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Income Tax Appellate Tribunal, C BENCH: CHENNAΙ
Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax, Appeal, Addl/JCIT(A), Panchkula [hereinafter “Addl. CIT(A)”] dated 09.07.2025 in the matter of assessment framed by the Assessing Officer [AO] u/s. 143(3) of the Income-tax Act,1961 (hereinafter “the Act”) on 27.12.2019.
The grounds of appeal raised by the assessee are as under:
“1. The grounds of appeal raised by the assessee are as under:
1. 1. The order of the CIT(A) is erroneous and bad in law as the same is opposed to the facts of the case and provisions of law.
2. The CIT(A) erred in dismissing the appeal without properly considering the submissions filed by the Appellant in violation of the principles of natural justice.
3. The AO erred in making the addition of Rs.13,10,000/- as unexplained money u/s.69A of the Act and the CIT(A) erred in failing to delete the same.
4. The Appellant having submitted the source for the cash deposits before the AO and the CIT(A), the CIT(A) ought to have deleted the addition of Rs. 13,10,000/-when the source was not disproved.
5. The addition having been made merely for the reason that cash was kept in hand for 3 months, the CIT(A) went wrong in falling to delete the same. 6 Alternatively, the AO having taxed the addition @60% u/s. 115BBE of the Act instead of 30%, the CIT(A) ought to have taxed the addition at the appropriate rate for A.Y.2017-18.”
The assessee has filed his return of income on 18.10.2017, declaring a total income of Rs. 9,22,470/-, including Long Term Capital Gain (LTCG) of Rs. 25,270/- on the sale of jewellery. The case was selected for limited scrutiny for the reason that the assessee had made cash deposits in his bank account during the demonetization period.
During the course of assessment proceedings, the assessee explained the source of such cash deposits as sale of jewellery and furnished copies of the sale bills in support of his claim. However, the A.O did not accept the explanation, holding that the assessee failed to conclusively furnish material evidence regarding the sale of jewellery.
Aggrieved, the assessee preferred an appeal before the Ld. Addl.
CIT(A). The Ld. Addl. CIT(A) accepted that the assessee had received Rs.12,46,640/- in cash from the sale of jewellery on 07.08.2016, 08.08.2016, and 10.08.2016. However, he confirmed the addition on the ground that the assessee failed to justify why such a substantial amount of cash was retained outside the banking system for an extended period and deposited only after three months, during the demonetization period.
The Ld. Authorized Representative (A.R.) for the assessee submitted that the assessee had explained source of cash deposit sale of old jewellary and had uploaded copies of the sale bills of jewellary before the A.O. The Ld. AR submitted that the capital gain arising from the sale was duly included in the return of income. It was further submitted that the cash received on sale was kept at home and deposited in bank after demonetization was announced. The Ld. AR argued that there was no restriction in law against retaining cash for a few months. Therefore, the Ld. A.R. pleaded that the addition made by the lower authorities be deleted.
The Ld. Departmental Representative (D.R.), on the other hand, supported the order of the Ld. Addl. CIT(A) and submitted written submission as under:
“In the case of appellant for a cash deposit of Rs. 13,10,000/- made during demonization period assessee explained the sources to be out of cash received on sale of old gold jewellery for an amount of Rs. 12,46,640/-. Assessee also furnished the copy of sale bills for the sale made to Sree Kumaran Thanga Maligai, Erode. 2. in this regard it is submitted that a perusal of the sale bills submitted does not show any payment being made by the jeweller to the assessee and even if paid there is no proof that the payment was made in cash. It is to be noted that the prevailing market practice in respect of purchase of old gold jewellery is always vide exchange in lieu of purchase of new gold, the same is also evident from the bills submitted by the appellant wherein the price is indicated in negative.
3. Hence, it is submitted that appellant has failed to conclusively prove the receipt of cash on sale of old gold. Without prejudice since, explanation on cash deposits is offered only to an extent of Rs. 12,46,640/- the addition to an extent of Rs.63,360/-needs to be sustained.”
We have heard the rival submissions and perused the materials available on record. The assessee has filed his return of income showing LTCG of Rs. 25,270/- on the sale of jewellery. During the assessment proceedings, the assessee has explained the source of cash deposits as sale of old jewellary and also furnished copies of sale bills. However, the A.O., without properly considering the evidence furnished, held that the assessee failed to conclusively prove the sale transaction. The Ld. Addl. CIT(A) has not doubted the sales bill, but confirmed the addition solely for the reason that the cash was deposited after a gap of three months of sale and during the demonetization period. In our view, there is no bar/restriction in law against keeping cash at home for three months , and the assessee’s has discharged the onus to explain the source of cash by furnishing the sale bills and also disclosing the same in return of income. The Ld Addl. CIT(A) was, therefore not justified to confirm the addition. We, accordingly, reverse the order of Ld. Addl. CIT(A) and direct the A.O to delete the addition.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 15th day of October, 2025 at Chennai.