VIDYA SAGAR AGRAWAL THROUGH L/H OM PRAKASH AGRAWAL,RAIPUR vs. ACIT, CENTRAL CIRCLE 1(1), VISAKHAPATNM

आयकर अपील�य अ�धकरण, �वशाखाप�नम पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SM‘ Bench, Visakhapatnam �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member Appeal No Assessee Department A.Y 825/Viz/2025 Shri Vidya Sagar ACIT Central 2017-18 Circle 1(1) Agrawal through Visakhapatnam L/H Om Prakash Agrawal, RAIPUR PAN:ADTPA7175Q 826/Viz/2025 Shri Om Prakash -do- -do- Agrawal, RAIPUR PAN:ADUPA4363M 827/Viz/2025 -do- -do- Shri Ram Gopal Agrawal, RAIPUR PAN:ADUPA4362L िनधा�रती �ारा/Assessee by: CA Praveen Khandelwal राज� व �ारा/Revenue by: Shri A.P. Babu, Sr. AR सुनवाई की तारीख/Date of hearing: 29/06/2026 घोषणा की तारीख/Pronouncement: 08/07/2026 आदेश/ORDER Per Bench:

These three appeal are filed by the respective assessees feeling aggrieved by the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-3, Visakhapatnam (“Ld. CIT(A)”) dated 13.10.2025 and 30.09.2025 respectively for the A.Y. 2017-18. Since the issues involved in these appeals are identical, for the sake of convenience, these were heard together and are being disposed of by this common and consolidated order.

2 ITA No. 825/Viz/2025:

“1. That on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in dismissing the appeal of the appellant on non-prosecution without affording an opportunity of being heard. 2. That on the facts and circumstances of the case and in law, the A.O erred in making an addition of Rs.3,74,000/- under section 69A of the Act, without considering the submission of the appellant. 3. The appellant carves to add, alter OR DELETE any of the above grounds of appeal during the course of appellate proceedings.” 3. The brief facts of the case are that the assessee is an individual who filed his return of income for Assessment Year 2017-18 on 06.02.2018 declaring total income of ₹2,62,460/-. The case of the assessee was selected for Limited Scrutiny under CASS and, accordingly, notice under section 143(2) of the Income-tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”) on 10.09.2018. During the course of assessment proceedings, the Ld. AO observed that the assessee had cash-in-hand of ₹24,75,719/- as on 09.11.2016. Out of the said cash balance, the assessee deposited cash of ₹21,00,500/- during the demonetization period from 09.11.2016 to 30.12.2016. Accordingly, after such deposits, a balance of ₹3,75,219/- remained with the assessee as on 30.12.2016. The Ld. AO was of the view that the balance cash remaining with the assessee as on 30.12.2016 represented Specified Bank Notes (“SBNs”), which ceased to be legal tender after 30.12.2016. Accordingly, after assuming that ₹1,219/- represented non-SBN currency, the Ld. AO treated

3 the balance amount of ₹3,74,000/- as unexplained money under section 69A of the Act and added the same to the income of the assessee. The assessment was completed by the Ld. AO under section 143(3) of the Act on 16.12.2019 assessing the total income of the assessee at ₹6,46,460/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) sustained the addition made by the Ld. AO and dismissed the appeal of the assessee. 5. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that the solitary issue arising out of the present appeal relates to the addition of ₹3,74,000/- made under section 69A of the Act. Inviting our attention to para no. 11 of the assessment order, the Ld. AR submitted that the assessee had cash-in-hand of ₹24,75,719/- as on 09.11.2016 as per the books of account maintained by him. The said cash balance has been duly accepted by the Ld. AO and no adverse finding has been recorded regarding the correctness thereof. It was further submitted that out of the said cash balance, the assessee deposited SBNs amounting to ₹21,00,500/- into the bank account during the demonetization period. Consequently, the balance cash of ₹3,75,219/- available with the assessee as on 30.12.2016 necessarily represented non-SBN currency. The Ld. AR submitted that the Ld. AO merely on the basis of suspicion and surmises presumed that the balance cash remaining with the assessee on 30.12.2016 represented SBNs and, on that basis, made the impugned addition under section 69A of the Act. It was argued that no prudent person would

4 knowingly retain SBNs after 30.12.2016 when such notes had ceased to be legal tender and could not be used in the normal course. Therefore, the presumption drawn by the Ld. AO is contrary to normal human conduct and unsupported by any evidence. It was further submitted that no material whatsoever has been brought on record by the Ld. AO to establish that the balance cash available with the assessee as on 30.12.2016 consisted of SBNs. Therefore, the addition made purely on conjectures and assumptions deserves to be deleted. 5.1 Without prejudice to the above submissions, the Ld. AR contended that even assuming the balance cash represented SBNs, the Ld. AO himself has held that such SBNs ceased to have any value after 30.12.2016. Therefore, when according to the Ld. AO the said cash had no value after 30.12.2016, the same could not simultaneously be treated as valuable money for the purpose of making an addition under section 69A of the Act. Accordingly, it was prayed that the addition be deleted. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities and prayed that the order of the Ld. CIT(A) be upheld. 7. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee had cash-in-hand of ₹24,75,719/- as on 09.11.2016. The said cash balance has been accepted by the Ld. AO and no defect whatsoever has been pointed out in the books of account or in the availability of such cash balance. It is further not in dispute that the assessee deposited

5 ₹21,00,500/- during the demonetization period and, consequently, a balance cash of ₹3,75,219/- remained with the assessee as on 30.12.2016. Thus, once the opening cash balance as on 09.11.2016 stands accepted by the Revenue, the consequential balance cash of ₹3,75,219/- remaining with the assessee as on 30.12.2016 also necessarily stands accepted. The only dispute before us is regarding the character of such balance cash, namely, whether the same represented SBNs or non-SBN currency. On perusal of the assessment order, we find that the Ld. AO has not brought any material evidence on record to substantiate his allegation that the balance cash remaining with the assessee as on 30.12.2016 represented SBNs. No verification, statement, documentary evidence or any other material has been referred to by the Ld. AO in support of such conclusion. The conclusion of the Ld. AO is thus based purely on suspicion and surmises. It is a settled proposition of law that suspicion, however strong, cannot take the place of evidence. In the absence of any cogent material demonstrating that the balance cash held by the assessee as on 30.12.2016 consisted of SBNs, the impugned addition cannot be sustained. 7.1 We also find considerable merit in the alternate contention advanced by the Ld. AR. The very foundation of the addition made by the Ld. AO is that the balance cash represented SBNs which ceased to be legal tender and had no value after 30.12.2016. If that be the stand of the Revenue, then a contradiction arises in treating the same amount as valuable money for the purpose of making an addition under section 69A of the Act. When the Ld. AO himself proceeds on the premise that the alleged SBNs had ceased to have any value after 30.12.2016, it is difficult to appreciate how the same

6 amount could simultaneously be regarded as valuable unexplained money liable to be taxed in the hands of the assessee. The stand adopted by the Revenue is self- contradictory and cannot be sustained. 7.2 Considering the totality of the facts and circumstances of the case, we hold that the addition of ₹3,74,000/- made by the Ld. AO under section 69A of the Act is based merely on assumptions and conjectures without any supporting evidence and, therefore, is unsustainable. Accordingly, we direct the Ld. AO to delete the addition of ₹3,74,000/-. 8. In the result, the appeal of the assessee in ITA No. 825/Viz/2025 is allowed ITA Nos. 826 & 827/Viz/2025 9. The issues raised by the assessees in these two appeals are identical to the issues raised by the assessee in ITA No.825/Viz/2025. Therefore, our observations and findings recorded therein shall apply mutatis mutandis to these two appeals as well. In ITA No.825/Viz/2025, we have made a direction to the Ld. AO to delete the addition. Accordingly, we direct the Ld. AO to delete the additions in both these appeals also.

7 11. To sum up, all the three appeals filed by the assessee are allowed.

Order pronounced in the Open Court on 8th July, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 8th July, 2026. Vinodan/sps

Copy to: S.No Addresses 1 Shri Vidya Sagar Agrawal, through L/H Om Prakash Agrawal, H.No.10, Shankari Marg 3, Choubey Colony, Raipur 492001 2 Shri Om Prakash Agrawal, H.No.10 Shankari Marg, 3 Choubey Colony, Raipur 3 Shri Ram Gopal Agrawal, Anupam Nagar, Shankar Nagar, RAIPUR 5492001 4 Assistant Commissioner of Income Tax Central Circle 1(1) Aayakar Bhavan, Dabagardens, Visakhapatnam 5 Pr. CIT,Central, Visakhapatnam 6 DR, ITAT Visakhapatnam Benches 7 Guard File

By Order Digitally signed by TUMMALACHARLA TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.07.08 16:59:19 +05'30'