Widow faces tax notice for Rs 60 lakh cash deposits; why ITAT treated it as gift from late husband

Cash deposits trigger scrutiny

The Income Tax Department found that a woman had put Rs 60,07,500 in cash into her bank account during the financial year 2015-16. She had not filed an income tax return for the matching assessment year. The Assessing Officer then issued a show-cause notice under Section 148A(b) of the Income Tax Act, 1961. The woman did not respond to that notice, and the Assessing Officer went on to pass an order.

Why ITAT intervened

The case reached the Income Tax Appellate Tribunal, which treated the deposits as a gift from her late husband. The excerpt does not set out the tribunal's detailed reasoning, but the outcome shows that unexplained cash deposits can be recharacterised when the taxpayer establishes a legitimate source and relationship. The matter began with a notice under Section 148A(b), the provision that gives a taxpayer an opportunity to be heard before reassessment proceedings are formally opened. Because no reply was filed at that stage, the Assessing Officer proceeded without the benefit of the taxpayer's explanation. The tribunal's finding that the money was a gift from a deceased spouse changes the tax character of the receipt, since gifts from a spouse fall within the exempt category under the law.

Why this matters for businesses

The case is a reminder that large cash movements attract automatic attention from the tax department, particularly where no return has been filed. For companies and professionals handling client money, the lesson is procedural as much as substantive. A notice under Section 148A(b) is not a routine formality; it is the taxpayer's chance to place evidence on record before an assessment order is framed. Ignoring it can lead to an order passed on the department's own reading of the facts, which then has to be challenged before the tribunal. The ruling also highlights the importance of documentation for gifts and family transfers, including the identity of the donor, the relationship and the mode of rec…