VENUS DEVELOPERS,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J (SMC)” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA No. 8843/MUM/2025 Assessment Year: 2017-18

Venus Developers, 203, Shanti Income Tax Officer, C 41-C 43, Sadan, 2nd Floor, Above DCB Room No. 230B, Kautilya Vs. Bank, Lokhandwala Complex, Bhavan, Bandra Kurla Complex, Andheri West, Mumbai – Bandra E., Mumbai – 400051, 400053, Maharashtra. Maharashtra PAN NO. AAIFV 1696 F Appellant Respondent

Assessee by : Shri Kartik Natrajan, CA. Revenue by : Shri Aditya Rai, (SR. DR.)

Date of Hearing : 10/06/2026 : 15/06/2026 Date of pronouncement

ORDER PER OM PRAKASH KANT, AM

This appeal by the Assessee is directed against order dated 21.10.2025, passed by the learned Additional /Joint Commissioner of Income-tax (Appeals) – 4, Chennai (in short, “the Ld. CIT(A)”), for the Assessment Year 2017–18, raising the following grounds:

“The Ld Addl / JCIT (App) has erred in law & on facts in dismissing appeal of the appellant & in confirming order passed by the AO, which is unjustified, bad in law & liable to be set aside. The Ld AO & CIT (A) have erred in considering the

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cash deposited during the demonetisation period as u cash deposited during the demonetisation period as unexplained money u/s 69A nexplained money u/s 69A of the IT Act, 1961, whereas in reality said cash deposit was only out of the cash of the IT Act, 1961, whereas in reality said cash deposit was only out of the cash of the IT Act, 1961, whereas in reality said cash deposit was only out of the cash in hand as per the audited books of accounts. They ignored that the appellant is in hand as per the audited books of accounts. They ignored that the appellant is in hand as per the audited books of accounts. They ignored that the appellant is engaged in the business of construction and is required to keep sufficient cash in engaged in the business of construction and is required to keep suf engaged in the business of construction and is required to keep suf hand to meet day-to to-day expenses. The Ld AO erred in making addition of Rs. day expenses. The Ld AO erred in making addition of Rs. 9,72,000/- merely on the ground that cash was deposited only during the demo merely on the ground that cash was deposited only during the demo merely on the ground that cash was deposited only during the demo period. The appellant prays that the entire addition made u/s 69A of the IT Act, period. The appellant prays that the entire addition made u/s 69A of the IT Act, period. The appellant prays that the entire addition made u/s 69A of the IT Act, 1961 be deleted in full and appropriate relief be granted. The appellant craves e deleted in full and appropriate relief be granted. The appellant craves e deleted in full and appropriate relief be granted. The appellant craves leave to add, amend, alter OR modify any of the above grounds of appeal at OR leave to add, amend, alter OR modify any of the above grounds of appeal at OR leave to add, amend, alter OR modify any of the above grounds of appeal at OR before the time of hearing. before the time of hearing.” 2. The brief facts giving rise to the present dispute are that the The brief facts giving rise to the present dispute are that the The brief facts giving rise to the present dispute are that the assessee, a partnership firm engaged in the business of assessee, a partnership firm engaged in the business of assessee, a partnership firm engaged in the business of construction and real estate development, filed its return of income construction and real estate development, filed its return of income construction and real estate development, filed its return of income for the year under consideration declaring a total income of for the year under consideration declaring a total income of for the year under consideration declaring a total income of ₹1,60,150/-. The return was initially processed under section . The return was initially processed under section . The return was initially processed under section 143(1) of the Income 143(1) of the Income-tax Act, 1961 (“the Act”). Subsequently, the tax Act, 1961 (“the Act”). Subsequently, the case was selected for scrutiny assessment and statutory notices case was selected for scrutiny assessment and statutory notices case was selected for scrutiny assessment and statutory notices were issued and served upon the assessee from time to time. were issued and served upon the assessee from time to time. were issued and served upon the assessee from time to time.

2.1 During the course of assessment proceedings, the Assessing During the course of assessment proceedings, the Assessing During the course of assessment proceedings, the Assessing Officer noticed cash deposits aggregating to Officer noticed cash deposits aggregating to ₹9,72,000/ 9,72,000/- made by the assessee in its bank account during the demonetisation period the assessee in its bank account during the demonetisation period the assessee in its bank account during the demonetisation period between 08.11.2016 and 13.12.2016. According to the Assessing between 08.11.2016 and 13.12.2016. According to the Assessing between 08.11.2016 and 13.12.2016. According to the Assessing Officer, despite adequate opportunities having been afforded cer, despite adequate opportunities having been afforded cer, despite adequate opportunities having been afforded through notices issued on the ITBA portal, the assessee failed to through notices issued on the ITBA portal, the assessee failed to through notices issued on the ITBA portal, the assessee failed to furnish satisfactory evidence explaining the source of the cash furnish satisfactory evidence explaining the source of the cash furnish satisfactory evidence explaining the source of the cash deposits. The Assessing Officer, therefore, treated the said amount deposits. The Assessing Officer, therefore, treated the said amount deposits. The Assessing Officer, therefore, treated the said amount as unexplained money and made an addition of s unexplained money and made an addition of ₹9,72,000/ 9,72,000/- under section 69A of the Act. section 69A of the Act.

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2.2 Aggrieved, the assessee carried the matter in appeal before the Aggrieved, the assessee carried the matter in appeal before the Aggrieved, the assessee carried the matter in appeal before the learned CIT(A). The appellate authority concurred with the findings learned CIT(A). The appellate authority concurred with the findings learned CIT(A). The appellate authority concurred with the findings of the Assessing Officer and obse of the Assessing Officer and observed that the assessee had neither rved that the assessee had neither furnished a cash-flow statement nor any reconciliation of cash flow statement nor any reconciliation of cash flow statement nor any reconciliation of cash balances or other supporting material establishing the source of the balances or other supporting material establishing the source of the balances or other supporting material establishing the source of the cash deposits. The learned CIT(A), therefore, upheld the addition cash deposits. The learned CIT(A), therefore, upheld the addition cash deposits. The learned CIT(A), therefore, upheld the addition made under section 69A made under section 69A of the Act. The relevant finding relevant finding of the Ld. CIT(A) is reproduced as under: CIT(A) is reproduced as under:

“The assessee had deposited cash of Rs. 9,72,000 in his bank account during The assessee had deposited cash of Rs. 9,72,000 in his bank account during The assessee had deposited cash of Rs. 9,72,000 in his bank account during demonetisation which the AO disallowed. The assessee is stating that the demonetisation which the AO disallowed. The assessee is stating that the demonetisation which the AO disallowed. The assessee is stating that the deposits are out of previous deposits are out of previous withdrawals. The assessee did not file any details such as cash flow statement, Reconciliation The assessee did not file any details such as cash flow statement, Reconciliation The assessee did not file any details such as cash flow statement, Reconciliation of cash and computation of income but merely stated that the source of cash of cash and computation of income but merely stated that the source of cash of cash and computation of income but merely stated that the source of cash deposit is out of income generated from business activities. deposit is out of income generated from business activities. The assessee has stated The assessee has stated that he had withdrawn cash for managing it's working that he had withdrawn cash for managing it's working capital and for contingency expenses and that he deposited this cash only capital and for contingency expenses and that he deposited this cash only capital and for contingency expenses and that he deposited this cash only because of demonetisation. because of demonetisation. This claim of the assessee is not substantiated by any documentary evidences. This claim of the assessee is not substantiated by any documentary evidences. This claim of the assessee is not substantiated by any documentary evidences. No records were furnish No records were furnished by the assessee so as to ascertain the nature of ed by the assessee so as to ascertain the nature of contingency expenses for which cash had to be withdrawn. contingency expenses for which cash had to be withdrawn. Even if this reason for cash withdrawal is genuine, the assessee has not Even if this reason for cash withdrawal is genuine, the assessee has not Even if this reason for cash withdrawal is genuine, the assessee has not established that the cash withdrawal which the assessee claims, are from established that the cash withdrawal which the assessee claims, are from established that the cash withdrawal which the assessee claims, are from income generated from business activities, is from accounted sources and also in ncome generated from business activities, is from accounted sources and also in ncome generated from business activities, is from accounted sources and also in which AY, the assessee had offered it as income has also not been substantiated which AY, the assessee had offered it as income has also not been substantiated which AY, the assessee had offered it as income has also not been substantiated by the assessee. Hence, his contention that he maintained cash with him for by the assessee. Hence, his contention that he maintained cash with him for by the assessee. Hence, his contention that he maintained cash with him for emergency purposes i emergency purposes is unacceptable. That the assessee, chose to keep cash with himself for a long period and then That the assessee, chose to keep cash with himself for a long period and then That the assessee, chose to keep cash with himself for a long period and then deposited it during demonetisation only because there is no option for the deposited it during demonetisation only because there is no option for the deposited it during demonetisation only because there is no option for the assessee is suspicious. assessee is suspicious.

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Even otherwise, the assessee has not furnished documentary evidence to prove Even otherwise, the assessee has not furnished documentary evid Even otherwise, the assessee has not furnished documentary evid that the source of cash deposit was from accounted sources and that they had that the source of cash deposit was from accounted sources and that they had that the source of cash deposit was from accounted sources and that they had already suffered taxation. already suffered taxation. The assessee in his grounds, has stated that the addition should not have been The assessee in his grounds, has stated that the addition should not have been The assessee in his grounds, has stated that the addition should not have been u/s 69A of the Act because the Section is applicable only when the assessee is u/s 69A of the Act because the Section is applicable only w u/s 69A of the Act because the Section is applicable only w found to be the owner of assets which are not recorded in his books of accounts. found to be the owner of assets which are not recorded in his books of accounts. found to be the owner of assets which are not recorded in his books of accounts. But the assessee has not furnished books of accounts and even otherwise, the But the assessee has not furnished books of accounts and even otherwise, the But the assessee has not furnished books of accounts and even otherwise, the assessee should have accounted sources of income to justify his cash deposits assessee should have accounted sources of income to justify his cash deposits assessee should have accounted sources of income to justify his cash deposits irrespective of whether he has maintained books of accounts or not. irrespective of whether he has maintained books of accounts or not. irrespective of whether he has maintained books of accounts or not. From the above discussions, it is clear that the From the above discussions, it is clear that the assessee's cash deposit is assessee's cash deposit is not from accounted sources. Hence, the grou from accounted sources. Hence, the ground of the assessee is dismissed nd of the assessee is dismissed.”

3.1 Per Per Per contra, contra, contra, the the the learned learned learned Departmental Departmental Departmental Representative Representative Representative supported the orders of the lower authorities and submitted that no supported the orders of the lower authorities and submitted that no supported the orders of the lower authorities and submitted that no satisfactory evidence demonstrating the availability of cash-in-hand satisfactory evidence demonstrating the availability of cash satisfactory evidence demonstrating the availability of cash

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as on the date of deposit had been furnished before the Assessing as on the date of deposit had been furnished before the Assessing as on the date of deposit had been furnished before the Assessing Officer or the learned CIT(A). It was, therefore, argued that the fficer or the learned CIT(A). It was, therefore, argued that the fficer or the learned CIT(A). It was, therefore, argued that the addition had rightly been sustained. addition had rightly been sustained. 4. We have carefully considered the rival submissions and We have carefully considered the rival submissions and We have carefully considered the rival submissions and perused the material available on record. The controversy lies in a perused the material available on record. The controversy lies in a perused the material available on record. The controversy lies in a narrow compass and relates t narrow compass and relates to the source and availability of cash o the source and availability of cash amounting to ₹9,72,000/ 9,72,000/- deposited by the assessee during the deposited by the assessee during the demonetisation period. demonetisation period. 4.1 The assessee's consistent stand has been that the impugned The assessee's consistent stand has been that the impugned The assessee's consistent stand has been that the impugned deposits were sourced from the opening cash balance and deposits were sourced from the opening cash balance and deposits were sourced from the opening cash balance and withdrawals made prior to demonetisation, and that the availability de prior to demonetisation, and that the availability de prior to demonetisation, and that the availability of such cash was duly supported by a month of such cash was duly supported by a month-wise cash summary, wise cash summary, details of cash receipts, withdrawals and deposits, as well as a details of cash receipts, withdrawals and deposits, as well as a details of cash receipts, withdrawals and deposits, as well as a flow statement. The authorities below, however, have cash-flow flow statement. statement. The The authorities authorities below, below, however, however, have have proceeded on the proceeded on the premise that no satisfactory evidence was premise that no satisfactory evidence was furnished in support of the assessee's explanation. furnished in support of the assessee's explanation. 4.2 Having regard to the submissions advanced before us and Having regard to the submissions advanced before us and Having regard to the submissions advanced before us and upon perusal of the material placed in the paper book, we find that upon perusal of the material placed in the paper book, we find that upon perusal of the material placed in the paper book, we find that ertain documentary evidence the assessee has now relied upon c the assessee has now relied upon certain documentary evidence which, according to it, demonstrates the availability of sufficient which, according to it, demonstrates the availability of sufficient which, according to it, demonstrates the availability of sufficient hand on the dates of deposit. Whether such cash was cash-in-hand on the dates of deposit. Whether such cash was hand on the dates of deposit. Whether such cash was genuinely available and whether the explanation offered by the genuinely available and whether the explanation offered by the genuinely available and whether the explanation offered by the assessee satisfactorily reconciles th assessee satisfactorily reconciles the impugned deposits are matters e impugned deposits are matters

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requiring factual verification from the primary books of account and requiring factual verification from the primary books of account and requiring factual verification from the primary books of account and supporting records. 4.3 It is trite law that an addition under section 69A can be It is trite law that an addition under section 69A can be It is trite law that an addition under section 69A can be sustained only where the explanation offered by the assessee is sustained only where the explanation offered by the assessee is sustained only where the explanation offered by the assessee is found to be unsatisfactory upon proper examination of the material be unsatisfactory upon proper examination of the material be unsatisfactory upon proper examination of the material on record. Equally, where an assessee claims that the cash on record. Equally, where an assessee claims that the cash on record. Equally, where an assessee claims that the cash deposited represents duly recorded cash balance available in its deposited represents duly recorded cash balance available in its deposited represents duly recorded cash balance available in its books, such claim deserves verification with reference to the regular books, such claim deserves verification with reference to the regular books, such claim deserves verification with reference to the regular books of account, cash book, vouchers and other contemporaneous s of account, cash book, vouchers and other contemporaneous s of account, cash book, vouchers and other contemporaneous records. Since the evidentiary material relied upon by the assessee records. Since the evidentiary material relied upon by the assessee records. Since the evidentiary material relied upon by the assessee has not been comprehensively examined by the Assessing Officer, has not been comprehensively examined by the Assessing Officer, has not been comprehensively examined by the Assessing Officer, we are of the considered view that the interests of justice would be we are of the considered view that the interests of justice woul we are of the considered view that the interests of justice woul best served by restoring the matter to the file of the Assessing best served by restoring the matter to the file of the Assessing best served by restoring the matter to the file of the Assessing Officer for a fresh examination. Officer for a fresh examination. Accordingly, the orders of the lower authorities on this issue are set Accordingly, the orders of the lower authorities on this issue are set Accordingly, the orders of the lower authorities on this issue are set aside and the matter is restored to the file of the Assessing Officer. aside and the matter is restored to the file of the Assessing Officer. aside and the matter is restored to the file of the Assessing Officer. The assessee shall produce the regular audited books of account, e shall produce the regular audited books of account, e shall produce the regular audited books of account, cash book, supporting vouchers and such other documentary cash book, supporting vouchers and such other documentary cash book, supporting vouchers and such other documentary evidence as may be necessary to substantiate the availability of evidence as may be necessary to substantiate the availability of evidence as may be necessary to substantiate the availability of cash-in-hand on the relevant dates. The Assessing Officer shall hand on the relevant dates. The Assessing Officer shall hand on the relevant dates. The Assessing Officer shall examine the same objectively and decide the issue afresh in e objectively and decide the issue afresh in e objectively and decide the issue afresh in accordance with law after affording the assessee a reasonable and accordance with law after affording the assessee a reasonable and accordance with law after affording the assessee a reasonable and effective opportunity of being heard. effective opportunity of being heard.

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We make it clear that we have not expressed any opinion on the We make it clear that we have not expressed any opinion on the We make it clear that we have not expressed any opinion on the merits of the addition and all contentions o merits of the addition and all contentions of both parties are left f both parties are left open for adjudication by the Assessing Officer. open for adjudication by the Assessing Officer.

Sd/- Sd/ Sd/- (ANIKESH BANERJEE ANIKESH BANERJEE) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 15/06/2026 Kunal Kr, P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER,

//True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai