SONTOSH SONI THROUGH SMT. VANDANA SONI, BHILAI,BHILAI vs. ITO, WARD-1(3), BHILAI, BHILAI

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ITA 108/RPR/2026Status: DisposedITAT Raipur26 May 2026AY 2017-187 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the additions made by the Assessing Officer were unfounded and arbitrary. The assessee had sufficiently explained the nature and source of the cash deposits, thus it could not be treated as unexplained money.

What were the facts?

The assessee deposited Rs. 10,52,000/- in cash into their bank account. The Assessing Officer treated this as unexplained money under Section 69A, making an addition. The assessee explained the source of funds through closing cash balance, withdrawals from a partnership firm, and prior bank withdrawals.

What were the issues?

Whether cash deposits in a bank account during the demonetization period are unexplained money when the assessee provides explanations for the source of funds. Whether the CIT(Appeals) erred in rejecting the assessee's explanations without proper verification.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 250(4),Section 250(6)

AI-generated summary — verify with the full judgment below

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

Before: SHRI PARTHA SARATHI CHAUDHURY

For Appellant: Shri Ravi Agrawal, CA
For Respondent: Shri CH. Rajeswara Reddy, Sr. DR
Hearing: 26.05.2026Pronounced: 26.05.2026

आयकर अपील�य अ�धकरण �यायपीठ “एक-सद�य” मामला रायपुर म� IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR �ी पाथ� सारथी चौधर�, �या�यक सद�य के सम� BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं./ITA No.108/RPR/2026 �नधा�रण वष� /Assessment Year : 2017-18 Shri Santosh Soni (Deceased) Through Legal Representative Smt. Vandana Soni, MIG-C-169, Vishali Nagar, Bhilai, Supela, Durg-490 001 (C.G.) PAN: ATUPS8461L

.......अपीलाथ� / Appellant बनाम / V/s. The Income Tax Officer, Ward-1(3), Bhilai (C.G.) ……��यथ� / Respondent

Assessee by : Shri Ravi Agrawal, CA Revenue by : Shri CH. Rajeswara Reddy, Sr. DR

सुनवाई क� तार�ख / Date of Hearing : 26.05.2026 घोषणा क� तार�ख / Date of Pronouncement : 26.05.2026

2 Shri Santosh Soni (Deceased) Through Legal Representative Smt. Vandana Soni, Vs. ITO, Ward-1(3), Bhilai (C.G.) ITA No.108/RPR/2026 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 16.12.2025 for the assessment year 2017-18 as per the grounds of appeal on record.

2.

In this case, addition has been made by the Department invoking Section 69A r.w.s. 115BBE of the Income Tax Act, 1961 (for short ‘the Act’) treating cash deposits made in the bank account as unexplained money in the hands of the assesse and accordingly, additions of Rs.10,52,000/- had been made by the A.O.

3.

That during the First Appellate Proceedings, the assessee had submitted that total cash available with him during the relevant period was Rs.22,19,240/-, out of which, a sum of Rs.10,52,000/- was deposited in the bank during November, 2016. The assessee had explained the nature and source of such cash deposits by furnishing copy of the balance sheet as on 31st March, 2016 showing closing balance at Rs.15,45,840/-. In this reference, the assessee had explained that he is a partner in M/s.Soni Auto Dealers, PAN-AAVFS5070P and having share @34% and earned income in the form of interest on capital, remuneration and share of profit from the firm. The Ld. CIT(Appeals)/NFAC had

3 Shri Santosh Soni (Deceased) Through Legal Representative Smt. Vandana Soni, Vs. ITO, Ward-1(3), Bhilai (C.G.) ITA No.108/RPR/2026 disbelieved this availability of closing cash balance only on the ground that the assessee had filed return of income in ITR-2 and therefore, he was not required to file balance sheet a/w. said ITR and since the balance sheet was never submitted before the Department, therefore, there was no authenticity regarding the same.

4.

In my considered view this kind of findings by Revenue authority erodes the basic platform of judicial proceedings before any quasi-judicial authority. Instead of verifying the genuineness and examining the closing balance as submitted by the assessee in the balance sheet, the First Appellate Authority commented on the ITR Form which was filed and since the said balance sheet was not filed a/w. said ITR, therefore, there was no authenticity as per Ld. CIT(Appeals)/NFAC. Such findings of the First Appellate authority is therefore held as perverse and arbitrary as there is no reasoning in such kind of findings by the Ld. CIT(Appeals)/NFAC in terms with Section 250(4) & (6) of the Act.

5.

Next point as assailed by the assesse explaining the nature and source of the cash deposits was that the assessee had withdrawn Rs.80,000/- in cash from partnership firm and the copy of the capital account of the assessee with the partnership firm M/s. Soni Auto Dealers had also been furnished before the Revenue Authorities wherein the assessee’s withdrawal had been reflected amounting to Rs.80,000/- in

4 Shri Santosh Soni (Deceased) Through Legal Representative Smt. Vandana Soni, Vs. ITO, Ward-1(3), Bhilai (C.G.) ITA No.108/RPR/2026 form of withdrawal of Rs.10,000/- each month upto the period of November, 2016. The Ld. CIT(Appeals)/NFAC had rejected such availability of Rs.80,000/- also on the ground that the assessee has not deducted the household expenses from this amount. The Ld. CIT(Appeals)/NFAC had not given any findings as to why household expenses has to be deducted from the withdrawal amount only and that why cannot household expenses be completed and taken care of through previous savings of the assessee. It is not the case of the Department that there is any undisclosed source of income by the assessee but just because from the amount of Rs.80,000/- which has been withdrawn, the household expenses were not deducted, authenticity was not accepted by the Ld. CIT(Appeals)/NFAC, which therefore, is not in terms with the parameters of equitable justice. That as per the dictate of Section 250(4) & (6) of the Act, the Ld. CIT(Appeals)/NFAC should have verified and enquired, before arriving at a specific finding. But in this case, the Ld. CIT(Appeals)/NFAC had dismissed the claim of the assessee summarily.

6.

Further, the assessee had stated that an amount of Rs.5,93,400/- was withdrawn from bank account prior to the date of deposit during demonetization period. In this regard, the assessee had furnished bank statement with Central Bank of India. That again without any cogent reasons, the Ld. CIT(Appeals)/NFAC rejected the authenticity of the bank

5 Shri Santosh Soni (Deceased) Through Legal Representative Smt. Vandana Soni, Vs. ITO, Ward-1(3), Bhilai (C.G.) ITA No.108/RPR/2026 statement as furnished by the assessee. That adding the entire three amounts i.e. [Rs.15,45,840/-(closing cash balance) (+) Rs.80,000/- (withdrawal from capital account of the partnership firm) (+) Rs.5,93,400/- (withdrawal from Central Bank of India), it adds upto Rs.22,19,240/-. Therefore, the assessee had successfully explained the nature and source of the cash deposits. That out of the afore-stated total amount, sum of Rs.10,52,000/- was deposited in the bank account by the assessee. That once, the nature and source of the cash deposits are explained, it cannot be held as unexplained money in the hands of the assessee and there cannot be any addition u/s. 69A of the Act in the hands of the assessee.

This Bench in the case of Shri Tukaram Vs, ITO, Ward Dhamtari, 7. ITA No.168/RPR/2025, A.Y.2017-18, dated 21.04.2025 had an occasion to deal with similar facts and circumstances wherein it had considered another decision of this Bench in the case of Payel Verma Vs. the Income Tax Officer, Ward-1(3), Bhilai, ITA No.341/RPR/2024, dated 09.05.2025. In the case of Shri Tukaram Vs, ITO, Ward Dhamtari (supra), the Tribunal has held and observed as follows:

“3. In this regard, it is noted that the revenue authorities have accepted the business of the assessee and there is no dispute with regard to the purchase/sales reported by the assessee. Further, the department has not brought on record any evidence suggesting any alternative source of income of the assessee other than the disclosed sources of income. The only

6 Shri Santosh Soni (Deceased) Through Legal Representative Smt. Vandana Soni, Vs. ITO, Ward-1(3), Bhilai (C.G.) ITA No.108/RPR/2026 contention of the department regarding addition is that such cash deposits were made in SBNs currency during demonetization period. The department has failed to bring out that such cash deposits are unexplained since the fact remains that the department has not disputed the business source income of the assessee. Therefore, in effect addition cannot be made in this case u/s. 69A of the Act. That the ITAT, Raipur in the case of Payel Verma Vs. the Income Tax Officer, Ward- 1(3), Bhilai (C.G.), ITA No. 341/RPR/2024, dated 09.04.2025, on identical facts and issues held as follows: “4. I have carefully considered the submission of the parties herein, analyzed the facts and circumstances in this case. The department had not disputed the nature of business of the assessee that the assessee is a wholesaler and selling goods to the retailers. The department had also not disputed that some of the retailers are also petty pan-walas/pan shop owners who do not have adequate documents either from the perspective of the income tax or from the perspective of the sales tax. Some of the petty pan-walas also conducts their business in some carts/trolley and they are not available every time at one single place. These realities have also not been disputed by the department. The Department has not questioned the turnover of the assessee and also has accepted the business module conducted by the assessee. Books of accounts of the assessee has also been accepted by the department. When all these parameters have been fulfilled by the assessee, there cannot be any addition u/s.69A of the Act treating the cash deposits in the bank account as unexplained money of the assessee. In view thereof, I set-aside the order of the Ld. CIT(Appeals)/NFAC and direct the A.O to delete the addition of Rs.17,61,000/- from the hands of the assessee.” Respectfully following the same parity of reasoning and in the similar set of facts and circumstances, the department is directed to delete the addition of Rs.2,29,500/- from the hands of the assessee. 4. As per the above terms the grounds of appeal raised by the assesse are allowed. 5. In the result, appeal of the assessee is allowed.”

7 Shri Santosh Soni (Deceased) Through Legal Representative Smt. Vandana Soni, Vs. ITO, Ward-1(3), Bhilai (C.G.) ITA No.108/RPR/2026 8. That on examining the facts and circumstances and as per judicial pronouncements as afore-stated, on the same parity of reasoning, it is held that the additions of Rs.10,52,000/- u/s.69A of the Act is unfounded, misplaced and arbitrary. The A.O is directed to delete the same from the hands of the assessee providing appeal effect of this order.

9.

That as per the above terms, the appeal of the assessee is allowed.

Order pronounced in open court on 26th day of May, 2026.

Sd/- (PARTHA SARATHI CHAUDHURY) �या�यक सद�य/JUDICIAL MEMBER रायपुर / Raipur; �दनांक / Dated : 26th May, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, रायपुर / DR, ITAT, “SMC” Bench, Raipur. गाड� फ़ाइल / Guard File. 5.

Samiran Bera, आदेशानुसार / BY ORDER, Sr. PS, ITAT, // True Copy // Raipur Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.05.26 19:14:42 +05'30'

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