NATHANI POLYMERS ,DELHI vs. ITO WARD - 34 (6) , NEW DELHI

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ITA 1834/DEL/2026Status: DisposedITAT Delhi20 April 2026AY 2017-184 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 addition made under Section 69A was based on suspicion, not evidence. Since the assessee demonstrated that the cash deposits were reflected in the books of account and supported by audited financials and VAT returns, the addition was unjustified.

What were the facts?

The assessee deposited Rs. 38,05,000/- in cash during the demonetization period. The assessee explained these deposits as arising from cash sales, supported by audited financial statements, purchase/sale details, and VAT returns.

What were the issues?

Whether cash deposits during demonetization, explained by cash sales and supported by documentary evidence, can be added as unexplained income under Section 69A.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI

Hearing: 16/04/2026Pronounced: 16/04/2026

आयकर अपीलीय अधिकरण धिल्ली पीठ “एस एम सी”, धिल्ली श्री धिकास अिस्थी, न्याधयक सिस्य IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं.1834/धिल्ली/2026 (धि.ि. 2017-18) ITA No.1834/DEL/2026 (A.Y.2017-18)

Nathani Polymers, Plot No.279, Pocket-J, Sector-2, DSIIDC Indl. Area, Bhawana, Delhi 110039 ...... अपीलार्थी/Appellant PAN: AAMFN-3295-N बिाम Vs. Income Tax Office, Ward-34(6), ..... प्रधििािी/Respondent E-2, Block Civic Centre, New Delhi 110002 अपीलार्थी द्वारा/Appellant by : Shri K. Sampath, Advocate (through VC) प्रधििािीद्वारा/Respondent by : Shri Manoj Kumar, Sr. DR सुििाई की धिधर्थ/Date of hearing : 16/04/2026 घोषणा की धिधर्थ/Date of pronouncement : 16/04/2026 आिेश/ORDER PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 30.12.2025, for Assessment Year 2017-18.

2.

Shri K. Sampath, appearing on behalf of the assessee submits that the solitary issue raised in the present appeal is against the addition of Rs.38,05,000/- made u/s. 69A r.w.s. 115BBE of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on account of cash deposits during demonetization period. The ld. Counsel submitted that during the course of assessment proceedings, the assessee had furnished written submissions explaining the source of cash deposits as arising from cash sales. The assessee also furnished audited financial statements for the year ended 31.03.2016 and details of purchases and sales for the period 01.04.2016 to 31.03.2017. The ld. Counsel further submitted that the details of sales and

2 ITA No.1834/DEL/2026 (A.Y.2017-18) purchases were reproduced by the CIT(A) in the appellate order and no discrepancy therein has been pointed either by the Assessing Officer (AO) or by the CIT(A). The ld. Counsel contended that the addition has been made without appreciating the evidences furnished by the assessee. The ld. Counsel further submitted that the assessee had also furnished copy of VAT returns corroborating the sales recorded in the books. It was explained that the assessee is engaged in trading of PVC granules and the sales are largely made in cash to small manufacturers. The AO and the CIT(A) without appreciating documents on record and submissions of assessee made/confirmed the addition. The ld. Counsel prayed for deleting the addition made u/s.69 of the Act in light of documentary evidences brought on record before the lower authorities.

3.

Per contra, Shri Manoj Kumar, representing the department vehemently defending the impugned order prayed for dismissing appeal of the assessee. The ld. DR submits that the assessee has failed to substantiate source of cash deposits in the bank.

4.

Both sides heard, orders of the authorities below examined. The assessee is a trader of PVC granules. The addition in the present case has been made u/s.69A of the Act on account of cash deposits during the demonetization period. As per the assessment order, the assessee had deposited cash amounting to Rs.38,05,000/- in the bank account, which was treated as unexplained money. The case of the assessee is that the cash deposits represent cash sales duly recorded in the books of account. The assessee has furnished audited financial statements; details of purchases and sales; & VAT returns substantiating turnover. A perusal of the CIT(A) order shows that the sales and purchase details were available on record. No specific defect has been pointed in the books of account or in the sales recorded

3 ITA No.1834/DEL/2026 (A.Y.2017-18) by the assessee. The addition has been sustained primarily on the ground of suspicion regarding genuineness of cash sales. It is a settled position of law that suspicion, however strong, cannot partake the character of evidence. The addition u/s. 69A of the Act can only be made where the assesee is found to be owner of money not recorded in books of account. In the instant case the assessee has demonstrated that cash deposits in bank are duly reflected in books and sales register and financials of the assesee are duly audited.

5.

Considering entire facts of the case, I find merit in submissions of the assessee, hence, addition of Rs.38,05,000/- made u/s.69A of the Act is directed to be deleted.

6.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on Thursday the 16th day of April, 2026.

Sd/- Sd/- (VIKAS AWASTHY) न्याधयक सिस्य/JUDICIAL MEMBER धिल्ली/Delhi, धििांक/Dated 20/04/2026 NV/- प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलार्थी/The Appellant , 1. प्रधििािी/ The Respondent. 2. 3. The PCIT/CIT(A) धिभागीय प्रधिधिधि, आय.अपी.अधि., दिल्ली /DR, ITAT, धिल्ली 4. गार्ड फाइल/Guard file. 5.

ITA No.1834/DEL/2026 (A.Y.2017-18)

BY ORDER, //True Copy//

(Asstt. Registrar) ITAT, DELHI

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