New Delhi, July 1 -- Cash deposited during the 2016 demonetisation period cannot be treated as unexplained income merely because it involved old currency notes, the Income Tax Appellate Tribunal (ITAT), Bangalore, has ruled. In relief for taxpayers facing scrutiny over demonetisation-era deposits, the Tribunal held that once a taxpayer furnishes a credible explanation backed by evidence, the burden shifts to the Income Tax Department to disprove it before invoking Section 69A of the Income-tax Act.

The ruling came in the case of Ramzan Mulla, a small trader from Vijayapura, Karnataka, who successfully challenged a Rs.20.99 lakh addition made by the tax department after cash deposits in his bank account during the demonetisation period. ...