BETA CONSULTANCY HR SERVICES PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX , AAYKAR BHAVAN, MUMBAI

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 13.10.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to the assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 30.12.2019 for the Assessment Year [A.Y.] 2017-18.

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. “1. In the facts and circumstances of the case and in law, the National Faceless Appeal Centre (NFAC), Ld. CIT(Appeals) erred in sustaining the addition made by the Assessing Officer of cash deposit amounting to Rs.57,31,500/- under section 68 of the Income-tax Act, 1961 purely on the basis of suspicions and assumptions and without bringing any cogent material on record and without considering the evidences placed on record by the Appellant. 2. In the facts and circumstances of the case and in law, the learned National Faceless Appeal Centre (NFAC), CIT (Appeals) erred in sustaining tax at 60% on cash of Rs. 57,31,500/- deposited in bank prior to 16th December 2016 i,e, prior to the date on which the Taxation Laws (Second Amendment) Act, 2016 received the assent of the President, instead of the then applicable rate of 30%. 3. In the facts and circumstances of the case and in law, the learned National Faceless Appeal Centre, CIT (Appeals) erred in sustaining the additions made by the Ld. Assessing Officer by relying upon and pointing out alleged fresh discrepancies, thereby denying the appellant a fair and reasonable opportunity of being heard and consequently violating the settled principles of natural justice. 4. In the facts and circumstances of the case and in law, the learned National Faceless Appeal Centre, CIT (Appeals) erred in sustaining the Notice u/s 143(2) issued by learned Assessing Officer which violates the format prescribed by the CBDT Instruction No. 225/157/2017/ITA-II dated 23.06.2017.” 3. Ground nos.1 to 3 pertain to the addition of Rs.57,31,500/- made u/s 68 of the Act. Facts of the case are that return of income was filed by the assessee declaring total income at Rs. 52,55,360/-.Itis engaged in the business of recruitment of Human resources and providing professional placement services to overseas companies. The Assessing Officer passed assessment order under section 143(3) of the Act at Rs. 1,09,86,859/- after making addition of cash deposits made in bank accounts by the assessee during the Demonetization period from 09.11.2016 to 30.12.2016, amounting to Rs.57,31,500/-.

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. 3.1 The AO observed that the assessee had deposited cash amounting to Rs.57,31,500/- in certain bank accounts claiming it to be out of earlier income and savings to the tune of Rs.18,60,000/- and services fees and miscellaneous charges received from various candidates of Rs.38,71,500/-, in the course of business. As per the assessment order, the Department gathered a list of assessees who had deposited substantial cash in certain bank accounts during the demonetization period. The data revealed that the assessee deposited huge cash in its bank accounts held with CITI Bank, Bharat Co-op Bank (Mumbai) Ltd., Dena Bank and Corporation Bank during the above period in old currency Rs 500 and Rs 1000 notes.

3.2 The assessee on being asked to explain the sources of above stated deposit submitted names and addresses of 182 candidates from whom service fees and other charges were received by it in cash. The assessee also filed Service-tax invoices issued to the candidates from whom cash was received. The invoices contained name and addresses of all the candidates from whom cash was received by the assessee, copies of service tax returns for the year under reference, sample receipts of online payments made for Mofa charges and visa stamping fees, copy of money insurance policy along with other office premises insurance policies as also details of cash receipts and cheque receipts for F.Y 2015-16, F.Y 2016-17 and F.Y 2017-18.,extract of audited financial statements for the A.Y 2012-13, A.Y 2013-14 and A.Y 2014-15. 10. It was further submitted that the cash deposit was out of earlier income and savings and hence, no addition was called for, as all the cash realised from the

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. candidates were from identifiable persons and the same was on account of service fees and other charges which had been duly offered as gross income in the profit and loss account. The assessee also requested the AO to issue summons to the candidates to examine its claim. It was pleaded that the provisions of Service Tax were duly followed and such tax collected from the candidates were deposited in the Government treasury.

3.3 It was further pleaded that the assessee was maintaining high cash balance since many years as evident from the closing cash balances at the year end of Rs.28,13,690/-, Rs.49,93,772/- and Rs.24,71,111/- for A.Y 2012-13, A.Y 2013-14, A.Y 2014-15 respectively. The books of account were subjected to audit. It was also contended that total cash of Rs.57,31,500/- was deposited in banks on various dates due to long queues and total chaos in the banks and also keeping in mind the risk involved of getting cash stolen. Moreover, there was no statutory requirement for depositing all the cash available in hand at one go. The amount of cash fees/charges received during the year under reference i.e., Rs.81,59,322/- had decreased as compared to the total amount of cash fees/charges received by it in the previous year Rs.99,40,965/-.

3.4 The AO, however,rejected the contentions of the assessee by observing that despite having all banking facilities, it had kept money as cash in hand as on 30.04.2016 of Rs. 22.13 lakh and subsequently around Rs 25 lakhs with it for a period of about 8 months without any logical.From the data of cash deposit received from banks,it was observed further that the assessee company had deposited cash in old currencies of denomination of Rs 500/-

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. and Rs 1000/- valued to Rs 57,31,500/-. It had deposited cash amounting to Rs. 25,60,000/- in its bank accounts from 01.04.2016 to 08.11.2016 and deposited cash from 10.11.2016 to 19.12.2016 which showed that the assessee there was exponential rise in cash deposits during demonetization period as compare to pre-demonetisation period. Though, the assesses stated to have opening cash balance of Rs 18,61,969.49/- in April 2016,it still withdrew cash of Rs. 4,00,000/- during April 2016. Further, the assessee stated to have opening cash balance of Rs. 22,13,314.49/- during May 2016 and still withdrew cash amounting to Rs. 3,00,000/- from its bank accounts. Had the assessee real cash with it, there was no need to withdraw such cash. The argument of the assessee that the cash was withdrawn by the assessee in the month of April and May 2016 for mental satisfaction with regards to security and considering the state of economy especially banks was not found plausible. The assessee had not submitted supporting documents and reason of withdrawal of cash despite of having huge cash in hand. Further, it was seen that the assessee had deposited all the cash in the SBN currency. It was highly unlikely that the all the cash in hand and amount received in for services rendered by the assessee was in old currency only.

3.5 The AO further observed that the assessee had deposited more than Rs. 2,00,000/- on 9 different instances after initial deposits of Rs. 2,00,000/- on 10 instances and Rs. 50,000/- on one instance which did not appear normal to him as it could also have deposited entire cash in hand it on in one go than depositing different dates. Had assessee got cash balance of Rs.

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. 57,31,500/- in actual reality with it, same would have been deposited by it immediately after 8th November 2016 in 1-2 days time and not in 27 different instances till 19.12.2016 into four difference banks. This clearly showed that assessee never had real cash of Rs. 57,31,500 /- as on 08.11.2016 and it deposited its unaccounted money as and when available from unknown sources on 27 instances till 19.12.2016. Therefore, the assessee could not prove that it was same cash which was so called available in cash book was deposited in Bank account by it. As held by the Hon’ble Supreme court in the case of Sumati Dayal vs. CIT (1995 AIR 2109), the fact should be examined by considering the surrounding circumstances and applying the test of human probability. So considering the surrounding circumstances and facts and also applying the test of human probability, it was held that the assessee failed to explain the nature and source of the impugned cash deposit in its bank accounts during demonetization period during the year under consideration. Accordingly,it was held that the assessee failed to discharge the onus required under section 68 of the Act and the entire sum of Rs. 57,31,500/- was added to the total income. In the alternative, he observed that the addition should be considered under section 69A of the Act as the assessee company had been found owner of the money but it had not offered acceptable and cogent explanation regarding the source of such money found in its bank accounts in- spite of providing reasonable opportunity of being heard.

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. thorough analysis of the evidences, patterns of deposit, financial behaviour, and application of both legal principles and tests of human probability, found the explanation offered by the assessee to be untenable. The addition made by the Assessing Officer was, therefore, sustained agreeing with the AO’s observations and findings regarding a 1,140% spike in average daily cash deposits during demonetization compared to the preceding with no proportional increase in business turnover, service tax payment, or receipts from clients. Further, the frequency and fragmentation of deposits i.e.27 instances across four banks contradicted normal human and business behaviour. The audited financials reflected closing cash of Rs.20.27 lakh as on 31.03.2016, while the working in the cash book showed Rs.18.61 lakh as the opening for 2016-17 showing a discrepancy of Rs.1.66 lakh unexplained, casted doubt on the reliability of the books. He also observed that if the assessee genuinely held Rs.57 lakhs in cash, out of which only Rs.25 lakhs was insured, it defied logic and commercial prudence that the remaining Rs.32lakhs was kept uninsured for months, especially when banks were accessible and interest bearing. He also disbelieved the contentions of the assessee regarding professional service income. He further relied on certain judicial rulings in support of the conclusion that the assessee failed to prove the onus on it.

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. furnished none of which could be rebutted by the lower authorities. The books of account were audited and all supporting details were furnished in support of the contentions. The authorities concerned had not considered the nature of business of the assessee in correct perspective. Moreover, the assessee was required to keep adequate cash balance and had also shown similar cash balance in the books of account in earlier years with average cash of Rs 25 lakhs. The addition made by the AO was based on conjectures and surmises only. Even the authorities were not sure which section to invoke I.E. sections 68 or 69A of the Act to the impugned addition.

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. assessee with regard to source for cash deposits was not acceptable as it suffered from inconsistencies.

7.1 We find that the assessee had furnished several evidences during assessment proceedings as stated in the preceding paras to ably demonstrate the sources of the amount deposited in banks. The AO did not find any defect therein. Even the assessee requested for issuing summons u/s 131 to the customers so as to examine the veracity of its claim regarding the source. However, for reasons best known to the AO, he did not heed the request. The assessee had furnished details of opening cash as also the subsequent deposits stated to have been received from the customers. Yet again,no infirmity had been pointed out. From these facts, it is undisputedly clear that the assessee was having sufficient cash in hand as on 08.11.2016 to explain source for cash deposits into bank account during demonetization period.It had furnished list of customers from whom cash business receipts were received. Further, said receipts had been duly recorded in the cash book of the assessee.The books of account, relevant invoices and several other evidences as stated in the preceding paras have been brushed aside by the lower authorities without any worthwhile reasons.The fact that the assessee made deposits on several dates and not in one go, to our mind is immaterial as the Revenue could not have dictated such periodical deposits as per the convenience of the assessee.There was no such statutory compulsion to deposit the entire amount at a time. Further, the assessee paid due service tax to the government exchequer which has also not been doubted in any manner by the AO. If the claim of the AO is

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. assumed to be correct, that the assessee has booked artificial receipts to cover up source for cash deposits into bank account during demonetization period alleged to be representing its own unaccounted income, then there should have been a categorical finding thereon. It is also not the case of the AO that the receipts from the customers were bogus as no enquiry was conducted by him in this regard.

7.2From the above stated facts, it is quite evident that the AO made addition towards cash deposits purely on suspicion basis and without there being any observation with regard to incorrectness in books of accounts maintained by the assessee and receipts declared for the relevant period. Be that as it may, the fact remains that, the assessee had furnished names and addresses of the customers from whom it has received cashin connection with its regular business activity and therefore, the assessee has satisfactorily discharged onus cast it. Therefore, the observation of the Assessing Officer in light of provisions of Sec.68 of the Act, that the assessee has not satisfactorily explained cash receipts is unwarranted and devoid of merits.

7.3 It is an admitted fact that the assessee was having sufficient cash balance as per cash book maintained for the relevant period. In fact, cash in hand as on the date of demonetization and said cash balance was backed by cash receipts recorded in the books of accounts before the date of demonetization. Therefore, in our considered view, the explanation of the assessee that it has received cash from various customers which was subsequently deposited in the banks, appears to be bona fide and reasonable. 10

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. 8. At this stage, it is necessary to consider certain judicial precedents on this issue. We find that on identical issue pertaining to cash deposit in banks in a catena of decisions of various courts of law including coordinate bench decisions deleted identical additions u/s 68 of the Act.Reference could be made to the decision of the Hon'ble Delhi High Court in the case of PCIT v. Agson Global (P) Ltd., reported in [2022] 441 ITR 550 (Delhi).The Hon'ble Delhi High Court under identical set of facts, has deleted the additions made by the AO towards cash deposits during demonetization u/s.68 of the Act. Likewise, the Hon’ble ITAT Visakhapatnam Bench in the case of M/s.Hirapanna Jewellers, Visakhapatnam, in ITA No.253A/Viz/2020 and CO No.02/Viz/2021, AY2017-18, similar addition was deleted as also by the ITAT Mumbai in the case of Rakesh Jain,Mumbai vs National Faceless Appeal Centre in ITA No.546/Mum/2025 on 4 December, 2025. In the case of Shree Sanad Textiles Industries Ltd. V. DCIT (Ahmedabad ITAT) ITA No. 1166/Ahd/2014,it was held that "We also note that the provisions of section 68 cannot be applied in relation to the sales receipt shown by the assessee in its books of accounts. It is because the sales receipt has already been shown in the books of accounts as income at the time of sale only."In the case of Gordhan, Delhi v/s DCIT dated 19/10/2019, it was held that "no addition can be made u/s 68 on the sole reason that there is a time gap of 5 months between the date of withdrawals from bank account and redeposit the same in the bank account , merely because there was a time gap between withdrawal of cash and cash deposits explanation of the assessee could not be 11

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. rejected and addition on account of cash deposit could not be made particularly when there was no finding recorded by the assessing officer or the Commissioner that apart from depositing this cash into bank as explained by the assessee, there was any other purposes it is used by the assessee of these amounts.”

8.1 In this view of the matter and by considering facts and circumstances of the case and also by respectfully following the above decisions, we are of the considered view that the assessee has satisfactorily explained source for cash deposits into bank account during demonetization period and further, said cash in hand has been explained out of known source of income. The AO without appreciating relevant facts simply made additions towards cash deposits u/s. 68 of the Act and also brought to tax u/s. 115BBE of the Act. The ld. CIT(A), was therefore, not justified in upholding such addition. Thus, allowing the above grounds of appeal, we deem it appropriate to set aside the appellate order and direct the AO delete the impugned addition.

ITA No.9275/Mum/2025; Beta Consultancy HR Services Pvt. Ltd. 10. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on 05/06/2026.

Sd/- Sd/- SAKTIJIT DEY PRABHASH SHANKAR (उपाध्यक्ष/ VICE PRESIDENT) (लेखाकारसदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai ददनाुंक /Date 05.06.2026 Soumili Das / PS

आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीअतधकरण