relief date
- September 11, 2026
Quotes
Income Tax Appellate Tribunal, Ahmedabad
The appellate tax tribunal ruling on the homemaker’s cash transactions
“It may be noted that the assessee does not have any independent source of income and is a housewife. Thus, the only source for amount returned to PMS (the taxpayer's father-in-law) is the amounts given by PMS to the assessee at home for safe keeping.”
livemint.com
Sources
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