Old Cash Deposits? IT Dept Can Still Tax You 69A

Income Tax officers can add unexplained cash deposits as your income under Section 69A — even years later. But if you have bank statements and loan records proving the source, you can fight and win at the appellate tribunal.

Here's what happened: A taxpayer's ₹12.69 lakh cash deposit during the 2016 demonetisation window was treated as unexplained income by the assessing officer under Section 69A of the Income Tax Act.. The Hyderabad Income Tax Appellate Tribunal deleted the addition after the taxpayer produced bank statements and loan account records clearly establishing the legitimate source of the cash.. The tribunal ruled that an assessing officer cannot disregard primary banking documents when determining whether a cash deposit is genuinely unexplained or has a traceable source..

What you should do: Locate and preserve all bank passbooks, loan statements, and deposit slips from October–December 2016 — these are your first line of defence if a demonetisation-era notice arrives.. Check your ITR filing for AY 2017-18: if you disclosed the cash source in your return or balance sheet at that time, retrieve those documents as corroborating evidence now.. If you receive a Section 69A notice for any past cash deposit, respond within the deadline with documentary proof — missing the response window forfeits your right to present evidence at the appellate stage..

Pro tip: Section 69A additions are taxed at a punishing flat 60% plus surcharge — far worse than your normal slab. Responding with bank proof at the first notice stage is far cheaper than losing at appeal.

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