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Facts
The assessee's appeal against an addition of Rs.1,91,500/-, made under Section 69A for depositing demonetized currency, was dismissed by the lower appellate authority. The assessee contended that the amount deposited was part of cash withdrawn from their bank account prior to demonetization.
Held
The Tribunal held that the addition made by the Assessing Officer was based on doubt and surmises. The Revenue failed to demonstrate that the withdrawn cash was utilized for any other purpose. The explanation that the deposited amount was part of prior cash withdrawals was accepted.
Key Issues
Whether the addition of Rs.1,91,500/- on account of unexplained cash deposit during demonetization is sustainable when the assessee provided explanation of prior cash withdrawals from bank.
Sections Cited
143(2), 142(1), 69A, 253(3), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH ‘SMC’, LUCKNOW
Before: SHRI ANADEE NATH MISSHRA
2017-18 against impugned appellate order dated 12/03/2025 (DIN & Order No. ITBA/APL/S/250/2024- 25/1074439670(1) of Addl./Joint Commissioner of Income Tax (Appeals) [“ADDL/JCIT(A)” for short]. In this appeal the assessee has raised the following grounds:
“1. That the notice u/s 143(2) issued by the Learned Income tax Officer 5(2) Lucknow (who was subordinate to Commissioner 2 Lucknow) having no jurisdiction on the appellant is bad in law.
That further notices u/s 142(1) and assessment order passed by the Income Tax Officer -2(2) Lucknow (who is subordinate to commissioner 1 Lucknow) having jurisdiction but no fresh notice u/s 143(2) has been issued by Income Tax Officer - 2(2)
Lucknow hence the assessment order passed without issuing notice u/s 143(2) by ITO 2(2) Lucknow is bad in law and the assessment is liable to be quashed.
Without prejudice to the above
The Learned Assessing Officer has erred in law as well as on facts in making addition of Rs.1,91,500/- u/s 69A.
That the appellant has withdrawn the cash the bank accounts and had sufficient balance to deposit the amount in bank during demonization.
That the Learned Assessing Officer has not justified in making addition of Rs.1,91,500/- merely an assumption and presumption and without bringing any material on record that the appellant has consumed all the amount withdrawn from bank.”
(B) This appeal has been filed by the assessee, beyond time limit prescribed under section 253(3) of IT Act. The assessee has submitted application for condonation of delay in filing of the appeal; pleading that the delay was unintentional and beyond control of the assessee and has requested to admit the appeal for hearing. The learned Sr. Departmental Representative for Revenue did not express any objection to assessee’s application for condonation of delay in filing of the appeal. In view of the foregoing, and in specific facts and circumstances of the present appeal before us, the delay in filing of this appeal is condoned; and the appeal is admitted for hearing.
(C) The facts of the case, in brief, are that in this case assessment order dated 11/11/2019 u/s 143(3) of the I.T. Act was passed by the Assessing Officer wherein the assessee’s total income was assessed at Rs.7,54,340/-. In the aforesaid assessment order an addition of Rs.1,91,500/- was made by the Assessing Officer u/s 69A of the I. T. Act on the ground that the aforesaid amount was deposited by the assessee in demonetized currency during demonetization period. The assessee’s appeal against the aforesaid addition of Rs.1,91,500/- was dismissed by the learned Addl/JCIT(A) vide impugned appellate order dated 12/03/2025. The present appeal has been filed by the assessee before the Income Tax Appellate Tribunal against the aforesaid impugned appellate order dated 12/03/2025.
(D) At the time of hearing, learned counsel for the assessee submitted that only an amount of Rs.4,41,500/- was deposited by the assessee in demonetized currency during demonetization period; and the Assessing Officer grossly erred in treating the amount of Rs.1,91,500/- being deposited in demonetized currency. Learned Counsel for the assessee further submitted that aforesaid amount of Rs.4,41,500/- was available with the assessee as cash in hand out of cash withdrawn from saving bank account for the period from 01/04/2016 to 31/10/2016 amounting to Rs.7,68,800/- and expenses incurred were Rs.3,27,300/- only. The learned counsel for the assessee also submitted that the remaining amount out of the aforesaid Rs.7,68,800/-, i.e. Rs.4,41,500/- was available with the assessee and was deposited in the bank account. In view of the above learned Counsel for the assessee contended that the aforesaid addition of Rs.1,91,500/- be deleted.
(E) Learned Departmental Representative relied on the orders of the learned CIT(A) and the Assessing Officer. However, he could not rebut the facts and submissions contended on behalf of the assessee. The Learned Departmental Representative for Revenue left the matter to the discretion of the SMC.
(F) Both sides have been heard. Materials on record have been perused. The assessee is an employee whose source of income is salary and bank interest and has shown income of Rs.5,62,840/- in the return filed by him.
The assessee had withdrawn cash from saving bank account for the period from 01/04/2016 to 31/10/2016 to the extent of Rs.7,68,800/- which is substantially higher than the amount deposited by the assessee in cash in bank account. The addition made by the Assessing Officer is based only on doubt, surmises and guess work. As regards the aforesaid addition of Rs.1,91,500/-, Revenue has not demonstrated that such cash withdrawn by the assessee was invested or utilized for any other purpose. No case has been made by Revenue to sustain this addition of Rs.1,91,500/-. In the specific facts and circumstances of the present case, the explanation tendered from assessee’s side that an amount of Rs.4,41,500/- deposited in bank in demonetized currency was part of cash balance available just before demonetization from the cash withdrawals made from the bank account for the period 01/04/2016 to 31/10/2016 is acceptable. Accordingly, in specific facts and circumstances of the present case, the aforesaid addition of Rs.1,91,500/- is deleted and the appeal is allowed.
(G) In the result, the appeal of the assessee stands allowed.
(Order pronounced in the open court on 14/10/2025)