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Cash deposits made during the 2016 demonetisation period are not liable for additional tax if they were already recorded in a taxpayer’s financial records and income tax returns, according to a recent ruling by the Income Tax Appellate Tribunal (ITAT)
The Delhi bench of the ITAT ruled in favour of senior citizens Nand Kumar Taneja and Nita Taneja, setting aside tax additions of Rs.24.72 lakh and Rs.17.45 lakh, respectively, for the assessment year 2015–16. Tax authorities had invoked Section 69A of the Income Tax Act, which permits the taxation of unexplained income, alleging that the deposits made by the assessees were not properly accounted for.
However, the tribunal found that the cash had already been disclosed in the assessees' books of accounts and earlier tax filings. It concluded that the source of funds was substantiated and the additions were unjustified.
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