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Facts
The assessee, engaged in the sale of milk and dairy products, declared income for AY 2017-18. During demonetization, the assessee deposited Rs. 14,23,000/- in old denomination notes into their bank account. The Assessing Officer added this amount as undisclosed income, and the CIT(A) sustained the addition.
Held
The Tribunal held that the assessee regularly deposited cash generated from its business of selling milk and dairy products. The cash deposits during demonetization were consistent with daily cash generation from the business and should have been considered by the lower authorities.
Key Issues
Whether cash deposits made during demonetization, sourced from regular business sales, can be treated as unexplained cash credit and added to income. Whether the CIT(A) erred by not providing adequate opportunity of being heard.
Sections Cited
44AD, 271AAC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT “SMC” BENCH, SURAT
Before: Dr. BRR Kumar, Hon’ble & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 05-01- 2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2017-18.
The grounds of appeal are as under:- “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs. 14,23,000/- on account of remain unexplained treated as unexplained cash credit. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered
I.T.A No.1018/Srt/2025 Bavchandbhai Nathabhai Alagotra, A.Y.2017-18
adequate opportunities to hear the case and passed ex-parte order and hence, the case may please be set aside and restored back to the CIT(A) or AO. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Assessing Officer has erred in initiating penalty proceeding u/s. 271AAC of the Income Tax Act, 1961. 4. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.”
The assessee is engaged in the business of sales of milk and other dairy products. The assessee filed return of income for assessment year 2017-18 on 31-03-2018 declaring total income at Rs. 4,84,960/- wherein the assessee shown profit u/s. 44AD of Rs. 4,96,815/-. Statutory notices were issued which were replied and the details were filed by the assessee. The Assessing Officer observed that the assessee during the demonetization period has deposited the cash in old denomination to the tune of Rs. 14,23,000/- in to bank account of Bank of Baroda. After taking cognizance of the assessee’s reply as well as the bank details, the Assessing Officer made addition of Rs. 17,91,900/- as undisclosed income from undisclosed source.
The assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee thereby sustaining the addition to the extent of Rs. 14,23,000/-.
There is a delay of 547 days in filing the present appeal for which the assessee has filed the detailed affidavit stating
I.T.A No.1018/Srt/2025 Bavchandbhai Nathabhai Alagotra, A.Y.2017-18
the reasons therein. The reasons appear to be genuine, hence the delay is condoned.
The ld. A.R. submitted that the assessee has received the day to day basis cash from selling the milk and dairy products and therefore the assessee is regularly depositing the cash prior to demonetization as well.
The ld. D.R. relied upon the assessment order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee is regularly depositing the cash generated through its business of milk selling and sale of other dairy products. The details given by the assessee appears to be in consonance with the daily cash generation and during demonetization, the assessee has received the said cash through its business of selling the milk as well as milk products, therefore the Assessing Officer as well as the CIT(A) should have taken into consideration.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 02-04-2026 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 02/04/2026 TRUE COPY a.k.
I.T.A No.1018/Srt/2025 Bavchandbhai Nathabhai Alagotra, A.Y.2017-18
आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Surat 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Surat
Strengthened preparation & delivery of orders in the ITAT 1) Date of dictation 27/03/2026 2) Date on which the typed draft is placed before the 30/03/2026 (3 Pages of Dictating Member & Other Member dictation notebook attached)
3) Date on which the approved draft comes to the Sr. /02/2026 P.S./P.S. 4) Date on which the fair order is placed before the /02/2026 Dictating Member for pronouncement 5) Date on which the fair order comes back to the Sr. 02/04/2026 P.S./P.S. 6) Date on which the file goes to the Bench Clerk 02/04/2026 7) Date on which the file goes the Head Clerk 8) Date on which the file goes to the Assistant Registrar for signature on the order 9) Date of Dispatch of the order