This document provides a detailed review of the Income Tax Appellate Tribunal’s decision regarding the appeal by Rita Madan against the order of the CIT(A), National Faceless Appeal Centre, concerning unexplained cash deposits during the demonetization period and the purchase of National Highways Authority of India bonds.
Rita Madan, employed with the Airports Authority of India, faced scrutiny regarding cash deposits made during the demonetization period in 2016. These deposits were noticed during the course of scrutiny selected through CASS focusing on several parameters including capital gains from the sale of property, foreign remittances, and cash deposits during demonetization.
The Assessing Officer noted cash deposits totaling Rs.15 lakh in various bank accounts during the demonetization period. Madan claimed these were savings withdrawn and redeposited, which she utilized to purchase NHAI bonds, claiming an exemption under section 54EC. However, inconsistencies in her explanations regarding the source of the funds led to an addition of Rs.15 lakh to her taxable income.
The CIT(A) accepted partial explanations relating to some deposits, reducing the addition to Rs.5 lakh. Madan appealed to the ITAT, which led to further examinations and the admittance of additional evidence indicating withdrawals matching the deposits in question.
The Tribunal admitted new evidence supporting Madan’s claims regarding the source of the deposits and remanded the matter back to the AO for a detailed examination. This case highlights the importance of maintaining clear records of cash transactions and the challenges of proving the source of funds deposited during the demonetization period.
Case Review: Rita Madan vs. ITO, New Delhi – ITA No. 482/DEL/2021, AY 2017-18
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