AVINASH DAMU PATIL,NANDURBAR vs. ITO WARD 2, DHULE

At the time of hearing, the Ld.AR submitted that there is a delay of 36 days in filing the appeal before Hon'ble Tribunal and the delay was not intentional and filed an affidavit of the assessee for condonation of delay. On consideration of facts and information mentioned in the affidavit, there is a reasonable cause explained and the Ld. DR. has no specific objections. Accordingly, the delay is condoned and the appeal is admitted.

The brief facts of the case are that, Assessing Officer (A.O) has received information from the AIMS Module of ITBA that the assessee has made substantial cash deposits in the two bank accounts i.e., the Shirpur Peoples’ Co-op Bank Ltd. of Rs. 16,25500/- and HDFC Bank of Rs. 5,84,000/- in the F.Y.2016-17. The Assessing Officer (A.O) has issued the notice u/sec 142(1) of the Act along with the questionnaire to explain the sources of cash deposits along with documentary evidence. Further the Assessing Officer observed that the assessee has made a cash deposits during the demonetization period and has issued a final show cause notice dated 15.11.2019 to the assessee to explain the sources of cash deposits in the two bank accounts. In compliance to the notice, the assessee has filed return of income for A.Y.2017-18 on 25.11.2019 and filed the reply mentioning that the assessee is engaged in the business of recharge of Airtel DTH & Installation and is an authorized distributor of Airtel DTH. The assessee’s submissions are that these cash deposits are made out of the receipts from the customers in respect of the recharge and installation. Whereas the AO has dealt on the facts of deposits and observed that the assessee has made cash deposits SBN during the demonetization period i.e on 10.11.2016, 11.11.2016 and 12.11.2016 aggregating into Rs. 5,65,000/- and was not satisfied with the explanations and made addition under section 69A of the Act. Similarly the A.O made addition of business income of Rs.4,55,983/- and interest income of Rs,466/- and assessed the total income of Rs.10,21,449/-and passed the order u/sec144 of the Act dated 2.12.2019. 4. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) has considered grounds of appeal, statements of facts, and findings of the AO but sustained the action of the AO and dismissed the assessee’s appeal. Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Hon'ble Tribunal.

At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in sustaining the additions made by the A.O overlooking the material filed in the proceedings. The Ld AR emphasized that the assessee has filed the details of deposits collected from different parties for the Airtel connections and the said deposits in the bank account represents the business transactions. Further, the Ld.AR submitted that the disputed deposits in the bank accounts are made prior to 15.12.2016 and are not attracted by the provisions of section 115BBE of the Act. The Ld.AR supported the submissions with judicial decisions and factual paper book and prayed for allowing the appeal. Per contra the Ld. DR supported the order of the CIT(A).

Heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in sustaining the additions made by the AO overlooking the facts and submissions. The Ld.AR contentions are that the assessee is in the business of recharge of the Airtel DTH & installations and deposits are out of business receipts. The Ld.AR submitted that the deposits made during the demonetization period SBN notes are recorded in the books of account and are deposited during 10.11.2016 to 12.11.2016 are much prior or prior to 15.12.2016. The Honble Tribunal in the case of Shri Santosh HarichandKatrela vs. ITO, Ward-1, Beed (ITA No. 339/PUN/2021 for the A.Y. 2017-18) dated12.12.2024 has dealt on the identical issue and granted relief at Page 6 Para 9 to 12 of the order read as under:- “9.“We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. We find that the assessee has accepted Rs.4,74,000/- on 09.11.2016 and 10.11.2016 and the Assessing Officer was of the opinion that the above amount accepted in SBN was not legal tender hence the addition of Rs.4,74,000/- was made in the hands of the assessee and simultaneously provisions of section 115BBE invoked which were brought on statute book by an amendment dated 15.12.2016. It was the contention of Ld. AR that as per the Cessation of Liabilities Act, 2017, the SBN of Rs.1000 & Rs.500 demonetized seized to be legal tender w.e.f. 31.12.2016 i.e. the appointed day and accordingly it is requested that prior to this appointed day Rs.1000 & Rs.500 denomination notes were legal tender and therefore the Assessing Officer was not correct in making the addition and consequently Ld. CIT(A)/NFAC was also not justified in confirming the action of the Assessing Officer. It was also the alternate contention of the counsel of the assessee that the provisions of section 115BBE were brought on statute book w.e.f. 15-12-2016, hence cannot be applied on a transaction which took place prior to 15-12-2016. In support of its main ground that the addition of Rs 4,74,000/- is not correct, Ld. AR relied on various decisions passed by the Co-ordinate Benches of this Tribunal. In one of such decision passed in the case of ITO vs. Sri TatipartiSatyanarayana, order dated 16.03.2022, the Tribunal observed in para 9 of the order as under :- “9. We have heard both the parties and perused all the documents on record. We find that there was sufficient cash balance with the assessee as detailed in page No.30 of the paper book. The Specified Bank Notes (Cessation of Liabilities) Act, 2017, defines “appointed day” vide Section 2(1)(a). As per Section 2(1)(a), “appointed day” means the 31st Day of December 2016. Section 5 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017 also deals with prohibition on holding, transferring or receiving specified bank notes. Section 5 states that “On and from the appointed day, no person shall knowingly or voluntarily, hold, transfer or receive any specified bank note”. We therefore, find that the specified bank notes can be measured in monetary terms since the guarantee of the Central Government and the liability of Reserve Bank of India does not cease to exist till 31.12.2016. In view of the above, the contention of the Ld. DR, treating the receipt of SBNs from cash sales as illegal and thereby invoking the provisions of section 69A is not valid in law. Therefore, we dismiss this ground of the Revenue.”

Apart from the above decision the Co-ordinate Bench of this Tribunal in the case of M.s Bhagur Urban Credit Co-op Soc. Ltd. vs. ITO, ITA No.561/PUN/2022 order dated 03.01.2023 also deleted the addition which was made on the basis of accepting the old currency i.e. SBN between 09.11.2016 to 11.11.2016 which were deposited in the bank account. Ld. DR could not bring on record any contrary material in support of the Revenue. Respectfully following the above decision passed in the case of (1) Sri TatipartiSatyanarayana (supra) and (2) M/s. Bhagur Urban Credit Co-op Soc. Ltd. (supra) we deem it fit to set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to delete the addition of Rs.4,74,000/- made by him. Thus, this ground is allowed in favour of the assessee.

Since the main ground of appeal regarding addition of Rs.4,74,000/- has been allowed in favour of assessee, therefore, other grounds raised in this appeal becomes academic in nature, hence not adjudicated.

In the result, the appeal filed by the assessee is allowed.”

Hence considering the facts, circumstances and ratio of judicial decisions and follow the judicial precedence as the deposits made during the demonetization period SBN notes are recorded in the books of account and are deposited during 10.11.2016 to 12.11.2016 are much prior to 15.12.2016..Accordingly, set aside the order of the CIT(A) and direct the Assessing officer to delete the addition u/sec69A of the Act and to allow deduction u/sec80C of the Act subject to verification of claim. And the grounds of appeal are allowed in favor of the assessee.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 28th July, 2026. PAVAN KUMAR GADALE (JUDICIAL MEMBER) Pune, Dated: 28th July, 2026 Abhishek Mohan Abhishek Mohan Date: 2026.07.28 22:37:38 +05'30' आदेश की प्रतितिति अग्रेतिि / Copy of the Order forwarded to : अिीिार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

The Pr. CIT concerned. 4. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, “SMC” बेंच, पुणे/ DR, ITAT, “SMC” Bench, Pune. गार्डफ़ाइि / Guard File. 5. ////