MALINI JIGNESH DOSHI,AHMEDABAD vs. ITO WARD 5(3)(1), AHMEDABAD

Considering the reasons stated in the Affidavit, which demonstrate that the delay was neither intentional nor deliberate but occurred due to circumstances beyond the assessee’s control, we find sufficient cause to condone the delay. In view of the principles laid down by the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC) and N. Balakrishnan v. M. Krishnamurthy [(1998) 7 SCC 123], which have held that substantial justice should prevail over technical considerations, we hereby condone the delay of 313 days in filing the appeal. Accordingly, the application for condonation of delay stands allowed and the case is allowed to be heard on Merits.

The brief facts of the case are that the assessee is an individual who filed her return of income for Assessment Year 2017-18 declaring a total income of Rs. 3,51,900/-. The case of the assessee was selected for limited scrutiny for verification of cash deposits made during the demonetization period. During the course of assessment proceedings, the Assessing Officer observed that the assessee had deposited total cash of Rs. 17,63,000/- in her bank accounts maintained with ICICI Bank and The Mahila Vikas Co- operative Bank during the demonetization period. The Assessing Officer issued various notices under sections 143(2) and 142(1) of the Act calling for details from the assessee regarding the source of the cash deposits, but there was no compliance on part of the assessee. In the absence of any explanation or documentary evidence, the Assessing Officer completed the assessment under section 143(3) of the Act and treated the cash deposits aggregating to Rs. 17,63,000/- as unexplained money under section 69A of the Act and applied the tax at the rate specified in section 115BBE of the Act. Accordingly, the assessee computed the total income of the assessee at Rs. 21,14,900/- and penalty proceedings under section 271AAC were also initiated separately.

The assessee preferred an appeal before the learned CIT(Appeals) against the addition made by the Assessing Officer. During the appellate proceedings before us CIT(Appeals), he issued several notices to the assessee, but there was no compliance on any of the scheduled dates. The CIT(Appeals) noted that despite sufficient opportunities provided, the assessee failed to make any submission or furnish any documentary evidence Malini Jignesh Doshi vs. ITO Asst.Year –2017-18 - 4– in support of her contentions. Relying on the observations of the Assessing Officer and placing reliance on the judgment of the Hon’ble Punjab & Haryana High Court in Anil Goel v. CIT [2008] 306 ITR 212 (P&H), the CIT(Appeals) held that in the absence of any submission, no independent reasons were required to be recorded for affirming the Assessing Officer’s order. Accordingly, the CIT(Appeals) confirmed the addition of Rs. 17,63,000/- made under section 69A and dismissed the appeal of the assessee.

The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing her appeal. Before us, the learned counsel for the assessee submitted that both the Assessing Officer and the CIT(Appeals) have failed to appreciate the factual and evidentiary position on record. The Counsel for the assessee submitted that the cash deposits of Rs. 17,63,000/- made during the demonetization period were fully explainable and arose from (i) earlier cash withdrawals of Rs. 10,00,000/- from the Mahila Vikas Co- operative Bank prior to November 2016, and (ii) accumulated savings and income disclosed in earlier years amounting to Rs. 7,63,000/-. The counsel further pointed out that the assessee had consistently filed income tax returns in preceding years declaring regular sources of income such as tuition fees, rent, and interest, all of which were in cash and duly disclosed to the Income Tax Department. It was further submitted that the bank statements clearly reflect the earlier withdrawals made during June and July 2016 aggregating to Rs. 10,00,000/-, and there is no finding by the Assessing Officer that such withdrawn cash was utilized elsewhere. Hence, the subsequent redeposit of such cash during the demonetization period cannot be treated as unexplained. The counsel relied on judicial precedents including Ajit Bapu Satam v.

The learned Departmental Representative, on the other hand, relied on the findings of the lower authorities.

We have heard the rival contentions and perused the material on record. It is evident from the records that the assessee had made substantial cash withdrawals aggregating to Rs. 10,00,000/- from her Mahila Vikas Co- operative Bank account prior to the demonetization period. The Assessing Officer has not disputed these withdrawals nor has he brought any material to show that such cash was utilized for any other purpose. Therefore, the assessee’s explanation that the subsequent deposits during the demonetization period were made from such earlier withdrawals cannot be brushed aside without any contrary material. The legal position in this regard is well settled. The Hon’ble ITAT Ahmedabad in M/s. Murlidhar Ice Malini Jignesh Doshi vs. ITO Asst.Year –2017-18 - 6– Cream & Sweet Parlour v. ITO (ITA No. 531/Ahd/2012) held that where cash deposits in a bank account are made out of earlier withdrawals and there is no evidence of their alternate use, such deposits cannot be treated as unexplained. Similar view has been taken in Ajit Bapu Satam v. DCIT [2023] 147 taxmann.com 222 (Mumbai - Trib.) and Ajay Data v. ACIT [2025] 171 taxmann.com 308 (Jaipur - Trib.). In all these cases, the principle applied is that unless the Assessing Officer demonstrates that the earlier withdrawn cash was used elsewhere, the redeposit thereof cannot give rise to addition under section 69A of the Act.

Further, the CBDT Instruction No. 3/2017 dated 21.02.2017 also supports this approach, directing officers to consider claims of redeposits from earlier withdrawals and past savings after due verification. In the present case, the assessee has been regularly filing returns and offering her income from tuition, rent, and interest to tax. Her explanation that the remaining Rs. 7,63,000/- was from accumulated household savings and disclosed income of preceding years is reasonable and supported by record. Considering the smallness of income, the modest background of the assessee, and the absence of any material to suggest otherwise, the explanation offered deserves acceptance.

In view of the above facts and the judicial precedents discussed, we are of the considered opinion that the addition of Rs. 17,63,000/- made under section 69A of the Act is unsustainable. Accordingly, the same is directed to be deleted.

The appeal of the assessee is allowed, and the addition of Rs. 17,63,000/- made under section 69A of the Act is hereby deleted.

In the result, the appeal filed by the assessee is allowed. This Order pronounced in Open Court on 06/11/2025