INCOME TAX OFFICER WARD-3(2)(1), AHMEDABAD vs. SHAILENDRASINH BHARATBHAI BARAD, AHMEDABAD

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ITA 1840/AHD/2025Status: DisposedITAT Ahmedabad13 May 2026AY 2017-186 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee had sufficient cash on hand from previous withdrawals and disclosed balances, which explained the demonetisation period deposits. The CIT(A)'s deletion of the addition was upheld.

What were the facts?

The assessee, a commission agent, deposited Rs. 1,82,01,000/- in cash during the demonetisation period. The Assessing Officer (AO) treated these deposits as unexplained income. The CIT(A) partly allowed the assessee's appeal.

What were the issues?

Whether cash deposits made during the demonetisation period were sufficiently explained by the assessee's prior cash holdings and withdrawals.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: MS SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Dipen Shukhadia, AR
For Respondent: Shri Rameshwar P Meena, SR-DR
Hearing: 21.04.2026Pronounced: 13.05.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Revenue against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 15.07.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 143(3) of the Income Tax Act.

2.

The brief facts of the case are that the assessee had filed his return of income for A.Y. 2017-18 on 05.02.2018 declaring total income of Rs.4,29,110/-. The case was selected for scrutiny under CASS. In the course of assessment, the AO noticed that the assessee had made cash

ITA No.1840/Ahd/2025 ITO Vs Shailendrasinh Bharatbhai Barad, AY- 2017-18 2

deposits of Rs.1,82,01,000/- in his bank accounts during the demonetisation period. The AO was not satisfied with the explanation of the assessee regarding the source of these cash deposits. Therefore, the entire cash deposit of Rs.1,82,01,000/- made during demonetisation period was held as unexplained and added to income. The assessment was completed u/s. 143(3) on 10.12.2019 at total income of Rs. 1,97,96,730/-.

3.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A) vide the impugned order and the appeal of the assessee was partly allowed. Th

4.

Now the Revenue is in appeal before us. The following grounds have been taken in this appeal:

1.

The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,82,01,000/- made under section 69A of the Income-tax Act, 1961, as unexplained cash deposits during the demonetization period, ignoring critical evidence such as the assessee’s failure to provide complete party-wise details of receipts and payments for F.Y. 2014-15 to 2016-17 and the unserved notices under section 133(6), which indicate potential non-genuine transactions. 2. The appellant craves leave to add, alter and/or to amend all or any of the ground before the final hearing of the appeal.

5.

Shri Rameshwar P Meena, the Ld. SR-DR, submitted that the assessee is a commission agent in food-grains and sales agricultural products to mill-owners/traders on behalf of the farmers. Explaining the modus operandi, the Ld. SR-DR submitted that the assessee used to received payment from mill owners/traders in his bank account via cheque/RTGS/NEFT/direct transfer and thereafter he withdrew cash from

ITA No.1840/Ahd/2025 ITO Vs Shailendrasinh Bharatbhai Barad, AY- 2017-18 3 the bank accounts and made payment to farmers. He submitted that considering the modus operandi of the assessee, the source of cash deposits of Rs. 1,82,01,000/- made in the bank account during the demonetisation period was not found explained by the AO. He submitted that the assessee in spite of carrying no business activity during the period from 01.04.2015 to 29.02.2016 had disclosed closing cash balance of Rs.95,91,761/- as on 31.03.2015 in his ITR, which was held as invalid. Though the assessee had shown cash balance of Rs.1,31,65,229/- in his ITR for A.Y. 2016-17, the said return was filed after demonetisation period and the chances of manipulation of cash balance was not ruled out. The Ld. Sr-DR further submitted that discrepancy was also found in the cash balance as per ITR and the cash balance as per cash book. He submitted that considering the discrepancies and above facts, the Ld. CIT(A) was not correct in deleting the addition of Rs.1,82,01,000/- on account of unexplained cash deposits.

6.

Per contra, Shri Dipen Shukhadia, the Ld. AR of the assessee submitted that the assessee is a registered commission agent in Sanand APMC. He explained that the assessee always had substantial cash-in- hand for purchase of agricultural produce from the farmers. The assessee had disclosed cash balance of Rs.1,30,85,848/- as on 31.03.2016 in his ITR for A.Y.2016-17 and thereafter substantial cash withdrawals were made from the bank accounts in each month from April 2016 to November 2016. The assessee had merely re-deposited the cash balance available with him in his bank account after announcement of demonetisation. Therefore, the AO was not correct in treating the cash deposits in the bank account as unexplained. The Ld. AR strongly supported the order of the Ld. CIT(A).

ITA No.1840/Ahd/2025 ITO Vs Shailendrasinh Bharatbhai Barad, AY- 2017-18 4

7.

We have considered the rival submissions. The assessee had shown cash balance of Rs. 95,91,761/- in the ITR for A.Y. 2015-16, which was filed prior to demonetisation. The AO has not given any reason for treating this cash balance as incorrect. According to the AO, the return for A.Y. 2015-16 was invalid return. However, the Ld. CIT(A) has given a finding that the said return was duly validated and processed by the CPC. In the return for A.Y. 2016-17, the assessee had shown cash balance of Rs. 1,31,65,229/-, which has also not been disputed by the AO. From the copy of bank account brought on record, it is found that there was substantial cash withdrawals made by the assessee in each month from April 2016 to November 2016. Thus, there was sufficient cash balance available with the assessee at the time of demonetisation, which was in excess of the cash deposits made in the bank accounts during the demonetisation period. Under the circumstances, the AO was not correct in treating the cash deposits made during the demonetisation period as unexplained. It is found that the Ld. CIT(A) has given the following finding for deleting the addition made by the AO:

“6.3 The fact remains that the appellant was a commission agent who purchased agricultural produces from various farmers and sold it to traders/millers. The transaction was carried out at APMC, Sanand and carrying out such transaction the appellant paid cess to Sanand APMC. The appellant has been regularly filing the return of income. The cash on hand has been deposited in the return of income. The AO has doubted the cash on hand available as on 01 04 2015 on the ground that the return for AY 2015-16 was invalid return However, subsequently the return was validated by CPC and processed by CPC Thus the Cash on hand of Rs 95.91 761/-as on 01.04 2016 could not be doubted Further, for AY 2016-17 there was closing cash on hand of Rs. 1,31.65 229/- The AO has not raised any doubt regarding availability of cash on hand in the hand of the appellant as on 01 04 2016 the only doubt raised by the appellant was that the return of income was filed after demonetization. The AO had not doubted the business modus operandi adopted by the appellant. The appellant explained that from 01 03 2016 to 08. 11 2016 apart from cash on hand the cash of Rs. 12.71.84,800/- was withdrawn and it was utilized for making payment to farmers and making payment for

ITA No.1840/Ahd/2025 ITO Vs Shailendrasinh Bharatbhai Barad, AY- 2017-18 5 regular expenditure The cash book for FY 2015-16 and 2016-17 was submitted to the AO during assessment proceeding. The copies of the bank statements were also submitted to the AO for verification. From cash book, it is evident that appellant has having sufficient cash on hand to make bank deposited during demonetisation period

In view of the above discussion the appellant being a commission agent for agricultural produces, he used to keep cash on hand for making payment to farmers The appellant has explained satisfactorily that cash deposited of Rs 181.00.000/-during demonetisation period was from cash on hand available with the appellant in the books of account. Further the appellant has been showing cash on hand regularly in the returns of income filed by him Considering all these facts from the addition of Rs. 1,82,01,000/- as unexplained money is deleted

8.

We do not find anything wrong with the findings of the Ld. CIT(A). The assessee had withdrawn total cash of Rs.12,71,84,800/- from his bank account during the period from 01.03.2016 to 08.11.2016, which was utilised for making payment to farmers and the cash balance available with the assessee on the date of demonetisation, in old denomination notes, was re-deposited in the bank account. In fact, the cash balance available with the assessee as on 08.11.2016 was Rs.2,28,31,999/- which was much in excess of the cash deposits during the demonetisation period. The Revenue has been unable to controvert the findings given by the Ld. CIT(A). We, therefore, do not find any reason to interfere with the order of the Ld. CIT(A). Accordingly, the order of the Ld. CIT(A) is upheld and the ground taken by the Revenue is dismissed.

9.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Court on 13/05/2026 at Ahmedabad.

Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 13th May, 2026

ITA No.1840/Ahd/2025 ITO Vs Shailendrasinh Bharatbhai Barad, AY- 2017-18 6

Neelesh, Sr. PS आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

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