SURENDRA KUMAR JAIN,INDORE vs. DCIT/ACIT 2(1), INDORE

The assessee filed his return of income on 28-03-2018 under section 139(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), declaring total income of Rs. 46,64,400/- . The case was selected for limited scrutiny through CASS, and notice under section 143(2) of the Act was issued on 09.08.2018. The assessee is a partner in two partnership firms and has also disclosed income from house property and capital gains. During the relevant previous year, the assessee deposited cash aggregating to Rs. 49,80,000/- in his Bank of Baroda account during the demonetization period.

During the assessment proceedings, the Assessing Officer called upon the assessee to explain the nature and source of the cash deposits. In response dated 19.08.2019, the assessee claimed that he had an opening cash balance of Rs 67,77,918/- as on 01.04.2016. However, according to the Assessing Officer, the assessee failed to furnish the relevant bank statements and corroborative documentary evidence establishing the availability and source of the alleged cash balance. The Assessing Officer further issued a show-cause notice dated 13.11.2019, requiring compliance by 19.11.2019. However, the assessee failed to furnish any satisfactory explanation or supporting evidence. Consequently, the Assessing Officer rejected the explanation regarding the availability of cash and made an addition of Rs 67,00,000/- under section 69A of the Act. The assessment was completed under section 143(3) on 06.12.2019, determining the total income at Rs 1,13,64,400/-.

Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). During the appellate proceedings, the assessee furnished balance sheets as on 31.03.2016 and 31.03.2017 and cash books for the financial years 2015-16 and 2016-17. The learned CIT(A), upon examination of the documents, observed that the assessee had disclosed substantial cash balances in earlier years but had failed to substantiate their existence and sources through independent documentary evidence.

The learned CIT(A) further observed that the actual cash deposited in the bank account during the demonetisation period amounted to Rs 49,80,000/- whereas the Assessing Officer had made an addition of Rs 67,00,000/- Accordingly, the learned CIT(A) restricted the addition under section 69A to Rs 49,80,000/- and deleted the balance addition of Rs 17,20,000/-

Aggrieved by the order of the CIT(A), the assessee preferred an appeal before the us. The assessee has raised following grounds of appeal: “1. That the learned 1st Appellate Authority has erred both in Law in passing the 1st Appeal order and partly confirmed the Addition of Rs. 4980000/-. 2. That the learned 1st Appellate Authority has also erred in not considered the facts and produced evidence and also confirmed the penalty addition which made by Assessing Authority. 3. That thus the passed 1st Appeal order is quite illegal and unjust unwarranted contrary to facts and deserve to be set aside.

Before us, the learned Authorised Representative of the

On the other hand, the learned Departmental Representative

We have considered the rival submissions and perused the

However, upon careful examination of the documentary

From the above, it is evident that the cash balances reflected in the cash books do not reconcile with the corresponding figures disclosed in the balance sheets. In particular, the cash book reflects a balance of Rs 57,00,344/- as on 31.03.2013, whereas the balance sheet forming part of the return filed for AY 2013-14 reflects cash of only Rs.7,72,091/-. The assessee has not furnished any satisfactory reconciliation explaining this substantial difference. Further, the cash book reflects cash of Rs 67,77,918/- as on 31.03.2016, whereas the balance sheet reflects Rs 67,94,249/-. Similarly, as on 31.03.2017, the cash book reflects Rs 1,80,088/- against Rs 1,96,419/- shown in the balance sheet. These differences remain unexplained. We further observe that the Chartered Accountant's certificate furnished before us reflects cash in hand of Rs 2,50,088/- as on 31.03.2017, which is inconsistent with both the cash book and the balance sheet for the corresponding date. The assessee has not furnished any reconciliation explaining these discrepancies.

We also observe that the assessee has relied substantially upon cash books and balance sheets without furnishing adequate supporting primary records to establish the actual availability of the claimed cash balance. Although entries in regularly maintained books of account constitute relevant evidence, their evidentiary value must be assessed in the light of their consistency with other records and the surrounding facts and circumstances.

In the present case, the material discrepancies between the cash books, balance sheets, Chartered Accountant's certificate and partnership accounts materially weaken the reliability of the assessee's explanation. The assessee has failed to satisfactorily reconcile these discrepancies or substantiate the availability of cash through independent corroborative evidence. The mere disclosure of a substantial opening cash balance in a cash book cannot, in the facts of the present case, be regarded as conclusive proof that such cash was actually available with the assessee on the dates of deposit, particularly when the underlying records contain material inconsistencies and the assessee has failed to establish a reliable cash trail.

Section 69A of the Act provides for the treatment of money as unexplained where the assessee is found to be the owner thereof, such money is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about its nature and source or the explanation offered is not satisfactory. In the present case, the cash deposits of Rs 49,80,000/- are not in dispute. The explanation offered by the assessee regarding their source has not been substantiated by reliable and reconciled documentary evidence. The material placed on record does not satisfactorily establish that the claimed opening cash balance was actually available for making the impugned deposits.

We further observe that, during the course of hearing, the learned Authorised Representative (Ld. AR) placed reliance upon certain judicial precedents furnished through written submissions dated 19.05.2026 are as under: (i) DCIT vs. Hindva Builders 182 taxmann.com 628 (Ahmedabad Trib) (ii) Arihant Associates vs. ITO 158 taxmann.com 7 (Raipur- Trib) (iii) Joginder Kaur vs. ITO 169 taxmann.com 90 (Amritsar- Trib) (iv) ITO vs. O3 Developers (P) Ltd. 486 ITR 269 (SC) (v) Mohit Sukhija vs. NFA 175 taxmann.com 94 (Delhi -Trib)

We have carefully considered the judicial pronouncements relied upon by the Ld. AR and examined their applicability to the facts and circumstances of the present case. On perusal, we find that the factual matrix underlying the said judicial precedents is materially distinguishable from that of the case before us. Consequently, the ratio laid down in those decisions does not advance the case of the assessee in the peculiar facts and circumstances of the present appeal. Accordingly, the judicial precedents relied upon by the Ld. AR are distinguishable on facts and are, therefore, not applicable to the present case.

We further find that the learned CIT(A) has already restricted the addition to the actual amount of cash deposited during the demonetisation period and deleted the excess addition of Rs 17,20,000/- made by the Assessing Officer. Having regard to the totality of the facts and circumstances, the material discrepancies in the accounts and the failure of the assessee to furnish a satisfactory explanation supported by reliable evidence, we find no infirmity in the conclusion reached by the learned CIT(A) in sustaining the addition of Rs 49,80,000/- under section 69A of the Act.

In view of the foregoing discussion, we hold that the assessee has failed to satisfactorily establish the source and availability of the cash claimed to have been deposited during the demonetisation period. The explanation based on the alleged opening cash balance remains unsubstantiated in view of the material discrepancies and absence of satisfactory corroborative evidence. Accordingly, we uphold the order of the learned CIT(A) sustaining the addition of Rs 49,80,000/- under section 69A of the Act. The grounds raised by the assessee on this issue are dismissed.

In the result, the appeal filed by the assessee is dismissed.