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Facts
The assessee's appeal is against an order confirming an addition made by the AO for unexplained cash deposits during the demonetization period. The assessee claimed these deposits were sale proceeds of gold ornaments and income from other sources. The AO accepted a portion but added back the rest.
Held
The Tribunal held that the addition of Rs. 2 lakhs for unexplained cash deposit was uncalled for, considering the CBDT's instruction not to verify cash deposits up to Rs. 2.5 lakhs during demonetization. The addition was deleted, and the ground was allowed.
Key Issues
Whether cash deposits during demonetization period, within the limits prescribed by CBDT instructions, require further verification by the AO.
Sections Cited
144, 142(1), 69, 44AD, 44AD(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: DR. MANISH BORAD & SHRI PARESH M JOSHI
(Assessment Year: 2017-18) Nikita Gupta, Income Tax Officer-2, C/o LB Gold, Ratlam CSA Marg, Vs. Alirajpur (Appellant / Assessee) (Respondent/ Revenue) PAN: AOTPG0456K Assessee by Shri Milind Wadhwani, AR Revenue by Ms. Ila Parmar CIT-Dr with Shri Nihar Sahu Date of Hearing 23.10.2025 Date of Pronouncement 24.10.2025 O R D E R Per Dr. Manish Borad, AM:
This appeal by the assesse is directed against the order dated 17.02.2023 of the Commissioner of Income Tax (Appeals), New Delhi for A.Y.2017-18 which is arising from the assessment order u/s 144 r.w.s. 142(1) of the Act dated 24.12.2019 framed by Income Tax Officer-2, Ratlam.
Registry has informed that there is delay of 7 days in filing the appeal before this Tribunal. The assessee has submitted Condonation of Delay application alongwith the affidavit. The Ld. AR for the assessee stated that the e-mail id of previous consultant was mentioned in Form No.35 due to which the assessee had no knowledge about the passing of the impugned order. Ld. AR also submitted that the delay is not intentional and therefore sought condonation of delay. The Departmental Representative opposed the request. On going through the reasons we notice that the delay was not intentional and assessee has not gained by delaying filing of appeal. Considering the ratio laid down by the Hon’ble Apex Court in the case of Inder Singh Vs.State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) and also observing that in filing appeal a delay is unintentional, we therefore condone the delay of 7 days and admit the appeal for adjudication.
At the outset Ld. Counsel for the assessee submitted that the only addition made is towards unexplained cash deposit during the demonetization period. He submitted that Central Board of Direcrt Taxes (CBDT) vide Instruction No.3/2017 dated 21.02.2017 has for cash deposits below Rs.2.5 lakhs during the demonetization period in case of individual tax payers. He further submitted that the assessee has already included the alleged cash deposit as part of the sale proceeds and offered it to income u/s 44AD of the Act.
He further submitted that the Ld. A.O has not granted the credit of self assessment tax at Rs.21,700/- paid on 29.06.2017 and the same needs to be allowed after due verification.
The Ld. Departmental Representative supported the order of lower authorities.
We have heard the rival contentions and perused the record placed before us. We notice that the addition of Rs.2,00,000/- has been made by the Ld. A.O for unexplained money u/s 69 of the Act for the cash deposited during the demonetization period. We note that the assessee deals in gold ornament business on small level and offers the income at presumptive section 44AD of the Act and also earns income from money lending business. During the course of assessment proceedings for the assessment year 2017-18 which have been initiated on account of cash deposits at Rs.13,24,062/-, Ld. A.O finally came to the conclusion that total in the bank account held with Narmada Jhabua Grameen Bank, Alirajpur is only Rs.2,50,000/-. The assessee contended before the Ld. A.O that the cash deposits are sale proceeds of gold ornaments and income offered to tax under presumptive taxation section as provided u/s 44AD of the Act. However Ld. A.O was partly satisfied and only accepted the source of cash deposit of Rs.50,000/- and made addition of remaining amount of cash deposit of Rs.2 lakhs.
We observe that the Ld. A.O during the course of assessment has accepted the income declared by the assessee at Rs.4,95,270/- which includes the income declared u/s 44AD of the Act on the turnover of Rs.2 lakhs and there is other income from interest on Rs.4,82,297/-. The computation of income shows that the assessee is earning income from interest regularly and so far as the source of cash deposit of Rs.2 lakh is concerned CBDT vide Instruction No.3/2017 dated 21.02.2017 has directed the revenue authorities not to make further verification of the cash deposits of up to Rs.2.5 lakhs during the demonetization period since the source of such amount can be either household savings/savings from past or from para 2 to 6 of the circular. In other words no verification is required in case of individual less than the age of 70 years for the cash deposit of Rs.2.5 lakhs during the demonetization period.
Considering the said direction by the CBDT dated 21.02.2017 and also considering the facts and circumstances of the case, we find that the impugned order making addition of Rs.2 lakh is uncalled for. Accordingly the finding of Ld. CIT(A) order is set aside and addition of Rs.2 lakh is deleted. Thus on merits assessee succeeds.
Ground No. 1 to 8 are allowed.
We further observed that during the course of hearing the assessee has referred to the written submissions wherein it has been stated that the credit of pre-paid taxes under the head self assessment tax at Rs.21,700/- deposited on 29.6.2017 has not been given by Ld. A.O. This issue needs verification and the same is hereby restored to the file of Ld. A.O for necessary verification.
Thus Ground No.9 is allowed for statistical purpose. Ground No.10&11 are general and consequential in nature which needs no adjudication.
In the result appeal of the assessee is partly allowed for statistical purpose.
Order pronounced in the open court on 24.10.2025.