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Facts
The assessee, a mobile phone dealer, deposited Rs. 7,92,900/- in specified bank notes during the demonetisation period. The Assessing Officer added this amount as unexplained money under Section 69A as the assessee failed to explain the source and produce a cash book, and the First Appellate Authority upheld the addition.
Held
The Tribunal admitted additional evidence (cash book and bank statements) under Rule 29, citing hard disk failure for previous non-submission. Noting that the cash book prima facie showed a sufficient balance on 08.11.2016, the Tribunal remitted the matter to the Assessing Officer for de novo adjudication to verify the new evidence and decide the issue afresh.
Key Issues
Whether cash deposits made during demonetisation were unexplained money under Section 69A, and the admissibility of additional evidence before the Income Tax Appellate Tribunal.
Sections Cited
69A, 143(2), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘SM’ Bench, Hyderabad
Before: SHRI RAVISH SOOD & SHRI MADHUSUDAN SAWDIA
(निर्धारण वर्ा/Assessment Year:2017-18) Shri Vijayanand Income Tax Officer, Vs. Ward-2, Chittoor. Nithyananad, Chittoor. PAN:AEDPN7704H (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri L. Damodara, Advocate. रधजस् व द्वधरध/Revenue by: Ms. Aditi Goyal, SR-DR सुिवधई की तधरीख/Date of hearing: 03/09/2025 घोर्णध की तधरीख/Pronouncement: 10/09/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by Shri Vijayanand Nithyanand (“the assessee”), feeling aggrieved by the order passed by the Learned ADDL/JCIT (A)-2, Gurugram, (“Ld. First Appellate Authority”), dated 28.01.2025 for the A.Y. 2017-18.
The assessee has raised the following grounds of appeal :
3. The brief facts of the case are that, the assessee is an individual, proprietor of M/s. Vakula Enterprises, engaged in the business of dealership of mobile phones. The assessee filed his return of income for AY 2017–18 on 29.10.2017, declaring total income of Rs.6,65,350/-. The case of the assessee was selected for complete scrutiny under CASS on the issue of cash deposits during the demonetisation period. Accordingly, notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”) on 08.08.2018. During the course of assessment proceedings, the Ld. AO noted that the assessee had deposited specified bank notes (“SBNs”) amounting to Rs.7,92,900/- during the demonetisation period. The assessee was called upon to explain the source of the deposits. However, the assessee could not produce the cash book before the Ld. AO. The Ld. AO therefore treated the deposits as unexplained money under section 69A of the Act and completed the assessment under section 143(3) of the Act vide order dated 19.12.2019, making addition of Rs.7,92,900/-, and assessed the total income at Rs.14,58,250/-.
Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. First Appellate Authority. The Ld. First Appellate Authority, however, dismissed the appeal observing that the assessee did not provide any supporting documents to substantiate his explanation.
Aggrieved with the order of Ld. First Appellate Authority, the assessee is in further appeal before us. The Learned Authorised Representative (Ld. AR) submitted that the assessee could not produce the cash book before the lower authorities due to crash of the tally software following a hard disk failure. He pointed out that before the Tribunal, the assessee has now furnished the cash book (page nos. 5 to 31 of the paper book) and bank statements ( page nos. 32 to 96 of the paper book) as additional evidence along with a petition under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. He drew our attention to the cash book, which shows that as on 08.11.2016, the assessee had a cash balance of Rs.18,70,280/-. He also submitted that the books of accounts of the assessee are duly audited by a Chartered Accountant. Thus, the deposits of Rs.7,92,900/- were out of available cash balance and cannot be treated as unexplained. He therefore requested that the additional evidence be admitted and the addition may be deleted.
Per contra, the Ld. Departmental Representative (“Ld. DR”) relied on the orders of the lower authorities. She submitted that the assessee had failed to produce the cash book or any supporting documents before both the Ld. AO and the Ld. CIT(A). The evidence is now being produced for the first time before this Tribunal, and hence, should not be admitted. She therefore prayed that the appeal of the assessee be dismissed.
We have carefully considered the rival submissions and perused the material available on record. We find that the assessee has filed before us, by way of additional evidence, a copy of the cash book (page nos. 5 to 31 of the paper book) and bank statements (page nos. 32 to 96 of the paper book), along with a petition under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. The explanation offered by the assessee is that due to hard disk failure and tally software crash, these documents could not be produced earlier before the Ld. AO and the Ld. CIT(A). On perusal of the cash book, we note that as on 08.11.2016, the assessee had a cash balance of Rs.18,70,280/-, which prima facie supports the contention that the deposits of Rs.7,92,900/- during the demonetisation period were out of available cash balance. However, these evidences have not been verified by the Ld. AO at any stage. In the interest of justice, we admit the additional evidence filed by the assessee. Since the same requires verification, we deem it appropriate to remit the matter back to the file of the Ld. AO for de novo adjudication. The Ld. AO shall verify the cash book, bank statements, and other supporting material furnished by the assessee, and may call for further evidence or explanation, if necessary, before deciding the issue afresh. The assessee shall extend full cooperation and file all requisite details as called for by the Ld. AO.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 10th Sept., 2025.