SONAL SINGH DHRUW, RAIPUR,RAIPUR vs. INCOME TAX OFFICER, WARD - 4(1), RAIPUR, RAIPUR

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ITA 554/RPR/2026Status: DisposedITAT Raipur30 July 2026AY 2014-158 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal. It held that the Assessing Officer (AO) had wrongly invoked Section 68 for unexplained cash deposits, as the facts pertained to cash withdrawals and deposits, which should have been considered under Section 69A. The Tribunal found merit in the assessee's contention regarding the incorrect charging section.

What were the facts?

The assessee's appeal was filed 118 days late. The primary issue was the incorrect invocation of Section 68 of the Income Tax Act for cash deposits, when Section 69A might have been more appropriate. The assessee's explanation for the cash deposit was found to be inadequate by the lower authorities.

What were the issues?

Whether the AO wrongly invoked Section 68 instead of Section 69A for unexplained cash deposits. Whether the assessee's explanation for the cash deposit was sufficient.

Which sections of the Income-tax Act were involved?

Section 68,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY

For Appellant: Shri Nikhilesh Begani, CA
For Respondent: Shri Piyush Tripathi, Sr. DR
Hearing: 27.07.2026Pronounced: 30.07.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 30.12.2025 for the assessment year 2014-15 as per the grounds of appeal on record.

2.

At the very outset, it is noted that the appeal is time barred by 118 days. Explaining reasons for such delay, the Ld. Counsel for the assessee has submitted condonation petition a/w. affidavit dated 06.07.2026. The relevant contents of the said affidavit are extracted as follows:

3 Sonal Singh Dhruw Vs. ITO, Ward-4(1), Raipur (C.G.) ITA No.554/RPR/2026

3.

The Department has not brought on record any evidence to suggest that any malafide or deliberate conduct on the part of the assessee for causing such delay nor could file any counter affidavit. Therefore, respectfully following the dictate of Higher Forum in the cases viz. (i) Collector, Land Acquisition Vs. Mst. Katiji & Ors, reported in 167 ITR 471 (SC); (ii) Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur, Civil Appeal Nos……………../2025 [Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31.01.2025; (iii) Jagdish Prasad Singhania Vs. Additional Commissioner of Income Tax (TDS), Raipur (C.G.), TAX Case No.17/2025, dated 24.02.2025 and (iv) Inder Singh Vs. the State of Madhya Pradesh, Civil Appeal No…………/2025, Special Leave Petition (Civil) No.6145 of 2024, dated 21st March, 2025, the delay of 118 days involved in this appeal is condoned.

4.

At the time of hearing, the Ld. Counsel for the assessee submitted that there is absolutely non application of mind by the Revenue authorities in framing assessment since the very charging Section has been wrongly invoked as Section 68 of the Act. The issue and enquiry in this case pertains to verification of cash withdrawals and corresponding cash deposits, therefore, if nature and source of the cash deposits is not explained, the relevant provision should have been section 69A of the Act and not Section 68 of the Act.

4 Sonal Singh Dhruw Vs. ITO, Ward-4(1), Raipur (C.G.) ITA No.554/RPR/2026

5.

Per contra, the Ld. Sr. DR relied heavily on the orders of the sub- ordinate authorities.

6.

I find that the contention in law as assailed by the Ld. Counsel for the assessee is decided in favour of the assessee on the same parameters by ITAT, Raipur in the case of Prakash Chand Agrawal Vs. ITO, Ward-2, Raigarh (C.G.), ITA No.205/RPR/2026, dated 22.05.2026 wherein it was held and observed as follows: “15. The Revenue authorities have not brought on record any reasoning for disallowance of the said amount. Neither the A.O nor the Ld. CIT(Appeals)/NFAC had brought any reasoning for refuting the contention of the assessee that the said amount is as per revised VAT return. The Revenue had clubbed the first addition and on the same basis has upheld this addition also. As I have examined in the foregoing paras regarding genuineness of the business activities of the assessee, genuineness of sales a/w. increase of purchases and stocks which never was doubted by the Department and specifically regarding this issue, when it is on record that such amount of Rs.2,32,186/- is a part of revised VAT return, therefore, addition of this amount also is arbitrary, bad in law and misplaced and the A.O is directed to delete the additions accordingly. I further observe that the additions have been made u/s. 68 of the Act which pertains to unexplained cash credit. But in this case, regarding both the additions, there is no trail of any evidence or enquiry by the Department regarding any loan transaction so to justify addition u/s. 68 of the Act as unexplained cash credit. The entire trail of examination is regarding the nature and source of cash deposits and since the addition has been made by the Department stating the said cash deposits were unexplained then the relevant charging section should have been Section 69A and not Section 68 of the Act. Therefore, charging provision itself has been wrongly invoked by the Department which is clearly non application of mind by the quasi judicial authority. I find that it has been held by the Co-ordinate Bench of the Tribunal, Delhi in the case of Bhawani Castings P. Ltd. Vs. DCIT (supra) that when there is no coherence in the reasons recorded for reopening and

5 Sonal Singh Dhruw Vs. ITO, Ward-4(1), Raipur (C.G.) ITA No.554/RPR/2026

additions made in the assessment, it is utter non application of mind by the A.O while recording reasons for reopening. 16. In the decision of the Co-ordinate Bench of Delhi in the case of Sanjeev Kumar c/o M/s Raj Kumar & Associates vs. ITO Ward 2(3)(2), Bulandshahr, reported in 2023(10) TMI 1027-ITAT Delhi on the same issue of non- application of mind, it was observed and held as follows: “14. In view of foregoing discussion, I reach to a logical conclusion that the complete cash book statement clearly explains the source of cash deposit to the bank account of assessee, wherein the assessee has not only included cash receipts as salary and capital withdrawal from two partnership firms M/s Umang Beverages and M/s Mohan Oil & Cattle Feed and a cash salary from Bihar Milk Foods Pvt. Ltd. and has also reduced the amount of drawings for household expenses. The copy of return of income of wife of assessee Smt. Shalini and father of assessee Shri Kalu Mal co-jointly established that the other family members of assessee are also earning and contributing towards household expenses. Therefore, in my humble understanding the source of cash deposit during demonetization to the bank account of assesses is properly explained by the assessee by way of self speaking documentary evidence and explanation. Secondly, the AO has made addition u/s 69 of the Act which pertains to unexplained investments, whereas the assessee has not made any investment either in movable or any immovable property during the relevant period by way of using cash amount. The Ld.CIT(A) though has given credit of 25% of Impugned cash deposit confirming the remaining part of addition but there is no logic of this segregation. From the relevant operative part of first appellate order, I also note that the Ld.CIT(A) has upheld the part addition without mentioning any charging section and impliedly adopting section 69 of the Act in the line of assessment order. Therefore, respectfully following the proposition rendered by the Hon'ble Jurisdictional High Court of Allahabad in the case of Sarika Jain (supra). I have no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Accordingly, grounds of assessee are allowed and AO is directed to delete the entire addition. 15. In the result, appeal of the assessee is allowed.”

6 Sonal Singh Dhruw Vs. ITO, Ward-4(1), Raipur (C.G.) ITA No.554/RPR/2026

17.

Similarly, in the decision of Hon’ble High Court of Allahabad in the case of Smt. Sarika Jain Vs. The Commissioner of Income Tax, Bareilly and Another, reported in (2018) 407 ITR 254 (All) which decision was referred to and applied in the earlier decision of the Co- ordinate Bench of Delhi (supra), the Hon’ble High Court of Allahabad held as follows: “In the present case, it is apparent that the subject matter of the dispute all through before the Tribunal in appeal was only with regard to the addition of alleged amount of the gift received by the appellant-assessee as his personal income under Section 68 of the Act and not whether such an addition can be made under Section 69-A of the Act. In view of the above, it can safely be said that the Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that "it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant- assessee under Section 68 of the Act. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the entire order of the Tribunal stand vitiated in law. Accordingly, we answer the question of law, as framed above, in favour of the appellant-assessee and against the Revenue and hold that the Tribunal was not competent to make any addition under Section 69-A of the Act and as the same was subject matter of the appeal before it.”

18.

Therefore, on both these counts, additions made by the A.O and sustained by the Ld. CIT(Appeals)/NFAC is unjustified, arbitrary and bad in law. 19. That as per above terms, the appeal of the assessee is allowed.”

7 Sonal Singh Dhruw Vs. ITO, Ward-4(1), Raipur (C.G.) ITA No.554/RPR/2026

7.

In this regard, the trail of enquiry in the case of the assessee is well evidenced at Para 11 of the Ld. CIT(Appeals)/NFAC order which reads as follows:

“11. A minute examination of the records reveals that the cash deposit of Rs.10,00,000/- was made on 29.05.2013 into joint bank account No. 09182011000468 with Oriental Bank of Commerce, wherein the assessee Smt. Sonal Singh Dhruw was a joint holder and immediate beneficiary of the time deposit funded therefrom. The assessee's explanation hinges on grandfather Shri Mehtar Ram Dhruw's purported cash withdrawals from agricultural sale proceeds, claiming these were routed to her via cash. However, the bank passbook of the grandfather, placed on record before the Assessing Officer, discloses cash withdrawals aggregating only Rs. 3,70,000/- spread over prior years (Rs.3,00,000/- on 23.06.2011; Rs.50,000/- on 03.07.2012; Rs.20,000/- on 04.09.2012), which is quantitatively inadequate to source the impugned Rs.10,00,000/- deposit, more so when occurring nearly two years later. Compounding this infirmity, the authorization certificate confirms agricultural sale proceeds were received by cheque directly into grandfather's account, not in cash, directly contradicting the assessee's cash hand- over narrative.”

8.

Therefore, considering the entire trail of examination as regards the nature and source of the cash deposits, I am of the considered view that the charging section should have been Section 69A of the Act and not Section 68 of the Act.

9.

That in the facts and circumstances of the case and as per judicial pronouncements as stated above, there is merit in the contention raised by the Ld. Counsel for the assessee. Accordingly, I set aside the order of

8 Sonal Singh Dhruw Vs. ITO, Ward-4(1), Raipur (C.G.) ITA No.554/RPR/2026

the Ld. CIT(Appeals)/NFAC and direct the A.O to provide appeal effect of this order.

10.

In the result, appeal of the assessee is allowed.

Order pronounced in open court on 30th day of July, 2026.

Sd/- (PARTHA SARATHI CHAUDHURY) �या�यक सद�य/JUDICIAL MEMBER रायपुर / Raipur; �दनांक / Dated : 30th July, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, रायपुर / DR, ITAT, “SMC” Bench, Raipur. गाड� फ़ाइल / Guard File. 5.

Samiran Bera, आदेशानुसार / BY ORDER, Sr. PS, ITAT, // True Copy // Raipur Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.07.30 15:07:02 +05'30'

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