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Facts
The assessee's case was reopened under Section 147 of the Income Tax Act, 1961, due to significant cash deposits into a third party's account which were then transferred to the assessee. The Assessing Officer made an addition of Rs. 2,23,46,000/- under Section 68 of the Act as unexplained income. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal found merit in the assessee's argument that the addition was unsustainable. It noted that a co-ordinate bench had deleted a similar addition in the case of Zia Rathi, holding that the cash deposits were explained by sales proceeds and not unexplained money.
Key Issues
Whether the addition of cash deposits as unexplained income under Section 68 is sustainable when a co-ordinate bench has deleted a similar addition in an allied case.
Sections Cited
147, 144B, 68, 115BBE
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Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI
Before: SH. M. BALAGANESH & SH. SUDHIR KUMAR
Appellant by Sh. Ashwani Taneja, Adv., Sh. Divyansh Dubey, Adv. & Sh. Shivam Kukreja, Adv. Respondent by Sh. Om Prakash, Sr. DR. 12.03.2026 Date of hearing: 08/04/2026 Date of Pronouncement: ORDER
PER SUDHIR KUMAR, JM:
This appeal by the assessee is directed against the order of National Faceless Appeal Centre (NFAC), Delhi vide order dated 15.9.2025 pertaining to A.Y. 2017-18 arising out of the assessment order dated 30-03-2022 passed by the Assessing Officer/National Faceless Assessment Centre, Delhi under Section 147/144B of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’].
The brief facts of the case are that the assessee filed his return of income declaring total income of Rs. 25,58,310/- on 30.10.2017 for AY 2017-18. Based on information available with the Department it was noticed that the huge cash deposit amounting to Rs. 2,23,46,000/- were made into the bank account of Smt. Zia Rathi during the demonetization period and same were transferred to Shri Inder Mohan Kukreja. Consequently, the case was reopened u/s. 147 of the Act. The assessment order u/s. 147 r.w.s. 144B of the Act was passed on 30.3.2022 assessing total income at Rs. 2,47,04,310/-. The addition of Rs. 2,23,46,000/- was made u/s. 68 of the Act as unexplained income.
Aggrieved by the order of the AO the assessee filed the appeal before the Ld.CIT(A), who vide his order dated 15-9-2025 dismissed the appeal against which the assessee is in appeal before the Tribunal.
The Ld. AR for the assessee has submitted that Ld. CIT(A) erred in law and on facts in confirming the action of the AO in making an addition of Rs. 2,23,46,000/- u/s. 68 of the Act r.w.s. 115BBE on account of cash deposit in the bank account of Zia Rathi a unexplained income of the assessee without considering the facts of the case and without considering the submission of the assessee and without observing the principles of natural justice. Even otherwise, it was further submitted that addition made in the case of Zia Rathi has been deleted by the Tribunal vide its order dated 16.01.2026 in (AY 2017-18), hence, on this basis, the addition made in the hands of the assessee is not sustainable in the eyes of law and needs to be deleted.
Ld. Authorized Representative of the Revenue relied upon the orders of the below authorities.
We have heard the revival contention of the parties and gone through the material available on record. We find force in the contention of the Ld. AR for the assessee that AO made the addition of Rs. 2,23,46,000/- u/s. 68 of the Act r.w.s. 115BBE on account of cash deposit in the bank account of Zia Rathi as unexplained income of the assessee, which addition has been deleted by the Tribunal vide its order dated 16.01.2026 in (AY 2017-18) in the case of Mrs. Zia Rathi vs. ITO by observing as under:- “….12. Once the assessee has been able to establish that entire cash deposited in the bank account was out of sales proceeds. It is also a matter of fact that out of total cash deposited of Rs. 9,23,95,000/-, only a sum of Rs. 2,23,46,000/- was deposited during demonetization period and balance amount of Rs. 7,00,49,000/- was deposited prior to demonetization which is also accumulated from the retail sales.
Once the assessee has discharged the burden casted upon her of explaining the source of cash deposited during demonetization by filing every possible evidence and Revenue has not been able to controvert such details nor any defects were pointed
out thus merely on assumption, it cannot be held that cash deposited during demonetization is unexplained money of the assessee. Accordingly, we hereby direct the AO to delete the addition made u/s. 68 of the Act towards the cash deposited during demonetization.”
8.1 In the background of the aforesaid discussions and considering the aforesaid precedent, we are of the considered view that the addition in dispute is not sustainable in the hands of the assessee, hence, the same is deleted. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 08.04.2026.