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Facts
The assessee, a school, deposited a sum of Rs. 45,75,000/- in cash during the demonetization period. The Assessing Officer (AO) added this amount to the assessee's income, treating it as unexplained cash credit under Section 68 of the Income Tax Act. The assessee contended that the deposit represented legitimate fee receipts from students.
Held
The Tribunal held that the explanation provided by the assessee regarding the cash deposits being from fee receipts from students was genuine. The Tribunal found that the addition made by the AO was based on surmise and conjecture and thus deleted the addition.
Key Issues
Whether the cash deposits made by the assessee during demonetization period, claimed to be fee receipts from students, constitute unexplained cash credits under Section 68 of the Income Tax Act.
Sections Cited
68, 115BBE, 250, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES : G : NEW DELHI
Before: MS. MADHUMITA ROY & SHRI NAVEEN CHANDRA
(Appellant) (Respondent) Assessee by : Shri Rajeshwar Painuly, CA Revenue by : Shri Muneesh Rajani, Sr.DR Date of Hearing : 10.02.2026 Date of Pronouncement : 11.03.2026 ORDER PER MADHUMITA ROY:
The instant appeal filed by the assessee is directed against the order dated 24.07.2025 of the Ld. Commissioner of Income-tax (Appeals)-30, New Delhi [hereinafter referred to as the Ld. CIT(A)] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the assessment order dated 25.11.2019 passed by the DCIT, Circle-17(2), Delhi (hereinafter referred to as ‘the ld. AO’) under Section 143(3) of the Act for Assessment Year 2017-18.
The grounds of appeal
taken by the assessee read as under:- “1. That the addition made is unjust, illegal, arbitrary, bad in law, highly excessive and based on surmise and conjecture. That the impugned Appeal Order is bad in law, illegal, and in violation of rudimentary principal of contemporary jurisprudence. That Hon'ble Commissioner of Income Tax (Appeals)-30 has passed the order against the Principles of Natural law and Justice.
2. The Hon'ble Commissioner of Income Tax (Appeals)-30, has erred in law and fact to upheld the addition of Rs. 45,75,000/- Under section 68 read with section 115BBE of the act is bad in law and must be deleted.
3. That the Appellant craves leave to add/alter any/all grounds of appeal before at the time of hearing of the appeal.”
3. The assessee is running a Junior/Primary Formal School from G-10, Pushkar Enclave, Paschim Vihar, New Delhi. The addition on account of cash deposit to the tune of Rs.45,75,000/- during demonetization period is the subject matter before us. The said amount was deposited from 09.11.2016 to 31.12.2016. In the absence of any explanation rendered by the assessee, the same was added in the hands of the assessee. In appeal, the assessee sought to justify the source of cash deposit is nothing, but, receipts as fee from students. Only on the basis of the observations made by the Ld. AO, the Ld. CIT(A) confirmed the same. Hence, the instant appeal before us.
4. Heard the parties and perused the record. Before the CIT(A), as it appears from the order passed by the Ld.CIT(A) and also reiterated by the Ld. Counsel appearing for the assessee, in support of the claim of the assessee that the money having been deposited out of the receipts of fees from students with 2 comprehensive documents, which was added by the Ld. AO under Section 68 of the Act, the complete details of the said cash receipts and deposits were duly furnished by the assessee reflecting from pages 12 to 14 of the order passed by the First Appellate Authority. It is the case of the assessee that the assessee received fees in cash during the year under consideration of Rs.1,77,52,346/- and deposited cash in the bank account of Rs.1,67,50,000/-. Rs.19,02,188/- was shown as cash expenses/payments made during the year and further cash withdrawal of Rs.1,20,000/- was shown by the assessee resulting cash in hand of Rs.22,18,561/- which was disclosed in Schedule 11 of the financial statement in the year under consideration which was also duly furnished before the First Appellate Authority. Before us, the Director of the school, namely Akash Gupta filed an affidavit providing break-up of fee received from parents of students appearing as Annexure-1 thereto. It was further stated by him categorically that fee receipts from parents are the genuine source of cash deposit. Further, pursuant to demonetization the specified old currency notes seized to be legal tender and, therefore, only permissible course available to the assessee was to deposit the cash into the bank accounts as per the Government Notification and banking regulations. Apart from that it was particularly stated in the said affidavit by the Director of the assessee school that in the education sector, receipt of fee in cash and maintenance of adequate cash balance for meeting day- to-day operation expenses is a normally accepted and prevalent business practice which, considering the details furnished by the assessee in support of the source 3 of cash deposits made by the assessee institution and further the details of fee receipts from students of the institution, seems to be genuine and, therefore, having regard to the entire aspect of the matter, we do not find any reason in not accepting such explanation rendered by the assessee in regard to the impugned cash deposit having been made through the cash in hand out of the fee receipt from the students of the institution, the impugned addition is found to be only a product of surmise and conjecture and, therefore, deleted.