Loading judgment…
Facts
The assessee, an individual engaged as a road transporter, deposited ₹27,00,000/- in cash during the demonetization period for AY 2017-18. The Assessing Officer and CIT(A) treated this as unexplained income under Section 69A, rejecting the assessee's explanation that the cash originated from prior bank withdrawals and was recorded in audited books, citing inconsistency with the assessee's usual business trend of immediate cash utilization.
Held
The Tribunal acknowledged the assessee's need to maintain a cash balance due to business exigencies but also considered the AO's observations regarding the deviation from the established business trend during demonetization. Balancing these aspects, the Tribunal estimated that 50% of the total cash deposited (i.e., ₹13,50,000/-) could be reasonably accepted as explained. Accordingly, the addition under Section 69A was restricted to ₹13,50,000/-.
Key Issues
Whether cash deposits made during the demonetization period, claimed to be from prior cash withdrawals and recorded in audited books, constitute unexplained money under Section 69A of the Income Tax Act, considering the assessee's business trend.
Sections Cited
69A, 69, 250, 143(2), 142(1), 143(3), 44AB
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI RAMA KANTA PANDA, VICE- & Ms. ASTHA CHANDRA
I.T.A.No.1905/PUN/2025 (Assessment Year : 2017-2018) Vijay Premraj Purohit, DCIT, Circle-1, Jalgaon Kondigre, 112, Shani Peth, Dalfad, Jalgaon, vs. Maharashtra-425001 PAN : AQLPP 1272 G (Appellant) (Respondent) For Assessee : Shri Dinar Daptari & Shri Siddhesh Mayekar, CAs For Revenue : Smt. Indira R. Adakil, Addl.CIT Date of Hearing : 04.12.2026 Date of Pronouncement : 12.01.2026 ORDER
PER : ASTHA CHANDRA, JM
This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [“CIT(A)/NFAC”], dated 16/06/2025 pertaining to Assessment Year (“AY”) 2017-18.
The assessee has raised the following grounds of appeal:-
1. On facts and in circumstances of the case and in law, the learned The Commissioner of Income-tax (Appeals), National Faceless Appeal Centre [hereinafter referred to as learned CIT(A)] erred in passing the Order u/s. 250 of the Income-tax Act, 1961 (the Act) without appreciating the provisions of law, facts, submissions, documents and case law placed on record. The Appellant prays that the additions made in the Assessment be deleted in toto.
2 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) 2. Addition of Rs. 27,00,000/- as Unexplained Money u/s. 69A of the Act 2.1. The learned CIT(A) erred in sustaining the addition made by the Assessing Officer by invoking provisions of section 69A of the Act in respect of cash deposited by the Appellant despite the fact that the cash so deposited were duly recorded in his books of accounts. The Appellant prays that the addition sustained on this count be deleted in toto. 2.2. The learned CIT (A) erred in sustaining the addition made by the Assessing Officer in respect of cash deposited by the Appellant as unexplained money u/s. 69A of the Act even though the nature and source of the same was duly explained by the Appellant as cash withdrawn from bank by the Appellant. The Appellant prays that the addition sustained on this count be deleted in toto. 2.3. The learned CIT (A) erred in sustaining the addition made by the Assessing Officer in respect of cash deposited by the Appellant as unexplained money u/s. 69A of the Act even though the nature and source of the same as explained by the Appellant as cash withdrawn from bank by the Appellant is verifiable on the face of the records. The Appellant prays that the addition sustained on this count be deleted in toto. 2.4. The learned CIT(A) erred in sustaining the addition made u/s. 69A of the Act by the Assessing Officer in respect of cash deposited by the Appellant solely based on unsupported suspicion & speculation and further ignoring the verifiable explanation about nature of source provided by the Appellant. The Appellant prays that the addition sustained on this count be deleted in toto.
The appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal at any time before or at the time of hearing.”
3. Briefly stated the facts are that assessee is an individual engaged in the business of authorized road transporter of Ambuja Cement Ltd. For A.Y. 2017-18, he e-filed return of income on 06/11/2017 declaring total income of ₹ 23,66,000/-. The case of the assessee was selected for scrutiny under CASS. Statutory notices u/s. 143(2) & 142(1) of the Income Tax Act, 1961 (“Act”) along with questionnaire were accordingly issued and served upon the assessee. In response thereto, assessee filed his reply/ 3 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) submissions from time to time. During the course of assessment proceedings, Ld. Assessing Officer (“AO”) noted that the assessee had deposited cash amounting to ₹ 27,00,000/- in his bank account(s) between the period of demonetization i.e. 09/11/2016 to 30/12/2016. The Ld.AO observed that the assessee’s regular business trend involved immediate utilization of cash withdrawal for transport payments. However, the explanation for the deposits made during the demonetization period that it stemmed from cash accumulated from withdrawals made in October, 2016 was found to be inconsistent with this established trend and was not supported by a reconciliation of currency denomination. The Ld.AO, therefore, completed the assessment vide his order dated 15/12/2019 passed u/s. 143(3) of the Act determining the total income of the assessee at ₹ 50,66,000/- by making addition of ₹27,00,000/- as unexplained income u/s. 69 of the Act.
4. On appeal, Ld. CIT(A)/NFAC upheld the action of the Ld.AO for the reason that assessee failed to discharge the onus of satisfactorily explaining the nature and source of cash deposit during the demonetization period, especially when it contradicted his established trend. The relevant observation and findings of the Ld. CIT(A)/NFAC are reproduced below:- “5.3.1 The crux of the appellant's argument is that since the cash was recorded in the audited books of account and the source of receipts (bank withdrawals) was not disputed, the addition under Section 69A is unwarranted. However, this argument overlooks the fundamental principles governing "unexplained money" under the Act, especially in the context of specific events like demonetization. Section 69A of the Income Tax Act, 1961, clearly states: "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable articleand such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of 4 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." The emphasis is not merely on whether an entry exists in the books, but on the satisfactory explanation of the nature and source of the money. In this case, while the cash withdrawals leading to the alleged cash in hand may have been recorded, the AO's primary concern, and rightly so, was the sudden deviation from the appellant's established business trend of immediate cash utilization. The appellant's explanation of accumulating cash due to the Diwali season and business needs, while plausible in isolation, failed to satisfactorily explain the anomaly in comparison to the consistent daily/next-day utilization of cash throughout the rest of the year. Furthermore, a critical aspect during the demonetization period was the requirement to prove the genuineness of high-value cash deposits. The onus was squarely on the appellant to establish a clear "one-to-one nexus" between the alleged previous withdrawals and the subsequent deposits of demonetized currency. The appellant failed to provide any documentary evidence, such as details of the denominations of notes withdrawn and subsequently deposited, which would have lent credence to his claim. Mere reliance on a closing cash balance in an audited cash book, without a convincing explanation for its sudden non-utilization contrary to the established business pattern, is insufficient to discharge this burden of proof. The Hon'ble Supreme Court in the case of Chuharmal Vs CIT (1988) 172 ITR 250 (SC), affirming the wide meaning of "income" under Section 69A, held that if the assessee fails to offer a satisfactory explanation about the nature and source of acquisition of money found in his possession (including bank accounts), its value may be deemed to be his income. The principle established is that the burden lies heavily on the assessee to explain the source of any unexplained money. In the present case, the AO's finding that the cash withdrawn in October 2016 was likely utilized for transportation charges, consistent with the appellant's business trend, is a reasonable inference drawn from the available facts. The appellant's failure to provide a credible explanation for keeping Rs. 27,00,000/- in cash for an extended period, contrary to his usual operational style, particularly when it was suddenly deposited during demonetization, leads to the inescapable conclusion that the source of this cash remained unexplained. Therefore, the addition of Rs. 27,00,000/- under Section 69A of the Act was justified and correctly made by the Assessing Officer.”
Aggrieved, the assessee is in appeal before this Tribunal and all the grounds of appeal
relate therein.
6. The Ld.AR submitted that books of account of the assessee have been audited by the Chartered Accountant (CA) u/s. 44AB of 5 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) the Act, which were duly filed before the Ld.AO along with cash book maintained by the assessee. He submitted the following chart showing the details of cash deposited into bank account(s) of the assessee during demonetization period:-
6.1 He further submitted that since the assessee had sufficient cash available with him during the demonetization period, the Ld.AO is not justified in making the impugned addition and the Ld.CIT(A)/NFAC is also not justified in sustaining the same. He submitted that the provisions of section 69A of the Act cannot be invoked in the present case of the assessee, since cash deposited by the assessee is duly recorded in the audited books of account and the books of account are not rejected by the Ld.AO. In support thereof, he relied on the following decisions:- i. ITO vs. M/s. Zee Bangles Pvt. Ltd. (ITA no. 815/MUM/2022, dt. 18.07.2023) (Bom. Tribunal) ii. Ramchandra Kanu Mendadkar vs. CIT(A) (2023) 201 ITD 492 (Mum.) iii. Balsons Jewellers vs. ITO (ITA No.563/DEL/2024, dt. 16.06.2025) (Del. Tribunal) iv. DCIT vs. Santosh Trust [2025] 39 NYPTTJ 1759 (Del.) v. ITO vs. Kshetra bhimashankar Gramin [2025] 39 NYPTTJ 1710 (Pune)
6 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) 6.2 As regards the source of cash deposited during the demonetization period, Ld.AR submitted that cash deposits were made out of cash withdrawals made earlier till October, 2016. Referring to the following decisions, he submitted that when the source has been explained from earlier cash withdrawals duly supported by bank statements, cash book etc. and when the Ld.AO has not brought any adverse material on record, the same cannot be treated as unexplained and no addition can be made u/s. 69A of the Act. i. S.R. Venkata Ratnam vs. CIT (1981) 127 ITR 807 (Kar.- HC) ii. Narayana Shibaroor Shibaraya vs. ITO (ITA No. 684/BANG/2022, dt. 23.11.2022) (Bang. - ITAT) iii. Deepak Kumar Agarwal vs. ITO (ITA No. 2597/DEL/2024, dt. 04.06.2024) (Del. - ITAT) iv. DCIT vs. Smt. Veena Awasthi (ITA No. 215/LKW/2016, dt. 30.11.2018) (Luck. - ITAT) v. Ajay Datta vs. ACIT (ITA No. 1183/JPR/2024, 07.01.2025) (Jaipur – ITAT) vi. Smt. Krishna Agarwal vs. ITO (2022) 213 DTR-Trib (Jd)(Trib) 74 vii. Ajit Bapu Satam vs. DCIT (2022) 218 DTR_Trib (Mum. Trib.) 119 6.3 Referring to the decision of the Delhi Bench of the Tribunal in the case of ITO vs. Mrs. Deepali Sehgal in dated 05.09.2014, Ld.AR submitted that there is no law which stated that savings are to be kept in the bank account only and cannot be held as cash in hand. Further justification/ necessity of cash withdrawal is irrelevant and cannot be questioned.
7 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) 7. Ld. Departmental Representative (DR), on the other hand, heavily relied on the orders of Ld.AO and Ld. CIT(A)/NFAC. He submitted that the decisions relied on by the Ld.AR are distinguishable and are not applicable to the facts of the present case. Ld. DR contended that Ld.AO has taken a valid stand that cash deposited is out of unaccounted money, as admittedly if there was more than enough cash balance available with the assessee prior to the dates of deposits, then what was the need for withdrawal of more cash and depositing the same during demonetization period. Referring to the cash availability statement reproduced below, submitted by the assessee during the course of hearing, he contended that the same appears to be camouflaged.
He accordingly submitted that the order of the Ld.CIT(A) be upheld.
We have heard Ld. Representatives of both the parties and perused the material available on record as well as the Paper Books filed by the Ld.AR on behalf of the assessee. We have also perused the various decisions cited before us. We find that Ld.AO has made the addition of ₹ 27,00,000/- u/s. 69A of the Act on the ground that assessee made cash deposits of ₹27,00,000/- during the 8 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) demonetization period. The assessee explained the source of cash is to be out of cash withdrawals on earlier occasions claiming it to be verifiable on the face of the records such as bank statements, cash book etc. The assessee’s nature of business is such which required him to maintain higher cash balance in hand. However, Ld.AO found the submission of the assessee to be inconsistent with the established trend and not supported by a reconciliation of currency denominations and hence the impugned addition. We find that the Ld. CIT(A)/NFAC sustained the addition made by the Ld.AO for the reasons already reproduced in preceding paragraph. It is the submission of the Learned Counsel for the assessee that the provisions of section 69A cannot be invoked in the present case since cash so deposited is duly recorded in the audited books of account that has been accepted by the Ld.AO. It is his submission that the source of cash deposited being withdrawal of cash on earlier occasions ought to have been accepted as the withdrawal of cash is squarely verifiable from the assessee’s bank statement(s) and there was more than sufficient cash available on the dates of deposits which is also verifiable from cash book and cash availability statement. It is also the submission of the Ld.AR that Ld.AO has not brought on record any adverse material so as to support his stand that cash deposited by the assessee is out of his unaccounted money. It is also his submission that assessee is maintaining the requisite books of account which is duly audited and accepted by the Ld.AO.
Perusal of the cash availability statement (reproduced above) as filed by the assessee shows that the assessee had opening 9 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) balance of ₹ 1,01,310/- as on April 01, 2016. During the months of April 2016 to October 2016, the assessee made substantial cash withdrawals and also held substantial amount of closing balance at the end of each month till October 2016. Therefore, if the contention of the assessee that there was more than enough cash balance on the dates of deposits is accepted, then there appears to be no necessity on the part of the assessee to withdraw huge amount of cash from the bank account every month prior to demonetization period. At the same time, it must also be appreciated that the assessee is required to keep certain amount of cash considering the nature of his business and for meeting the business exigencies. Therefore, in our opinion, neither the entire addition made by the Ld.AO nor the contention of the assessee that he had sufficient cash available with him, can be accepted outright. So far as various judicial precedents relied on by the Ld.AR are concerned, the applicability thereof would depend upon the peculiar facts of each case which in our considered view, are distinguishable in the present case in hand, specifically when the cash is deposited during the demonetization period. Thus, considering the totality of the facts of the case and in the interest of justice, we are of the considered view that the amount of 50% of the total cash deposited during the demonetization period can reasonably be estimated as available to the assessee for making the cash deposits during the demonetization period. We therefore, direct the Ld.AO to modify the assessment by restricting the addition to ₹ 13,50,000/- (i.e. 50% of ₹ 27,00,000/-). The assessee 10 ITA.No.1905/PUN/2025 (Vijay Premraj Purohit.) gets part relief. The effective grounds of appeal
raised by the assessee are accordingly partly allowed.