SURENDRA KUMAR SHARMA,NEEM KA THANA vs. INCOME TAX OFFICER, WARD BEHROR, BEHROR

ITA 1235/JPR/2025Status: DisposedITAT Jaipur01 October 2026AY 2017-1811 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Ld. CIT(A) was not justified in rejecting the assessee's explanation for the source of cash deposits. The primary basis for the Ld. CIT(A)'s rejection was that the insurance policies submitted by the assessee did not mention his name as the agent. However, the Tribunal found that the assessee had provided a substantiated explanation for this, stating that as per Section 42(2) of the Insurance Act, 1938, he could act as an agent for only one General Insurance Company. To serve customers better and retain business, he obtained services of other agents on a commission-sharing basis. This explanation was supported by affidavits from these agents and bank statements showing receipt of commission. The Tribunal noted that the Ld. CIT(A) had not appreciated this explanation and had wrongly rejected the assessee's explanation based on an incorrect finding of facts. Regarding the SBNs, the Tribunal held that merely not evidencing the collection of SBNs was insufficient to reject the assessee's explanation, as it is impractical to keep detailed records of the currency in which payments are collected. The Tribunal found that the assessee had sufficiently demonstrated with voluminous evidence that the cash deposits originated from his business as an insurance agent, and no infirmity was pointed out by the Department in the evidence or explanation. Therefore, the addition of Rs. 35,08,550/- was directed to be deleted.

What were the facts?

The assessee, Surendra Kumar Sharma, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi (Ld. CIT(A)), dated July 30, 2025. The assessment year(s) are not explicitly stated but the dispute pertains to cash deposited in the assessee's bank account during the demonetization period. The Assessing Officer (AO) made an addition of Rs. 35,08,550/- on account of unexplained cash deposits. The assessee claimed the cash represented premiums collected as a general insurance commission agent. The AO rejected this, citing lack of justification and violation of demonetization rules regarding Specified Bank Notes (SBNs). The Ld. CIT(A) confirmed the addition, noting the assessee's name was not on some policies and that premiums were not evidenced as received in SBNs.

What were the issues?

1. Whether the addition of Rs. 35,08,550/- under Section 69A of the Income Tax Act, 1961, on account of unexplained cash deposits during the demonetization period is justified? Assessee's contentions: - The lower authorities erred in making and confirming the addition. - The cash deposits represented premiums collected from various parties in the course of business as a general insurance commission agent. - The assessee provided supporting evidence including cash flow statements, insurance policies, affidavits of buyers, details of the business model, past cash deposit history, and justifications for the absence of his name on some policies. - The Ld. CIT(A) erred in holding that insurance premiums were not received in SBNs, which were deposited during demonetization. - The Ld. CIT(A) erred in holding that the absence of the assessee's name on some policies meant he could not produce tangible evidence. - The addition amounts to double taxation as the receipts were already declared in the revenue account and taxes paid on net commission income. - The invocation of Section 115BBE of the Income Tax Act, 1961, was erroneous. - The Ld. CIT(A) cited irrelevant case laws. Revenue's contentions: - The Ld. DR relied on the findings of the Ld. CIT(A). The Ld. CIT(A) noted that the assessee's name was not appearing on some policies, and other agents' names were present. The Ld. CIT(A) also noted that the insurance premiums were not evidenced to have been received in SBNs, which were found deposited during the demonetization period. The Ld. CIT(A) relied on Supreme Court decisions in Sreelekha Banerjee v. CIT and Roshan Di Hatti v. CIT.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

Hearing: 06.07.2026Pronounced: 01.10.2026

Per Annapurna Gupta, AM:- The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), dated 30.07.2025 under P a g e | 2 Surendra Kumar Sharma Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

2.

The grounds raised by the assessee read as under:-

1.

On the facts and circumstances of the case and in law also Ld. Lower authorities grossly erred in making and confirming additions of Rs 35,08,550/- under section 69A of the Income Tax Act, 1961. 2. On the facts and circumstances of the cas

The order continues below.

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