JASNEET KAUR BHATIA,NEW DELHI vs. ITO, WARD 50(5), DELHI, NEW DELHI

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ITA 5402/DEL/2025Status: DisposedITAT Delhi15 May 2026AY 2017-185 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 held that the assessee, filing under Section 44AD, would not naturally have demonstrative evidence for cash deposits. Considering the totality of facts, the Tribunal found no occasion to doubt the assessee's statement of past savings and directed the deletion of the addition.

What were the facts?

The assessee, engaged in a small business and filing under Section 44AD, deposited Rs. 3,47,500/- in cash during demonetization. The AO added this amount as unexplained income, and the CIT(A) sustained an addition of Rs. 2,47,500/-.

What were the issues?

Whether the cash deposit during demonetization was unexplained income, and whether penalty proceedings under Section 270A were rightly initiated.

Which sections of the Income-tax Act were involved?

Section 69A,Section 44AD,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, ‘E’: NEW DELHI

Before: SHRI YOGESH KUMAR U.S.

For Appellant: Shri G.S. Kohli, CA
For Respondent: Ms. Ankush Kalra, Sr. DR
Hearing: 25.02.2026Pronounced: 15.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘E’: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTNAT MEMBER

ITA No.5402/DEL/2025 [Assessment Year: 2017-18] Jasneet Kaur Bhatia, ITO, WARD 50(5), CIVIC D-26, G.F. NARAINA VIHAR, CENTRE, MINTO ROAD, NEW NEW DELHI-I10028 Vs DELHI-I10002 PAN-AEYPB7127D Assessee Revenue Assessee by Shri G.S. Kohli, CA Revenue by Ms. Ankush Kalra, Sr. DR Date of Hearing 25.02.2026 Date of Pronouncement 15.05.2026

ORDER PER AMITABH SHUKLA, AM,

This appeal filed by the assessee is against order dated 16.06.2025 of National Faceless Appeal Centre/learned Commissioner of Income Tax(Appeals), New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order dated 19.04.2021 passed under section 144 of the Income Tax Act, 1961 pertaining to Assessment Year 2017-18. The word ‘Act’ herein this order would mean Income Tax Act, 1961.

2.

The assessee has raised following grounds of appeal:-

ITA No.5402/Del/2025

1.

General Ground That on the facts and in the circumstances of the case and in law, the order passed by the learned Commissioner of Income Tax (Appeals) ["GIT(A)"] dated 16.06.2025 is bad in law and void-ab-initio to the extent of additions sustained, and the same deserves to be deleted in full. 2. Addition of 72,47,500/- u/s 69A (Cash Deposit during Demonetisation) That the learned CIT(A) has erred in sustaining the addition of 72,47,500/- as unexplained money u/s 69A of the lncome-tax Act, 1961 , ignoring that – (a) The said cash was out of past accumulated savings and cash sales from regular business, duly evidenced; (b) The appellant is consistently assessed under section 44AD, where maintenance of books is not statutorily required, and cash holdings from business receipts are permissible; (c) The addition has been sustained purely on conjectures and surmises without any contrary material; and (d) Section 694 is inapplicable as the cash deposits were itself declared in ITR. 3. Penalty Proceedings Direction (i) That the learned CIT(A) has erred in mechanically directing initiation of penalty proceedings u/s 2704 without appreciating that there was no misreporting or underreporting of income, and that the major additions made by the AO stood deleted by the CIT(A) himself, thus no penalty is leviable. (ii)That such directions are unlawful and are against the natural law of justice. 4. Reliefs That the appellant craves leave to add, amend, alter, modify, delete or substitute any of the above grounds of appeal before or at the time of hearing. 5. That non-filing of return of income was in bonafide belief that her income is below taxable limit

3.

The first issue raised by the appellant assessee through the above grounds of appeal is regarding the confirmation of addition of Rs.2,47,500/- by the ld. CIT(A) u/s 69A of the Act. As per brief factual matrix of the case the appellant is a lady engaged in small time business and has been filing her return of income qua provisions of section 44AD of the Act. The ld. AO had noted that Page 2 of 5

ITA No.5402/Del/2025

there was a cash deposit of Rs.3,47,500/- in the back account of the assessee during the demonetization period. Rejecting the defence of the assessee that the same were linked to past savings and cash withdrawals, the ld. AO proceeded to make the addition of Rs.3,47,500/- to the assessee’s total income. The ld. CIT(A) partly agreed with the proposition of past savings but gave relief of only Rs. 01 Lakhs while ordering confirmation of addition of Rs.2,47,500/-.

4.

The ld. Counsel for the assessee vehemently argued that the assessee has not been maintaining any books of accounts since she files her return of income qua provisions of section 44AD of the Act. It was argued that considering the overall financials and social stature of the appellant, the assessee cannot be doubted for depositing paltry amount of Rs.3,47,500/- to her bank account.

5.

The ld. DR relied upon the orders of the lower authorities.

6.

We have considered the rival submissions in the light of material placed on record. The only issue is regarding the truthfulness of the assessee’s statement of past savings with reference to the cash deposit of Rs.3,47,500/- in her bank account during demonetization period. As the assessee been filing here return u/s 44AD, she would not naturally behaving demonstrative evidences like cash book etc to prove the impugned deposit. The ld. CIT(A) has admitted that a respectable lady like assessee can have justification of Rs.1 lakhs, but has not indicated how and why the balance would not be attributable to a respectable lady. Be that as it may be, in the interest of justice, we are of the Page 3 of 5

ITA No.5402/Del/2025

considered view that in view of the totality of facts and circumstances of the case, there is no occasion for doubting the veracity of the statement of the assessee. Accordingly, we set-aside the order of the ld. CIT(A) and direct the Ld. AO to delete the Impugned addition. The ground of the appeal No.2 raised by the assessee is therefore allowed.

7.

The next issue raised by the assessee through ground of appeal no.3 is regarding the directions of the ld. CIT(A) to initiate penalty u/s 270A. It has been noted that the ld. CIT(A) is empowered to direct initiation of penalty only in respect of any enhancement of income directed by him in the appellate order. In the present case, there was no such enhancement and hence the directions per se are premature and infructuous. In any case, there would not be any case for imposition of penalty u/s 270A as we have deleted the balance addition of Rs.2,47,500/- made by the AO. Accordingly, the ground of appeal no.3 is also allowed.

8.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 15th May, 2026.

Sd/- Sd/- [YOGESH KUMAR U.S.] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 15.05.2026 Shekhar Copy forwarded to: 1. Appellant 2. Respondent Page 4 of 5

ITA No.5402/Del/2025

3.

PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi,

Page 5 of 5

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