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Facts
The assessee deposited Rs. 11,30,000 cash during the demonetization period. The Assessing Officer (AO) gave credit for Rs. 4,03,910 (declared agricultural income) but treated the balance Rs. 7,26,090 as unexplained money under section 69A of the Income Tax Act, 1961, and added it to the income. The assessee contended that the source of the deposited cash was prior withdrawals totaling over Rs. 11 lacs from a joint Punjab National Bank account in September 2016, a contention both the AO and CIT(A) failed to consider.
Held
The Tribunal observed that the assessee had indeed withdrawn more than Rs. 11 lacs from their bank account in September 2016, approximately two months before demonetization. Concluding that it was humanly probable for this amount to have been held by the assessee and subsequently re-deposited, the Tribunal found no justification for the addition made by the AO. Consequently, the addition of Rs. 7,26,090 was deleted.
Key Issues
Whether cash deposited during demonetization, sourced from prior bank withdrawals, constitutes unexplained money under section 69A of the Income Tax Act, 1961, and whether the addition made by the AO was justified.
Sections Cited
69A, 115BBE, 271AAC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH ,CHANDIGARH
Before: SHRI RAJPAL YADAV
HYBRID HEARING O R D E R
The assessee is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 02.09.2025 passed for assessment year 2017-18.
The grievance of the assessee is that ld.CIT (Appeals) has erred in confirming the order of the AO partly whereby addition of Rs.7,26,090/- has been made.
ITA No.1261/CHD/2025 A.Y.2017-18 2
I have duly considered the rival contentions and gone through the record carefully and I deem it appropriate to take note of paragraph No. 5.3 of the assessment order which would exhibit the issue agitated in this appeal :
“5.3 Therefore, In the light of above facts on record, surrounding circumstances and legal position as narrated above, the assessee's reply with regard the cash deposited during demonetisation to the extent of Rs.11,30,000/- cannot be accepted as the assessee failed to give any plausible explanation about the nature and source of cash deposits and the assessee has made up a concocted storey just to justify his cash holding as on 08.11.2016. However, during the assessment proceedings, the assessee has submitted form J of Rs.4,03,910/- (M/s Vivek Trading Co., Mustfabad on 14.10.2016 of Rs. 1,26,868/-, on 15.10.2016 of Rs.1,81,185 and dated 28.10.2016 of Rs.95,857/-). The confirmation of the same has also obtained and placed on file. Therefore the credit to the extent of Rs.4,03,910/- is considered. Hence the value of cash deposits to the extent of Rs. 7,26,090/- (11,30,000 - 4,03,910) which are appearing in the bank accounts of assessee, is considered as unexplained money u/s 69A of the Income Tax Act, 1961. Therefore, Rs.7,26,090/- is held as income of the assessee from undisclosed sources which are not disclosed to the department and added to the Total Income of the assessee to be taxed u/s 115BBE of the Income tax Act, 1961. The penalty proceedings u/s 271AAC of the income tax Act, 1961 is being initiated separately.”
(Addition of Rs.7,26,090/-)
A perusal of the above assessment order would reveal that during demonetization, a sum of Rs.11,30,000/- was deposited in the bank account of the assessee. The ld. AO has given credit to agriculture income declared by the assessee at Rs.4,03,910/- and balance he made the addition.
ITA No.1261/CHD/2025 A.Y.2017-18 3
The appeal to the CIT (Appeals) did not bring any relief to the assessee.
Before us, ld. counsel for the assessee drew our attention towards bank statement with Punjab National Bank bearing Account No. 1419008800003697. It is a joint account of Shri Om Parkash Saini S/o Shri Hans Raj Saini. From this account, a sum of Rs.8 lacs was withdrawn on 12.09.2016, Rs.32,000/- was withdrawn on 19.09.2016 and Rs.3,84,000/- was withdrawn on 30.09.2016. The assessee claimed credit of these amounts available with him for explaining the source of deposit during demonetization, but both the authorities have failed to give this credit. A perusal of the bank statement would indicate that in the month of September, assessee was possessing more than Rs.11 lacs which was withdrawn from Punjab National Bank. Once the currency has been discontinued, it has to be redeposited in the bank. The ld. First Appellate Authority has failed to appreciate this contention of the assessee inspite of specifically bringing it to his notice. The account details are being noticed by the CIT A.Y.2017-18 4 (Appeals) on page No. 7 and 8. Inspite of this fact, ld.CIT (Appeals) has rejected the case of the assessee.
On due consideration of the above facts and circumstances, I am satisfied that assessee was having sufficient cash balance which was withdrawn two months prior to demonetization. It is humanly probable that this amount was lying with the assessee which was re-deposited. Accordingly, no addition deserves to be made in the hands of the assessee. I delete the addition and allow the appeal of the assessee.
In the result, appeal of the assessee is allowed.