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Facts
The assessee, an advocate, declared an income of INR 63.20 Lakhs. The assessment u/s 143(3) led to an addition of INR 41 Lakhs for unexplained FDR investment under Section 115BBE. In the first appeal, the Ld. CIT(A) further enhanced the addition to INR 60 Lakhs under Section 68, treating cash deposited during demonetization as unexplained.
Held
The Tribunal held that since the AO had accepted the declared income, including INR 60 Lakhs cash receipts from the profession, this amount could not be subsequently treated as unexplained cash credit under Section 68 by the CIT(A). The enhancement by CIT(A) without a show cause notice was impermissible, and treating already declared income as unexplained credit would result in a double addition.
Key Issues
1. Whether the CIT(A) can enhance an assessment without issuing a show cause notice. 2. Whether income already declared by the assessee and accepted by the AO can be subsequently treated as unexplained cash credit under Section 68 of the Income Tax Act.
Sections Cited
250, 143(3), 115BBE, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DEHRADUN “DB” BENCH: DEHRADUN
Before: SHRI YOGESH KUMAR U.S. & SHRI MANISH AGARWAL
ORDER PER BENCH: The present appeal is filed by assessee against the order dated 23.12.2025 passed by Ld. Commissioner of Income Tax (A), NFAC, Delhi [“Ld.CIT(A)”] u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 06.11.2019 passed u/s 143(3) of the Act pertaining to Assessment Year 2017-18.
Brief facts of the case are that the assessee is an Advocate by profession and return of income was filed on 21.08.2017, declaring total income of INR 63,20,030/-. The case was selected for scrutiny and the assessment was completed u/s 143(3) of the Act wherein addition of INR 41 Lakhs was made by holding the investment made in FDR as unexplained and further invoked the provision of section 115BBE of the Act.
In first appeal, Ld.CIT(A) enhanced the income and confirmed the addition of INR 60 Lakhs u/s 68 of the Act by holding that the cash deposited during demonetization period is unexplained and no addition is sustained towards the investment in FDR.
Before us, Ld.AR for the assessee submits that assessee received income from profession of INR 60 Lakhs in cash which was deposited during demonetization period and out of such sum, FDR of INR 41 Lakhs was got prepared. AO had accepted the income declared by the assessee in the return of income filed which inter-alia includes INR 60 Lakhs as cash receipts from profession. Ld.AR further submits that Ld.CIT(A) has made enhancement without giving any show cause to the assessee and further failed to appreciate the fact that such cash deposited was already offered for tax in the return of income filed for the year under appeal which has been accepted by the AO without any doubts. As per Ld.AR, once the income is accepted, its application in FDR cannot be doubted and since the AO has accepted the income declared in the return, the same cannot be treated unexplained credit u/s 68 of the Act by ld. CIT(A) and therefore, ld. AR prayed for the addition sustained / enhanced by ld. CIT(A).
On the other hand, Ld.CIT DR for the Revenue vehemently supported the orders of the lower authorities and requested for the confirmation of the same.
Heard the contentions of both the parties at length and perused the material available on record. From the perusal of the assessment order, it is observed that AO has not raised any doubts with respect to income declared by the assessee in the return of income filed and due taxes have been paid. Once the income declared in the return of income is accepted, the gross receipts declared in cash could not be doubted and the same cannot be treated as unexplained cash credit u/s 68 of the Act. It is further observed that Ld.CIT(A) has enhanced the income of the assessee without giving any show cause notice to the assessee which is not permissible. If the receipts already declared as income is treated as unexplained cash credit u/s 68 of the Act, it tantamount to double addition of an income.
In the light of the facts and overall discussion made herein above, addition of INR 60 Lakhs sustained / enhanced by Ld. CIT(A) is not tenable and thus, is deleted.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 13.03.2026.