ITAT Mumbai Allows Fresh Examination of Cash Deposit Dispute

Background

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has partly allowed the appeal of taxpayer Pooja Vinod Wadhwani by restoring a significant portion of the cash deposit addition to the Assessing Officer for fresh adjudication. The case related to unexplained cash deposits of ₹44.90 lakh in the assessee’s bank account for Assessment Year 2014–15, which had triggered reassessment proceedings after she failed to file a return of income. The Assessing Officer treated the entire amount as unexplained money under Section 69A of the Income Tax Act, citing lack of documentary evidence to support the assessee’s claim that the deposits were business receipts from grey cloth trading. On appeal, the Commissioner of Income Tax (Appeals) granted partial relief by treating 50 percent of the deposits as business-related and estimating profit at 5 percent, while sustaining the remaining 50 percent as unexplained income. The assessee challenged this before the ITAT, arguing that the sustained portion was sourced from opening cash balances and earlier withdrawals.

Tribunal Orders De Novo Review on Unexplained Portion

The Tribunal noted that the assessee had produced cash summaries and additional documents for the first time at the appellate stage, which were not examined by lower authorities. In the interest of justice, it remanded the issue of ₹22.45 lakh treated as unexplained cash back to the Assessing Officer for fresh consideration, directing that proper opportunity be given to the assessee to substantiate her claim. However, the ITAT upheld the CIT(A)’s decision estimating business income at 5 percent on the remaining deposits, observing that no material had been brought to disprove those findings. Consequently, the appeal was partly allowed for statistical purposes, reinforcing the principle that fresh evidence impacting tax liability deserves proper factual scrutiny before final additions are sustained.