KAMAL KUMAR MODI,JATNI vs. DCIT,CIRCLE-2(1)/BHUBANESWAR, BHUBANESWAR

ITA 855/CTK/2026Status: DisposedITAT Cuttack08 October 2026AY 2017-183 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 1,11,69,337/- as unexplained cash credit was unjustified. The Tribunal noted that the assessee's books of account were not rejected and the cash book clearly showed a cash balance of Rs. 1,38,51,454/- as on November 8, 2016. Since the assessee had this cash balance, they were entitled to deposit it in the bank. The Tribunal observed that the cash balance had been regularly increasing due to sales, not appearing suddenly. Therefore, the addition on this issue was deleted. Regarding the Rs. 19,50,000/- commission income, the Tribunal found that the assessee had disclosed this income in its return and specified it as commission income. As no other sources were found by the AO, it could not be treated as undisclosed income. Consequently, the levy of tax under Section 115BBE on this amount was also deleted. The appeal of the assessee was allowed.

What were the facts?

The assessee, Kamal Kumar Modi, proprietor of Shree Mahavir Industries, filed an appeal against the order of the CIT(A), NFAC, Delhi for Assessment Year 2017-18. The assessee had deposited Rs. 1,35,00,000/- during the demonetization period. The Assessing Officer (AO) made an addition of Rs. 1,11,69,337/- on the ground that it was unexplained cash credit, based on a comparison of average sales. Additionally, the AO treated Rs. 19,50,000/-, offered by the assessee as commission income in the return, as income from undisclosed sources and levied tax under Section 115BBE. The assessee contended that its cash book showed a balance of Rs. 1,38,51,454/- and the commission income was disclosed in the return.

What were the issues?

1. Whether the addition of Rs. 1,11,69,337/- as unexplained cash credit is justified, considering the assessee's cash balance and the demonetization period? (Question of law and fact, relating to Section 69A of the Income Tax Act, 1961). 2. Whether the commission income of Rs. 19,50,000/-, offered by the assessee in its return, can be treated as income from undisclosed sources for the purpose of levying tax under Section 115BBE? (Question of law and fact, relating to Section 115BBE and Section 68 of the Income Tax Act, 1961). Assessee's contentions: The cash book clearly showed a cash balance of Rs. 1,38,51,454/- as on the date of demonetization, which entitled the assessee to deposit cash. The Rs. 19,50,000/- was disclosed as commission income in the return and was from business activity, not undisclosed sources. Revenue's contentions: The AO rightly adopted arithmetical principles by comparing monthly average sales to determine the undisclosed cash credit. The huge amount deposited during demonetization was rightly disallowed and confirmed by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI GEORGE MATHAN & G. GURUSAMY

For Appellant: Shri Mohit Sheth, Adv
For Respondent: Shri Vijaya Singh ld Sr DR
Hearing: 08/10/2026Pronounced: 08/10/2026

Per Bench This is an appeal filed by the assessee against the order of the ld CIT(A), NFAC, Delhi dated 20.8.2026 in Appeal No.CIT(A)-1/14663 for the assessment year 2017-

18.2.

Shri Mohit Sheth, ld AR appeared for the assessee and Shri Vijaya Singh, ld Sr. DR appeared for the revenue.

3.

It was submitted by ld AR that during the demonetization period, the assessee had deposited Rs.1,35,00,000/- in his bank account. It was the submission that the cash book of the assessee clearly showed that the assessee had cash balance of Rs.1,38,51,454/-. It was the submission that the Assessing Officer on the ground that 2 Assessment Year: 2017-18

the average sales of the earlier y

The order continues below.

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