Income Tax Notice for Rs 15 Lakh in Bank Locker: Know The Reason

A person named Mr. Shailendra Ramesh Chandra Rathi whose bank locker has been searched on 23rd September 2021 and revealed around Rs.15,01,150 in cash. The Income Tax Authorities considered that this entire cash amount as unexplained income and attempted to add it to Shailendra's taxable income u/s 69A of the Income Tax Act.

Shailendra's Explanation

Shailendra explained that the cash belonged not only to him. This includes cash of family member, a partnership firm and gifts from relatives.

Family Cash Chart Submitted

Most of these claims were supported with respective income tax returns (ITR), cash books and other documents, illustrating the source and ownership of each portion of cash.

Department's View

The AO rejected the explanation and considered that the entire cash found in the locker as belonging to Shailendra because the locker was in his name.​

Only Rs.1,533 was accepted as explained money. The rest was treated as Shailendra's unexplained income and added to his taxable income.​

Appeal and Legal Proceedings

Shailendra appealed to the CIT (Appeals), where some relief was provided and deleted some amount but still upheld addition of Rs. 11,14,117.

Money attributed to the mother, sister-in-law, and firm was accepted as explained.

Amounts relating to the wife, father and gifts were still disallowed due to lack of verified ITRs or documentation.

Shailendra further appealed to the Income Tax Appellate Tribunal (ITAT), Mumbai and presented evidence that ITRs for his wife and father were indeed filed for AY 21-22 and 22-23, and that gifts were genuine.

ITAT found that the CIT's order was not correct and criticized the lower authorities for selectively accepting some explanations (e.g., mother, sister-in-law) while rejecting others (wife, father, gifts) without valid reasoning or investigation.​

ITAT also said that gift amount Rs. 3,46,528 on occasions are normal in Indian households.

The ITAT deleted Rs. 11,14,117 the addition made under Section 69A in Shailendra's income, accepting that the cash belonged to the joint family and was properly documented.