Vivad Se Vishwas Not Concluded? Appeal Must Be Heard on Merits — ITAT Mumbai Deletes Demonetisation Cash Addition
Ameeta Paramanand Nadkarni (6477/Mum/2025)
Facts:
1. The assessee deposited ₹17.56 lakh in cash during the demonetisation period. The AO accepted ₹9.91 lakh as explained and treated the balance ₹7.64 lakh as unexplained money u/s 69A, taxable u/s 115BBE.
2. The explanation was that cash deposits were out of earlier cash withdrawals from her own bank account, withdrawals from her elderly mother’s bank account (operated by the assessee for medical needs), and past savings / streedhan.
3. The CIT(A) dismissed the appeal without examining merits, citing issuance of Form-3 under VSV Scheme.
ITAT Mumbai held as below:
1. Although Form-3 was issued, the assessee did not pay the amount determined. Hence, the settlement was never concluded. Mere opting for the scheme does not extinguish appellate rights unless payment is made.
2. The AO had considered only 25% of withdrawals for FY 2015-16 and 70% for FY 2016-17, without any rational basis, despite evidence of substantial withdrawals for household expenses from other accounts.
3. The reduction of streedhan from ₹5 lakh to ₹2 lakh was held to be purely ad-hoc, unsupported by evidence.
4. Keeping cash at home for medical emergencies of aged parents/in-laws is a plausible and reasonable explanation, relying on the principle that human behaviour cannot be judged by rigid standards.
5. Appeal allowed on merits. AO is directed to grant consequential relief.
The copy of the order is as under:
