ABM DEVELPERS PRIVATE LIMITED,PATNA vs. INCOME TAX OFFICER, WARD 2(1), PATNA, PATNA

Per Sonjoy Sarma, Judicial Member: The present appeal filed by the assessee is directed against the order dated 16.12.2025 passed by the Commissioner of Income Tax (Appeal) [hereinafter referred to as the ‘Ld. CIT(A)] u/s 250 of the Income Tax Act, 1961 (the ‘Act’) for the assessment year 2017-18. 2. Brief facts of the case are that, assessee is a Company engaged in the business of development and filed its return of income for the assessment year 2017-18, declaring total income of Rs.4,78,246/-. The case of the assessee was selected for scrutiny under provisions of the Act. Accordingly, statutory notices u/s 143(2) and 142(1) of the Act along with questionnaire were issued and served upon the assessee. During the

I.T.A. No.96/Pat/2026 ABM Develpers Private Limited ; AY: 2017-18 course of assessment proceedings, Assessing Officer made disallowance of Rs.8,43,000/- u/s 40(a)(ia) of the Act on account of non-compliance with TDS provisions. Further, it was observed that during the demonetisation period, assessee had deposited cash amounting to Rs.1,09,00,000/- in specified bank notes in the bank account. The Ld. Assessing Officer during the assessment proceedings, called upon the assessee to explain the sources of such substantial cash deposit made during the demonetisation period. In response, assessee submitted that eight cash deposits were out of earlier cash withdrawal made from his bank account prior to demonetisation. It was contended that no unexplained income was involved, and the deposits represent redeposit of the same cash. In order to verify the claim of the assessee, the Ld. Assessing Officer obtained bank statement and the detailed withdrawal data directed from the bank u/s 133(6) of the Act. The Ld. Assessing Officer upon examination observed that the assessee had withdrawn cash prior to the demonetisation in mixed denomination including 1000, 500 and 100 notes. Withdrawal pattern inter alia included withdrawals on 17.10.2016, comprising of 1000 denomination notes, 3500 notes along with 500 denomination notes. Withdrawals on 18.10.2016, including, 1000 denomination notes 1900 notes and 500 denomination notes. Subsequently, withdrawal of the various dates including denomination of 500 and 1000 notes and, further withdrawals of Rs.3,00,000/- in 1000 denomination notes, 300 notes. From the above, the Assessing Officer noted that the total number of 1000 denomination notes withdrawn prior to demonetisation aggregating to approximately 5700 notes, equivalent to Rs.57,00,000/-. However, assessee deposited Rs.1,09,00,000/- on 13.11.2016 entirely in 1000 denomination notes i.e., 10,900 notes. Thus, the Assessing Officer found clear mismatch between the demonetisation of cash withdrawal

I.T.A. No.96/Pat/2026 ABM Develpers Private Limited ; AY: 2017-18 and those deposited specially while withdrawals included substantial portion of 500 and 100 notes. The deposit consists exclusively of 1000 notes. The Ld. Assessing Officer held that assessee failed to explain how the demonetisation of 500 and 100 notes were converted into 1000 demonetisation notes prior to deposit. The explanation of the assessee was found to be unsatisfactory and unsustainable. Accordingly, the Assessing Officer treated entire cash deposit of Rs.1,09,00,000/- as unexplained cash credit u/s 68 of the Act and added the same to the total income of the assessee. 3. Dissatisfied with the above order, assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) after considering the facts and submissions, upheld the action of the Assessing Officer. He observed that assessee failed to reconcile the mismatch in denomination, no documentary evidence was furnished to substantiate the claim that deposits were out of the earlier withdrawals and the explanation remain general and unsupported. Accordingly, the Ld. CIT(A) sustain the order of the Assessing Officer. 4. Aggrieved by the above order, assessee is in appeal before this Tribunal. The Ld. AR reiterated the submission made before the lower authorities and contended that the cash deposit during the demonetisation period were out of earlier withdrawal from the bank, there was no fresh introduction of unexplained money. He further stated that the Assessing Officer and the Ld. CIT(A) heard in making substantiating the addition without properly appreciating the fact. It was further submitted that merely because there was a difference in denomination, the entire deposit could not be treated as unexplained. 5. On the other hand, the Ld. DR strongly supported the order of the Assessing Officer and the Ld. CIT(A) and submitted that the assessee

I.T.A. No.96/Pat/2026 ABM Develpers Private Limited ; AY: 2017-18 failed to provide any plausible explanation for the mismatch denomination. The claim of redeposit was not supported by any evidence and further stated that the addition was rightly made u/s 68 of the Act. 6. We have carefully considered the rival submissions and perused the material available on record, in the present appeal the core issue is whether cash deposit of Rs.1,09,00,000/- made during the demonetisation period can be treated as explained based on prior withdrawals deposits the mismatch in denomination. It is an admitted position that the assessee had withdrawal cash from the bank account prior to the demonetisation. It is also not dispute that assessee deposited Rs.1,09,00,000/- during the demonetisation period in 1000 denomination notes. However, upon examination of the withdrawals details, it is evident that the withdrawals were not exclusively in 1000 denomination notes, substantial portion of the withdrawals consist of 500 and 100 denomination notes. Therefore, the total number of 1000 denomination notes, withdrawal was approximately Rs.5700 notes i.e., Rs.57,00,000/-. However, the assessee deposited 10,900 notes of 1000 denomination notes aggregating Rs.1,09,00,000/-. Thus, there is a clear discrepancy of 5200 notes i.e., Rs.52,00,000/- which remain unexplained. The assessee has failed to provide any cognizant explanation as how the denomination of 500 and 100 were converted into 1000 denomination notes prior to deposit. No evidence such as exchange records, cash book, reconciliation or third-party confirmation has been placed on record. At the same time, it cannot be ignored that assessee had indeed withdrawals of Rs.57,00,000/- in 1000 denomination notes prior to the demonetisation. To that extent, the explanation of the assessee appears reasonable and acceptable. In our considered view, approach of the Assessing Officer treating the entire deposit as

I.T.A. No.96/Pat/2026 ABM Develpers Private Limited ; AY: 2017-18 unexplained is excessive and not in accordance with principles of proportionality. The doctrine of redundance of probability and the principle of fairness requires that explanation of the assessee is acceptable to the extent, it is supported by evidence and rejected only to the extent it remains unsubstantiate. Accordingly, we hold that the sources of Rs.57,00,000/- stands reasonably explained. The balance amount of Rs.52,00,000/- remains unexplained. In view of the above discussion, we partly allowed the appeal of the assessee, and direct the Assessing Officer to delete the addition of Rs.57,00,000/- and the remaining addition of Rs.52,00,000/- is sustained. 7. In the result, the appeal of the assessee is partly allowed.

Kolkata, the 22nd April, 2026.

Sd/- Sd/- [Laxmi Prasad Sahu] [Sonjoy Sarma] Accountant Member Judicial Member Dated: 22.04.2026. DP, PS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches