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

ITA 1235/JPR/2025Status: DisposedITAT Indore01 October 2026AY 2017-1811 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in confirming the addition of Rs. 35,08,550/-. The Tribunal found that the assessee had adequately explained the source of the cash deposits as premiums collected in his business as an insurance agent. The primary reasons for the CIT(A)'s rejection were that the assessee's name did not appear on some policies and that there was no evidence of SBNs being collected. The Tribunal noted that the assessee had provided explanations for his name not appearing on policies, including working with other agents on a commission-sharing basis, and had supported this with affidavits from those agents and bank statements showing commission receipts. The Tribunal found that the CIT(A) had not properly appreciated these submissions and evidence. Regarding the SBNs, the Tribunal held that merely not evidencing the collection of SBNs was not sufficient to reject the assessee's explanation, as it is impractical to keep detailed records of currency received, and the overall evidence sufficiently explained the source of the cash deposits. Therefore, the addition was set aside, and the amount was directed to be deleted. The issue of double taxation and the invocation of Section 115BBE were not expressly decided as the primary issue of unexplained cash was resolved in favor of the assessee.

What were the facts?

The assessee, Surendra Kumar Sharma, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated July 30, 2025, which confirmed additions of Rs. 35,08,550/- made under Section 69A of the Income Tax Act, 1961. The additions were based on cash deposited in the assessee's bank account during the demonetization period, which the Assessing Officer (AO) and the CIT(A) deemed to be from unexplained sources. The assessee claimed the cash represented premiums collected as a general insurance commission agent. The AO rejected this, citing a lack of justification and alleged violation of demonetization rules by collecting Specified Bank Notes (SBNs). The 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 cash deposited in the bank during the demonetization period, is justified? Assessee's Contention: The assessee argued that the cash deposits represented premiums collected in the course of his business as an insurance commission agent. He submitted a cash flow statement, insurance policies, affidavits of buyers, details of his business model, past cash deposit history, and justifications for his name not appearing on all policies. He also contended that accepting SBNs up to December 31, 2016, was not illegal and that he acted as an intermediary, not for personal benefit. He relied on affidavits from other agents whose names appeared on policies, explaining he worked with them on a commission-sharing basis and that payments to them were through banking channels. Revenue's Contention: The revenue, as represented by the CIT(A), contended that the assessee failed to provide tangible evidence. Specifically, the assessee's name was not on some insurance policies, and there was no evidence that insurance premiums were received in SBNs, which were found deposited in the bank during the demonetization period. The revenue relied on the findings of the AO and the CIT(A) and cited Sreelekha Banerjee v. CIT and Roshan Di Hatti v. CIT.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 250

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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