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Facts
The assessee, a non-resident Indian, faced scrutiny for Assessment Year 2017-18. The AO noted unexplained cash deposits of Rs. 14,44,000/- and deposits of Rs. 29,72,000/- from M/s Sequoia Real Estate Private Limited in his bank account. Since the assessee did not explain the sources, the AO added these amounts as unexplained income under Section 69A, which was confirmed by the CIT(A).
Held
The Tribunal found that the CIT(A) dismissed the appeal without considering crucial additional evidence like medical records and remittance summaries. Therefore, in the interest of substantial justice and to provide a reasonable opportunity, the case was restored to the AO for a fresh decision, allowing the assessee to present all necessary evidence.
Key Issues
Whether additions for unexplained cash deposits and repayments of unsecured loans under Section 69A were justified, especially when the assessee claimed the source was bonafide household savings/remittances, and if the CIT(A) erred in not admitting crucial additional evidence.
Sections Cited
69A, 143(3), 115BBE, 271AAC, 271AA(2), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
O R D E R This appeal has been preferred by the Assessee against the order dated 12.06.2025, passed by the Commissioner of Income Tax (Appeal) [ld. CIT(A)], Noida-2 for Assessment Year 2017-18.
2.0 The brief facts of the case are that the assessee was a non-resident Indian. The assessee filed his return of income for the year under consideration on 29.09.2017, declaring a total income of Rs.9,210/- from house property and from other sources. The case of the assessee was selected for scrutiny under CASS. During the course of assessment proceedings, while going through the bank statements, it was noticed by the Assessing Officer (AO) that the assessee had made cash deposits
ITA(IT) No.517/LKW/2025 Page 2 of 8 of Rs.14,44,000/- in his bank account No.126301075021 maintained with ICICI Bank, Nirala Nagar Branch, Lucknow. In addition to these cash deposits, there were deposits of Rs.29,72,000/- from a real estate company, M/s Sequoia Real Estate Private Limited. The AO issued statutory notice to the assessee, requiring the assessee to prove the source of cash deposits of Rs.14,44,000/- and also to prove the nature of deposit of Rs.29,72,000/- in his bank account No.126301075021 maintained with ICICI Bank, Nirala Nagar Branch, Lucknow. Since there was no response from the side of the assessee, the AO treated both the deposits, i.e., cash deposits of Rs.14,44,000/- and deposits of Rs.29,72,000/- from M/s Sequoia Real Estate Private Limited as unexplained and added the same to the income of the assessee under section 69A of the Income Tax Act, 1961 (hereinafter called “the Act’). The AO completed the assessment under section 143(3) of the Act, assessing the total income of the assessee at Rs.44,25,210/-.
2.1 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 271AAC and 271AA(2) of the Act, separately.
ITA(IT) No.517/LKW/2025 Page 3 of 8 2.2 Aggrieved, the Assessee preferred an appeal before the Ld. First Appellate Authority, who dismissed the appeal of the assessee and confirmed the order of the AO.
2.3 Now, the assessee has approached this Tribunal challenging the order of the ld. CIT(A), by raising the following grounds of appeal:
1. Because the present appeal by the assessee, is directed against the order dated 12.06.2025 passed by Office of the Commissioner of Income Tax, Appeal CIT(a) Noida-2.
2. Because the Assessing Authority committed material illegally while passing the impugned order dated 24.12.2019 which was confirmed by the Appellate Authority through its order dated 12.06.2025. Assessment in the case has been made u/s 143(3) r.w.s 144B of the Income Tax Act, 1961 vide order dated 24.12.2019 at the Rs.44,16,000/- explanation regarding source and nature of cash deposit of Rs.14,44,000/- and deposit from M/s Sequoia Real Estate Private Limited of Rs.2972000/- both the deposits are treated as unexplained income of the assessee and added back to the taxable income of the assessee u/s 69A of the Act for A.Y. 2017-18. The above addition is taxable as per provisions of section 115BBE of the Act.
Erroneous confirmation of addition of ₹14,44,000/- under Section 69A: The learned CIT(A) gravely erred in sustaining the addition of ₹14,44,000/-being cash deposit during demonetization, without appreciating that the Appellant is an NRI and the source of cash emanated from bona fide
ITA(IT) No.517/LKW/2025 Page 4 of 8 household savings funded by foreign remittances and agricultural income. The Appellant's explanation, supported by remittance records and medical documentation, could not have been discarded on conjectural reasoning. Reliance: Dipak Balubhai Patel (HUF) v. ITO (ITAT Ahmedabad, "Where cash deposits during demonetisation are recorded and explained, addition under Section 69A is unwarranted." Harsh Agarwal v. DCIT (ITAT Jaipur, July 2024): "NRI compelled to deposit SBN notes during demonetisation cannot be penalised absent contrary evidence."
Erroneous confirmation of addition of Rs.29,72,000/-as unexplained income: The learned CIT(A) erred in law in treating repayment of unsecured loan by M/s Sequoia Real Estate Pvt. Ltd. as unexplained income, notwithstanding uncontroverted evidence of prior loan advancement and subsequent repayment through banking channels. Reliance: ITO v. Dinesh Kumar Goel (Delhi ITAT): "Repayment of old loans routed through bank cannot be assessed as income unless falsity is demonstrated." J.R. Rice India Pvt. Ltd. v. ACIT (ITAT Delhi): "Additions cannot be founded on presumptions when bank statements substantiate the transaction."
Failure to admit additional evidence under Rule 46A: The learned CIT(A) erred in refusing to admit crucial evidence
ITA(IT) No.517/LKW/2025 Page 5 of 8 (medical records, remittance summaries) despite the Appellant establishing sufficient cause for non-production before the AO, being stationed abroad and preoccupied with medical exigencies. The rejection militates against principles of natural justice. Reliance: CIT v. Text Hundred India Pvt. Ltd. (351 ITR 57): "Technicalities should not defeat substantive justice; additional evidence may be admitted when sufficient cause is shown."
Additions made without adherence to CBDT Guidelines: The additions disregard CBDT's Standard Operating Procedure issued during demonetization, which mandates verification of books and historical patterns before invoking Section 69A. The AO's failure to follow such binding instructions vitiates the assessment.
Additions based on suspicion and conjecture: It is well-settled that suspicion, however strong, cannot substitute proof (CIT v. Daulat Ram Rawatmull [87 ITR 349 (SC)]). The impugned additions, resting on unsubstantiated assumptions, are liable to be deleted.
Rajkot ITAT Cash Deposits During Demonetisation Explained The Rajkot Tribunal held that if the source of demonetisation- period deposits is satisfactorily explained, additions under Section 69A are not justified.
Smt. Prabhavati S. Shah v. CIT [231 ITR 1 (Bom)]
ITA(IT) No.517/LKW/2025 Page 6 of 8 Held: Powers of appellate authority are co-terminus with that of AO, and additional evidence can be admitted to meet ends of justice.
CIT v. Smt. P.K. Noorjahan [237 ITR 570 (SC)]. Held: Addition cannot be made merely because explanation is not fully satisfactory if assesses overall circumstances support it.
ITO v. Ashok Kumar (ITAT Chandigarh) Held: Cash deposits during demonetization explained through past savings and family withdrawals accepted. Held: Addition cannot be made merely because explanation is not fully satisfactory if assesses overall circumstances support it.
Meenu Sagar v. ITO [ITAT Jaipur, 2021] Held: Cash deposits from family members and past withdrawals explained with evidence, addition deleted.
Any other ground of appeal that may be taken up during the course of the appeal hearing with the kind permission of the Income Tax Appellate Tribunal. 3.0 During the course of hearing before me, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the AO had passed the order under section 143(3) read with section 144B of the Act without affording reasonable opportunity of hearing to the assessee and had made the additions without bringing on record any material in support of the additions which were made on the basis of presumption and surmises only. It
ITA(IT) No.517/LKW/2025 Page 7 of 8 was further submitted that the ld. CIT(A) dismissed the appeal of the assessee without considering crucial additional evidences viz. medical records and remittance summaries produced by the assessee before him. The Ld. A.R., therefore, prayed that, in the interest of justice, the matter may be restored to the file of the AO for deciding the same afresh after providing reasonable opportunity of being heard to the assessee. He submitted that the assessee undertakes to produce all the relevant documents in support of his claim before the AO.
4.0 The Ld. Sr. D.R. placed reliance on the orders of the authorities below and submitted that the appeal of the assessee may be dismissed.
5.0 I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the assessee deserves an opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the AO with the direction to provide one more opportunity to the assessee to present his case along with necessary evidences. I also caution the assessee to fully comply with the directions of the AO in the set-aside proceedings when called upon to do so, failing which, the AO would be at complete liberty to pass the order in accordance with ITA(IT) No.517/LKW/2025 Page 8 of 8 law, based on the material available on record even if it is ex- parte qua the assessee.
6.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 31/12/2025.