TARUNA VINAY AGARWAL,MUMBAI vs. INCOME TAX OFFICER WARD 30(1)(1), MUMBAI

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ITA 3776/MUM/2026Status: DisposedITAT Mumbai30 June 2026AY 2017-186 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 found that the assessee had sufficient cash balance available from previous years' withdrawals and deposits to explain the demonetization deposit. The AO's addition was based on conjecture, and the assessee had provided supporting evidence.

What were the facts?

The assessee deposited Rs. 15,50,000/- in cash during demonetization, which the Assessing Officer (AO) treated as unexplained money. The assessee claimed the deposit was from her opening cash balance, supported by cash account summaries from previous financial years.

What were the issues?

Whether the cash deposit during demonetization was sufficiently explained by the assessee's prior cash balance, and if the addition made by the AO was justified.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 271AAC,Section 270A,Section 234A,Section 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI

Before: HON’BLE SHRI SANDEEP GOSAIN

For Respondent: MS. Kanika Naroola
Hearing: 29.06.2026Pronounced: 30.06.2026

आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order dated 23.02.2026 passed u/s 250 of the Income Tax Act, 1961 ('the Act'), by the office of the Commissioner of Income-tax (Appeals) Addl/JCIT (A), Jodhpur for the assessment year 2017-18. The following grounds are raised by the assessee are reproduced below:

2 ITA No.3776/Mum/2026 Taruna Vinay Agarwal

“Ground I: WRONGFUL INVOCATION OF SECTION 69A. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)/JCIT(A) erred confirming the action of the Learned Assessing Officer (Ld. AO) in making an addition u/s 69A of the Act amounting to Rs. 15,50,000/- as alleged unexplained money u/s 69A of the Act. The Appellant therefore prays that the addition of Rs.15,50,000/- made under section 69A of the Act and sustained by the Ld. CIT (A) be deleted in full. Ground II: MISAPPLICATION OF THE 'HUMAN PROBABILITY TEST' BY CIT (A)/JCIT (A).

The Ld. CIT(A)/JCIT(A) erred in applying the Human Probability Tests to dismiss the Appellants claim, without appreciating the specific facts and circumstances of the present case, rendering the order perverse and unsustainable in law. Ground III: BREACH OF PRINCIPLES OF NATURAL JUSTICE - EVIDENCE IGNORED. The Ld. AO and the Ld. CIT(A)/JCIT(A) erred in passing the orders without properly considering, appreciating, or rejecting the extensive documentary evidence placed on record by the Appellant, which constitutes a breach of the fundamental principles of natural justice and fair play. GROUND IV: INITIATION OF PENALTY PROCEEDINGS U/S 271AAC & 270A- The Ld. CIT(A)/JCIT(A) erred in not granting relief with respect to the penalty proceedings-initiated u/s 271AAC(1) & 270A of the Act. Since the addition u/s 69A itself is liable to be deleted, the question of penalty u/s 271AAC does not survive. The Appellant prays that no penalty u/s 271AAC(1) & 270A of the Act shall be levied. Ground V: CONSEQUENTIAL LEVY OF INTEREST U/S 234A AND 234B. The AO erred in levying interest u/s. 234A and u/s 234B of the Act. The Appellant prays that the interest chargeable u/s 234A and u/s 234B of the Act be deleted/ appropriately reduced.

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Ground VI: GENERAL. The Appellant craves leave to add, amend, and/or alter the above ground of appeal at or before the time of hearing of this Appeal, with the permission of the Hon'ble Tribunal." 2. Ground No. 1 to 3 raised by the assessee are interrelated and interconnected and relates to challenging the order of CIT(A) in upholding the addition made u/s 69A of the Income-tax Act. Therefore, I have decided to adjudicate these grounds through the present consolidated order. 3. I have heard the counsels for both the parties, perused the material placed on record, judgment cited before me and also the orders passed by the revenue authority. From the records, I noticed that the assessee had deposited cash of Rs. 15,50,000/- on 16.11.2016 and could not explain the source of the said cash deposit with supporting details therefore A.O. made additions u/s 69 of the Act r.w.s. 115BBE of the Act which were also upheld by Ld. CIT(A). Whereas as per the case set-up by the assessee, it was submitted that the assessee in her immediately preceding three assessment years filed return of income disclosing the following income aggregating to Rs. 17,23,730/-. The details of which are hereinbelow: Asst. Date of Return Manual/ Ack No. Ward Year Filing Income Efiling 2016- 04.08.2016 484,990 Efiling 38110757 17 (3) (2) 2017 0040816 2015- 27.08.2015 538,620 Efiling 72383730 17 (3) (2) 2016 0270815 2014- 30.08.2014 700,210 Efiling 34092591 17 (3) (2) 2015 0300814 17,23,730 Total

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4.

It was submitted that during the demonetization period the assessee deposited Rs. 15,50,000 into her bank account from the opening cash balance available with the assessee of Rs. 15,75,638 and in the course of assessment proceedings had submitted cash accounts summary for Financial Year 2014-15 and 2015-16. The same are at paperbook page No. 37 & 57 and thus explained the source of cash deposit with supporting details and evidences. 5. After having considered the facts of the case and also the documents relied upon by the assessee, I found that from the cash account, it is evident that as on 1st of April 2015, there was an opening cash balance of Rs. 13,56,778/-. Further, the assessee also made bank withdrawals aggregating to Rs. 4,95,000/- and bank deposits and drawings aggregating to Rs. 6,18,140/- resulting in a closing balance as on March 31, 2015 of Rs. 12,33,638/-. In the financial year 2015-16, the assessee withdrew cash aggregating to Rs. 8,15,000/- and there were drawings and bank deposits aggregating to Rs. 4,73,000/- resulting in a closing balance of Rs. 15,75,638/- as on March 31, 2016. This, itself demonstrates that the assessee had a sufficient cash balance available to her for deposit during the period of demonetisation. The only allegation made by the revenue authorities is that the mere withdrawal of cash in earlier years does not automatically give rise to a presumption that cash remained available in the hands of the assessee in a subsequent year. However, in this regard assessee has submitted that it is

5 ITA No.3776/Mum/2026 Taruna Vinay Agarwal

further established that the cash available with the assessee has been utilized by the assessee and was not available for re- depositing in the bank account but no such evidence has been brought on record by the revenue. It is settled proposition of law that assessee cannot prove in the negative that cash was not utilized by the assessee. It is equally evident from the accounts that after reducing drawings, still surplus cash was available with the assessee. Moreover, revenue authorities have not doubted the evidence furnished by the assessee but had proceeded on the basis of conjectures and surmises. In this regard, reliance is being placed upon the decision of Hon’ble Karnatka High Court in the case of S.R. Venkata Ratnam vs CIT (127 ITR 807), wherein the Hon'ble High Court, on identical allegations made by the Revenue, held that once the Assessee disclosed the source as having come from withdrawal made on a given date from a given bank account, it was not open to revenue to concern themselves with what the Assessee did with that money ie whether he had kept the same in his house or utilised the services of a bank by depositing the same. Having not investigated the availability of the source of cash, it is not open to Revenue to merely surmise that it would not be probable for the Assessee to keep an unutilised cash amount for a period of 2 years. 6. Moreover, the reliance was also placed in the case of Hon’ble Punjab and Haryana High Court in the case of Shivcharan Dass vs CIT (126 ITR 263) and the decision of the

6 ITA No.3776/Mum/2026 Taruna Vinay Agarwal

Hon'ble Jaipur Tribunal in the case of Smt. Parmila Devi Yadav vs ITO (ITA No. 345/JP/2024 dated August 2, 2024. 7. Therefore, considering the totality of facts and circumstances as discussed by me above and also keeping in view the judicial principles, I direct the A.O. to delete the addition. Consequently, these grounds raised by the assessee, stands allowed. 8. Other Grounds raised by the assessee, needs no adjudication in view of my decision on Ground No. 1 to 3. Consequently, appeal filed by the assessee, stands partly allowed. Order pronounced in the open court on 30.06.2026.

Sd/- (SANDEEP GOSAIN) JUDICIAL MEMBER

Mumbai, Dated 30/06/2026 KK, PS आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / The CIT(A) 3. 4. आयकर आयु�(अपील) / Concerned CIT िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण,मु�बई/ DR, ITAT, Mumbai 5. गाड� फाईल / Guard file. 6. आदेशानुसार/BY ORDER, स�ािपत �ित //True Copy//

उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु�बई / ITAT, Mumbai

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