RICKY NAKHAT,KOLKATA vs. I.T.O., WARD - 32(2), KOLKATA
What did the Tribunal hold?
The Tribunal held that the addition of ₹69,57,500/- under Section 69A of the Income-tax Act, 1961, resulted in double taxation. The Tribunal noted that the cash deposited was treated as business receipts by the assessee and accepted as such by the AO and CIT(A). The assessee's books of account were not rejected, and the net profit was calculated based on these accepted books. The Tribunal found that Section 69A is applicable to unexplained money not recorded in the books of account. However, in this case, the cash sales were recorded in the books of account. The Tribunal relied on the decisions in ITO vs. Joydeb Kundu and JMK Exports vs. ACIT, which held that if cash deposits are shown as sales/business receipts and the books are not rejected, the same amount cannot be added under Section 69A as it amounts to double taxation. Accordingly, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition.
What were the facts?
The assessee, Ricky Nakhat, filed an appeal against the order of the National Faceless Appeal Centre, Delhi (NFAC), dated 08.10.2024, for Assessment Year 2017-18. The appeal challenges the confirmation of an addition of ₹69,57,500/- made by the Assessing Officer (AO) under Section 69A of the Income-tax Act, 1961. The AO initiated scrutiny due to abnormal cash deposits during the demonetization period. The assessee filed financial statements, and after issuing a show cause notice, the AO treated the entire cash deposit of ₹69,57,500/- as unexplained investment under Section 69A and added it to the assessee's income. The CIT(A) upheld this addition after considering a remand report, finding that the assessee failed to provide sufficient documentary evidence.
What were the issues?
1. Whether the addition of ₹69,57,500/- as unexplained investment under Section 69A of the Income-tax Act, 1961, is justified when the cash deposits were recorded as business receipts in the audited books of account, which were not rejected by the authorities below? (Mixed question of law and fact) Assessee's contentions: The assessee argued that the AO's order was wrong as Section 69A is not applicable because the cash deposits were out of business receipts and duly recorded in the audited books of account. The assessee's books were not rejected, and the operational results were not disbelieved. The assessee contended that adding the cash deposits under Section 69A, when they represent recorded sales, leads to double taxation. The assessee relied on the decisions in JMK Exports vs. ACIT (ITA No. 1428/Del/2021) and ITO vs. Joydeb Kundu (ITA No. 8/Kol/2021). Revenue's contentions: The judgment does not record any specific contentions from the Revenue.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 08.10.2024 for the AY 2017-18.
The only issue raised by the assessee is against the order of ld. CIT (A) confirming the addition of ₹69,57,500/- as made by the AO u/s 69A of the Income-tax Act, 1961 (the Act) in respect of cash deposit during demonetization period.
The facts in brief are that the assessee filed the return of income on 04.11.2017, declaring total income of ₹9,64,510/-, which was
In the appellate proceedings, the ld. CIT (A) called for the remand report from the ld. AO and accordingly, the remand report was submitted on 26.02.2024. The ld. CIT (A) after taking into account the remand report and the reply of the assessee came to the conclusion that the assessee has failed to provide sufficient authentic documentary evidences to explain the cash deposits and therefore, justified the addition made by the ld. Assessing Officer.
The ld. AR vehemently submitted before us that the order passed by the ld. AO is patently wrong and against the provisions of the Act. The ld. AR submitted that though the assessee could not file all the
After hearing the rival contentions and perusing the materials available on record, we find that in this case the amount stated to be deposited in the bank accounts during demonetization period was treated as business receipt by the assessee which has been accepted by the AO as well as by the ld. CIT (A). Accordingly, the net profit was calculated as per the profit and loss account which is also been accepted and books were not rejected by either of the authorities below. Thereafter the ld. AO has added ₹69,57,500/- as unexplained
More On the issue of wrong invocation of provisions of Section 69A the Act, we observe that the same is not applicable to the transactions recorded in the books of accounts maintained by the assessee. For the sake of convenience, the provisions of section 69A are extracted as below:
69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.] 08. A perusal of above section reveals that it deals with unexplained money in the form of bullion, jewellery or other valuable articles which are not recorded in the books of account if maintained by the assessee for any source of income and the assessee has not offered any explanation about nature and source of acquisition of money,
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 30.07.2025.
More judgments on Section 69A
- Vishal Kumar Patel(HUF), Raipur vs DCIT, Circle-1(1), RaipurITA 595/RPR/2026[2017-18]Status: Heard21 Oct 2026AY 2017-18
- Adj Agri International LLP, Rajkot vs The Income Tax Officer, Ward-1(1)(1), RajkotITA 1198/RJT/2026[2018-19]Status: Disposed21 Oct 2026AY 2018-19
- Ashok Singh, Jaipur vs ACIT, Circle-2 Jaipur, JaipurITA 1540/JPR/2025[2015-16]Status: Disposed21 Oct 2026AY 2015-16
- Hemal Paresh Madeka, Rajkot vs Asst.Commissioner of Income Tax…ITA 955/RJT/2026[2020-21]Status: Disposed19 Oct 2026AY 2020-21
- Neepaben Sunnybhai Motwani, Rajkot vs Income Tax Officer, RajkotITA 875/RJT/2026[2021-22]Status: Disposed19 Oct 2026AY 2021-22
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