Section 69A: ITAT Endorses a Balanced, Evidence-Based Approach over Blanket Additions
Shrenik Manish Mehta vs ITO
ITA No.: 7324/Mum/2025
Facts:
1. The assessee, an individual, filed return declaring income of ₹6.30 lakh. Case was selected for scrutiny due to large cash payments towards credit card dues.
2. Total credit card payment: ₹27.65 lakh, out of which ₹13.95 lakh paid in cash. Explanation of assessee was that cash was received from family members as follows:
Father: ₹8,00,000
Mother: ₹4,50,000
Wife: ₹3,00,000
And was supported by affidavits.
3. AO rejected explanation since, affidavits are not sufficient proof. There is no evidence of earning capacity of family members. Entire ₹13.95 lakh was treated as unexplained money u/s 69A of the Income Tax Act, 1961.
ITAT Mumbai held as below:
1. Assesse’s wife has filed return of income by showing professional income under section 44ADA, thus, cash gift of Rs. 3,00,000/- is reasonably explained and accordingly, deleted.
2. Perusal of bank statement shows that mother is regularly getting credit which shows some systematic activity, therefore, entire cash gift cannot be treated as unexplained. Considering the amount of return of income is very meager therefore 50% of cash gift is accepted as reasonable one.
3. Bank statement shows that there are regular debit and credit entry… hence, it can safely be concluded that father is also engaged in some systematic business activities. Thus, 50% of cash gift from father is also acceptable.
4. Out of total addition, Rs. 4,00,000/- + Rs. 2,25,000/- & Rs. 3,00,000/- are deleted and remaining of Rs. 4,70,000/- is confirmed.
Conclusion:
1. The Tribunal emphasized that capacity and surrounding circumstances matter-where some evidence of income and banking activity existed, the explanation could not be dismissed outright.
2. Accordingly, it accepted the wife’s contribution in full and granted partial relief (50%) in respect of parents, considering their modest but demonstrated financial activity.
The copy of the order is as under:
