HARIPATEL RASHIK,KANGAYAM vs. ITO WARD 1(4), TIRUPPUR

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ITA 497/CHNY/2026Status: DisposedITAT Chennai05 August 2026AY 2017-184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had provided sufficient explanation supported by books of account, including an opening cash balance of Rs. 18,28,789/-. The Revenue failed to bring any material to contradict the genuineness of the cash balance.

What were the facts?

The assessee deposited Rs. 14,49,000/- during the demonetization period. The Assessing Officer treated this as unexplained money under Section 69A as the assessee did not provide a proper source. The CIT(A) upheld the addition.

What were the issues?

Whether cash deposits made during demonetization are unexplained money when supported by opening cash balance in books of account and not controverted by the revenue.

Which sections of the Income-tax Act were involved?

Section 69A,Section 148,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY.S

For Respondent: Mr. Christopher Vasanth, Sr. AR

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 20.11.2025 for Assessment Year (AY) 2017-18.

2.

The assessee is an individual and filed the return of income for AY 2017-18 declaring total income of Rs.4,16,800/-. The A.O received information that during the demonetization period, the assessee has deposited a sum of Rs.14,49,000/- in the bank account. The A.O reopened the

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assessment by issue of notice u/s. 148 of the Act. The assessee filed various details from time to time before the A.O, the A.O however proceeded to treat the entire amount deposited during the demonetization period as unexplained money u/s. 69A of the Act for the reason that the assessee has not provided proper source for the cash deposit. Aggrieved, the assessee filed further appeal before the CIT(A). The CIT(A) rejected the submissions of the assessee and sustained the addition made by the A.O. The assessee is in appeal before the Tribunal against the order of the CIT(A).

3.

The Ld. Authorized Representative (AR) of the assessee submitted that the assessee has furnished various details including the profit and loss account, balance sheet, bank statements, cash book etc. before the lower authorities. The Ld. AR drew our attention to the cash book to submit that the assessee was having an opening cash balance Rs.18,28,789/- as on 08.11.2016 which has not been considered by the lower authorities. The Ld. AR further submitted that the lower authorities are not recorded any specific finding with regard to the abnormal spike in the cash balance of the assessee and have not rejected the books of accounts. Accordingly, the Ld. AR submitted that the lower authorities are not correct in rejecting the submission of the assessee that the source for cash deposit is from the business receipts of the assessee.

4.

The Ld. Departmental Representative (DR), on the other hand, relied on the orders of the lower authorities.

5.

We have heard the rival submissions and perused the material available on record. The issue for consideration is whether the cash deposits of Rs.14,49,000/- made during the demonetization period are liable to be

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assessed as unexplained money under section 69A of the Act. We notice that the assessee has consistently explained that the impugned cash deposits were made out of the cash available from the business and, in support thereof, furnished the profit and loss account, balance sheet, bank statements and cash book. We further notice that the cash book reflects an opening cash balance of Rs.18,28,789/- as on 08.11.2016, which according to the assessee is sufficient to cover the cash deposits made during the demonetization period. On a perusal of the cash book placed before us, we do not notice any abnormal or sudden spike in the cash balance immediately preceding the demonetization period and that the cash book reflects regular withdrawals and deposits in the normal course of business, indicating that the cash balance was moving in a continuous manner and was not artificially built up to explain the impugned deposits. It is relevant to note here that neither the AO nor the CIT(A) has rejected the books of account or recorded any finding that the cash book is not genuine or that the opening cash balance was either fictitious or stood otherwise utilised.

6.

It is a settled principle that where the opening cash balance is duly recorded in the regular books of account and the Revenue has not brought any material to establish that such cash was unavailable for making the deposits, the subsequent cash deposits cannot be treated as unexplained money under section 69A merely on suspicion. In the present case, the explanation offered by the assessee is duly supported by the books of account and remains uncontroverted by any adverse material brought on record by the Revenue. In these circumstances, we find no justification for sustaining the addition made under section 69A of the Act. Accordingly, we direct the Assessing Officer to

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delete the addition of Rs.14,49,000/-. The grounds raised by the assessee are allowed.

7.

In the result, the appeal of the assessee is allowed. Order pronounced on 05th day of August, 2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (पदमावती यस) (Padmavathy.S) (George George K) उपा�� / Vice President लेखा सद�य सद�य सद�य /Accountant Member सद�य लेखा लेखा लेखा चे�नई/Chennai, �दनांक/Dated: 05th August, 2026. EDN, Sr. P.S EJTADA Digitally signed by EJTADA DURGA NARESH DURGA आदेश क� �ितिल�प अ�े�षत/Copy to: Date: 2026.08.10 1. अपीलाथ�/Appellant NARESH 11:50:29 +05'30' 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

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