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Facts
The assessee, engaged in wholesale trading of tobacco and chewing betel nuts, deposited a significant amount of cash during the demonetization period. The Assessing Officer (AO) treated ₹5,63,35,000/- as unexplained money under Section 69A of the Income Tax Act, 1961, and added it to the assessee's income. The CIT(A) upheld this addition.
Held
The Tribunal held that the AO's addition was unsustainable on two grounds: incorrect invocation of Section 69A and the risk of double taxation. The cash deposits represented sales that were already accounted for in the assessee's books, which were not disputed by the AO. The Tribunal also noted that the additional evidence provided by the assessee, bank certificates, were clarificatory and not new evidence under Rule 46A.
Key Issues
Whether the addition of cash deposits made during the demonetization period as unexplained money under Section 69A was justified, and if it resulted in double taxation.
Sections Cited
69A, 143(3), 46A, 68, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 03.09.2025 for the AY 2017-18.
The only issue raised in the various grounds of appeal is against the confirmation of addition of ₹5,63,35,000/- by the learned CIT (A) as made by the learned AO on account of cash deposited in the bank during the demonetization period. The assessee has also challenged the order of learned CIT (A) on the ground that the admission of additional under Rule 46A without referring the same to the learned AO.
2.2. In the appellate proceedings, the learned CIT (A) also dismissed the appeal of the assessee after taking into consideration the reply/ submission of the assessee. The learned CIT (A) while upholding the order of the learned AO even held that the assessee has not furnish any documents/ proof to corroborate huge cash deposited during demonetization period.
2.3. After hearing the rival contentions and perusing the materials available on record, we find that the assessee is engaged in the business of wholesale trading of Tobacco and Chewing Begel Nuts (pan masala) under the name and style of M/s Maa Ambay Traders.
2.4. Besides, addition was made by the learned AO u/s 69A of the Act which is not correct section under which this addition could not be made. The case of the assessee is squarely covered by the decision of this Tribunal in the case of Ragini Verma Vs ACIT Circle-49(1), Kolkata in for A.Y.2017-18, order dated 13-06-2024. The operating part thereof is extracted as under: - “7. After hearing the rival contentions and perusing the material on record including the decisions cited before us, we observe that the assessee has shown to have done trading in sarees in Kolkata. We also note that all the transactions of sale and purchases were made in cash and the assessee has also maintained the books of account and recorded the transactions as regards purchase and sales therein. This is undisputed that the cash deposited in to the bank account of assessee was out of cash books and a finding to that effect has been given by the AO as well. We also note that the AO has not rejected the books of account and even sale was not doubted. Therefore the action of the AO by adding the cash sales u/s 69A amounted to double addition which is not permissible under the Act. First by way of accepting the sales and secondly by way of making further addition towards cash sales u/s 69A of theAct. The case of assessee finds support from the decision of Co-ordinate Bench in the case of ITO vs. Joydeb Kundu (supra) wherein the Hon’ble Bench has held as under:
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 09.12.2025.