NEELAM KAUL,NAVI MUMBAI vs. ITO, KAUTILYA BHAVAN, MUMBAI

आदेश / O R D E R PER AMIT SHUKLA (J.M): This appeal has been preferred by the assessee against the order dated 25.02.2026 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, arising out of the assessment framed under section 147 read with section 144B of the Income Tax Act, 1961, for the Assessment Year 2017-18. The assessee is

2 ITA No. 4530/Mum/2026 Neelam Kaul aggrieved by the action of the authorities below in treating the cash deposits of Rs.5,00,000/- made during the demonetisation period as unexplained money under section 69A and taxing the same under section 115BBE of the Act. 2. Briefly stated, the assessee is an individual engaged in providing home tuition services and derives income from such activity. She filed her return of income declaring the income earned during the relevant previous year. Subsequently, the assessment was reopened on the basis of information regarding cash deposits of Rs.5,00,000/- made in her bank account during the demonetisation period. During the course of assessment proceedings, the assessee explained that the impugned cash deposits were made out of the cash already available with her. It was submitted that she had an opening cash balance of Rs.8,84,018/-, which stood duly reflected as the closing cash balance in the return of income for the immediately preceding Assessment Year 2016-17. Besides the said opening balance, she had also earned cash receipts of Rs.4,53,030/- during the relevant previous year from her tuition activities, which had also been duly offered to tax. Thus, according to the assessee, the total cash available with her during the year aggregated to Rs.13,37,048/-, out of which only Rs.5,00,000/- had been deposited in the bank account during the demonetisation period. The Assessing Officer, however, did not accept the explanation and treated

3 ITA No. 4530/Mum/2026 Neelam Kaul the entire cash deposit as unexplained money under section 69A. The learned CIT(A) confirmed the addition. 3. Before us, the learned Counsel reiterated that the authorities below have completely failed to appreciate the undisputed factual position emerging from the record. He submitted that the opening cash balance of Rs.8,84,018/- was not an afterthought but was duly disclosed in the return of income of the immediately preceding assessment year, which had been accepted by the Department. Thus, the existence of such opening cash balance could not be disregarded while examining the source of the cash deposited during the year under consideration. It was further submitted that the assessee had earned cash income of Rs.4,53,030/- from her regular tuition activities during the relevant previous year, which also stood duly disclosed in the return of income. Accordingly, the aggregate cash available with the assessee far exceeded the amount of Rs.5,00,000/- deposited during the demonetisation period. The learned Departmental Representative relied upon the orders of the lower authorities. 4. We have carefully considered the rival submissions and perused the material available on record. The short issue requiring adjudication is whether the cash deposit of Rs.5,00,000/- made during the demonetisation period could be treated as unexplained money under section 69A despite the assessee demonstrating sufficient cash availability from disclosed sources.

4 ITA No. 4530/Mum/2026 Neelam Kaul It is an undisputed fact borne out from the record that the assessee had disclosed a closing cash balance of Rs.8,84,018/- in the immediately preceding Assessment Year 2016-17, which automatically constituted the opening cash balance for the year under consideration. This opening balance has neither been disturbed nor doubted by the Revenue. Once such opening cash balance forms part of the accepted financial position of the assessee, the same cannot be brushed aside while examining the source of cash deposits made in the subsequent year, unless the Revenue brings some cogent material on record to establish that such cash was either non-existent or had been otherwise utilised. No such material has been brought on record by the Assessing Officer. Apart therefrom, the assessee had also disclosed cash income of Rs.4,53,030/- earned from her tuition activities during the relevant previous year, which has also been accepted as part of the returned income. Thus, on the date of deposit, the assessee had explained cash availability aggregating to Rs.13,37,048/-, whereas the impugned cash deposit was only Rs.5,00,000/-. The explanation, therefore, stands fully supported by the cash available with the assessee from disclosed and explained sources. The Assessing Officer has proceeded merely on the premise that documentary evidence was not furnished in support of the explanation. However, the existence of the

5 ITA No. 4530/Mum/2026 Neelam Kaul opening cash balance itself emanates from the records of the Department and has not been shown to be incorrect. Likewise, the cash receipts from tuition activities constitute the very income returned by the assessee. In the absence of any material brought by the Revenue to discredit either the opening cash balance or the disclosed cash receipts, the explanation furnished by the assessee could not have been rejected merely on conjectures or surmises. Suspicion, however strong, cannot substitute evidence, particularly when the explanation is supported by the contemporaneous records and the overall cash availability is substantially higher than the amount deposited. 5. In view of the aforesaid facts and circumstances, we are of the considered opinion that the assessee had satisfactorily explained the source of the cash deposit of Rs.5,00,000/- made during the demonetisation period. The addition made under section 69A and sustained by the learned CIT(A) is, therefore, unsustainable in law as well as on facts. Accordingly, the addition of Rs.5,00,000/- is directed to be deleted. The grounds raised by the assessee are allowed. In the result, the appeal of the assessee is allowed. 6. Order pronounced on 07th July, 2026. Sd/- Sd/- (GIRISH AGRAWAL) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 07/07/2026

6 ITA No. 4530/Mum/2026 Neelam Kaul Kunal Kr., P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy//

BY ORDER,

(Asstt. Registrar) ITAT, Mumbai

7 ITA No. 4530/Mum/2026 Neelam Kaul

Initial Date 1. Draft dictated on Sr.PS 2. Draft placed before author Sr.PS