NEERU BIRLA,NEW DELHI vs. INCOME TAX OFFICER, WARD 45(1), DELHI, NEW DELHI

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ITA 916/DEL/2026Status: DisposedITAT Delhi18 September 2026AY 2017-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the AO erred by including cash deposits made before the demonetization period and by rejecting the assessee's explanation for post-demonetization deposits without proper examination of evidence. The addition made by the AO was found unsustainable.

What were the facts?

The assessee made cash deposits during the demonetization period. The Assessing Officer (AO) added the entire amount under Section 69A as unexplained money, without fully examining the documentary evidence provided by the assessee.

What were the issues?

Whether cash deposits made during the demonetization period are unexplained money, and if the AO properly considered the documentary evidence provided by the assessee to substantiate the source of these deposits.

Which sections of the Income-tax Act were involved?

Section 69A,Section 271AAC,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI VIKAS AWASTHY

For Respondent: Shri Manoj Kumar, Sr. DR

PER VIKAS AWASTHY, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of Commissioner of Income Tax Appeal (ADDL/JCIT), Kolkata [herein after referred to as ‘the CIT(A)] dated 18/11/2025 for the assessment year 2017-18.

2.

The assessee in appeal has inter-alia assailed the addition of Rs.18,88,600 made by the Assessing Officer (AO) under section 69A of the Income Tax Act, 1961 (in short ‘the Act’) on account of cash deposits during demonetization.

3.

The assessee has filed an application dated 13/4/2026 under Rule 11 of the Income Tax (Appellate Tribunal) Rules 1963 for admission of additional grounds of appeal which are stated

ITA 916/DEL/2026 NEERU BIRLA to be legal in nature. The ld. Counsel for the assessee at the outset stated that he is not pressing ground number i. raised by way of additional grounds of appeal.

4.

The learned counsel submits that the assessee was carrying trading business of iron and steel under the name and style of ‘Xclusive Marketers’ a proprietorship firm of the assessee. The assessee closed her business w.e.f. 30/6/2015. There were outstanding sundry debtors of Rs.1,65,98,512 as on 31/3/2014. To support his contention, the ld. Counsel referred to Balance Sheet of the assessee as on 31/3/2014 at page 57 and 58 of the paper book and ITR for AY 2014-15 where similar amount is reflected against sundry debtors. The ld. Counsel contended that the amount received in cash from some outstanding Sundry debtors was deposited in Bank account. Further, the assessee has rental income which is duly reflected in the return of income. The assessee receives rent from tenants in cash. Thus, the cash deposits in Bank accounts of the assessee during FY 2016-17 are from sundry debtors, rental income and other income viz. sale of scrap, etc.

4.1 The learned counsel for the assessee further submits that the case of the assessee was selected for scrutiny for the reason that ‘Large value cash deposits were made during demonetization period’. The learned counsel furnished a table showing date-wise cash deposit in the Bank accounts of the assessee. The said table also bifurcating the amounts deposited in bank prior to demonetization and after demonetization. The ld. counsel stated that before demonetization the aggregate of amount of cash deposits is Rs.13,27,500 and after demonetization only Rs.5,61,600 were deposited on 21/11/2016. The AO without examining the documents on record including Bank Statements furnished by the assessee made addition of entire cash deposits of Rs.18,88,500 under section 69A of the Act. The AO has erred in holding that entire cash deposits were during demonetization period. The ld. Counsel thus prayed for deleting the addition made u/s. 69A of the Act.

5.

Per Contra Sh. Manoj Kumar representing the department strongly supported the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submits that the assessee has not been able to substantiate that cash deposits in the bank were from sundry debtors. No details of the sundry debtors viz. name, amount, PAN etc from whom cash was stated to be received during the period relevant to the assessment here under appeal was furnished by the assessee. Therefore, the AO has rightly made addition in respect of the cash deposits in the bank under section 69 of the Act.

ITA 916/DEL/2026 NEERU BIRLA 6. Submissions made by rival sides heard, orders of the lower authorities examined. The limited issue that was raised by ld. Counsel for the assessee during the course of submissions was addition made under section 69A of the Act in respect of cash deposits during demonetization period. A perusal of the assessment order reveals that the case of the assesse was selected for scrutiny under CASS inter-alia for the reason; “(iii) Large value cash deposits during demonetization period (iv) Large value cash deposits during demonetization period as compared to Returned Income.”. The assesse has furnished a table of cash deposits on various dates during Financial Year 2016-17. The relevant excerpts from the said table are extracted herein under: Before demonetization .

After demonetization Date State Bank of Hyderabad 21.11.2016 5,61,600 18,89,100 Total

A bare perusal of the above table shows that Rs.13,27,500 were deposited upto August 2016, that is prior to demonetization. In support thereof the assessee has placed on record bank statement from Axis Bank at pages 35 to 37 of the paper book. The cash deposits after demonetization on 21.11.2016 is Rs.5,61,600 only. A Statement of Account from State Bank of Hyderabad in support thereof is at page 40-41 of the paper book. It is explicit that the AO without appreciating the facts which are duly corroborated with documentary evidences made addition of entire cash deposits during FY 2016-17 that is Rs.18,88,600 under section 69A of the Act holding the said amount as unexplained money of the assessee. Further, the AO has exceeded the scope of limited scrutiny by making addition of cash deposited in bank prior to demonetization period. The scope of scrutiny was restricted to large cash deposits during demonetization. Therefore, for the reasons stated above addition made in respect of cash deposits upto August 2016 i.e. before demonetization is unsustainable.

ITA 916/DEL/2026 NEERU BIRLA 7. In respect of cash deposits after demonetization i.e. Rs.5,61,600, the contention of the assessee is that the said cash deposits are from rental income received in cash Rs.2,04,000 from tenants of Swarn Park property and Rajouri Garden property, other income Rs.1,89,460/- and cash in hand. The AO has rejected submissions of the assessee by applying test of human probabilities rather than examining the documents furnished by the assessee. It is settled legal proposition that suspicion howsoever strong, cannot partake the character of evidence. Thus, in given facts, I find no plausible reason to sustain addition made by the AO under section 69A of the Act in respect of cash deposits in bank account of the assessee during the impugned AY. Hence, the same is directed to be deleted. The ground no.2 and 4 to 6 of appeal are allowed.

8.

Since, no submissions were made on the legal issues raised in ground no. 3 of appeal, the same is left open at this stage.

9.

In ground of appeal no. 7 the assessee has assailed levy of penalty u/s 271AAC of the Act. Since penalty proceedings are independent and separate, penalty proceedings cannot be assailed in quantum appeal. Hence ground no. 7of appeal is dismissed.

10.

In ground of appeal no. 8 the assessee has assailed charging of interest u/s.234B, 234C and 234D of the Act. Levy of interest u/s/.234B, 234C and 234D of the Act is consequential and mandatory, hence, ground no. 8 of appeal is dismissed.

11.

In the result appeal of the assessee is partly allowed.

Order pronounced in the open court on Friday the 18th day of September, 2026.

Sd./-

VIKAS AWASTHY JUDICIAL MEMBER Delhi Dated: 18-September-2026

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