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Facts
The assessee, engaged in trading electrical goods, filed a return of income declaring Rs. 3,93,730 for AY 2017-18. The assessment was reopened under Section 147 due to cash deposits of Rs. 11,80,000 during demonetization. The AO made an addition on account of these deposits, which was upheld by the CIT(A).
Held
The Tribunal held that the assessee's claim that cash deposits were from cash sales needed proper substantiation. As the assessee was not provided sufficient opportunity to file evidence before the AO, and the CIT(A) did not admit additional evidence, the matter was restored.
Key Issues
Whether cash deposits during demonetization are to be treated as income when the assessee claims they are from business sales and whether the CIT(A) was justified in not admitting additional evidence.
Sections Cited
147, 44AB, 68, 115BBE, 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
Before: SHRI VIKAS AWASTHY
ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 15.10.2025, for Assessment Year 2017-18.
Shri I.P Bansal appearing on behalf of the assessee submits that the assessee is a proprietor of M/s Gupta Electric Store and is engaged in trading of electrical goods. For the Assessment Year 2017-18, the assessee filed his return of income on 28.09.2017, declaring total income of Rs. 3,93,730/-. Based on information with respect to cash deposits of Rs. 11,80,000/- during the demonetization period (09.11.2016 to 31.12.2016) in his bank account with Vijaya Bank, the assessment for AY 2017-18 was reopened u/s.147 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’).
2.1. The ld. Counsel for the assessee submits that cash deposits in the bank are from cash sales. The nature of assessee’s business is such that cash sales are usual part of the assessee’s routine business. The total turnover of the assessee including cash sales is to the tune of Rs.1,19,65,151/- the entire cash sales have been duly accounted in the books and same are audited under the provisions of section 44AB of the Act. The books of account of the assessee have been accepted by the Assessing Officer (AO) without pointing any defect. The assessee has filed its return of income on the basis of audited books. If any addition is made on account of cash deposits in the bank it would tantamount to double addition. In support of his submissions, he placed reliance on the decision in the case of Shagun Jewellers vs. DCIT in for AY 2017-18 decided on 27.02.2025.
2.2. The ld. Counsel further submits that the assessee could not file documentary evidences before the AO as sufficient opportunity was not provided to the assessee. The assessee filed additional evidences before the CIT(A) under Rule 46A, to substantiate that cash deposits in the bank were out of cash sales. However, the CIT(A) without admitting additional evidences dismissed appeal of assessee.
Shri Manoj Kumar, representing the department vehemently relied on impugned order and prayed for dismissing appeal of the assessee.
Both sides heard. A perusal of the assessment order reveals that the AO had made addition of Rs.11,80,000/- under section 68 r.w.s. 115BBE of the Act primarily
for the reason that the assessee has not filed documentary evidences to substantiate, cash deposits are from business receipts/cash sales. The assessee has filed additional evidences under Rule 46A before the CIT(A). The First Appellate Authority without admitting additional evidences, upheld the addition made by the AO. Considering entire facts of the case, I deem it appropriate to restore the matter back to the AO for denovo assessment after affording reasonable opportunity to making submissions to the assessee, in accordance with law.
In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on Thursday the 12th day of March, 2026.