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Facts
The assessee made a significant cash deposit of Rs. 8,08,32,060/- in her bank account, which the AO added under Section 69A, a decision upheld by the CIT(A). The assessee claimed the deposits were from legitimate business and exempt under Section 10(26) of the Income Tax Act, but her responses to inquiries were deemed unsatisfactory, and she alleged denial of adequate opportunity to be heard.
Held
The Tribunal acknowledged the inadequate presentation of facts and the assessee's claim of insufficient opportunity. Consequently, the impugned order was set aside, and the matter was remanded to the Ld. AO for fresh assessment. The assessee is granted a second chance to prove the bona fide nature of the deposits by presenting all necessary documents, including VAT returns, for the Ld. AO's evaluation and fair conclusion.
Key Issues
Whether the addition under Section 69A for unexplained cash deposits was justified, considering the assessee's claim for exemption under Section 10(26) and alleged denial of adequate opportunity to present evidence.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 10(26) of the Income Tax Act, 1961, Section 69A of the Income Tax Act, 1961, Section 115BBE of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI
Appearances by: Assessee represented by : Vikash Dokania Anil Jha, ARs Department represented by : Kausik Ray, JCIT Date of concluding the hearing : 13.10.2025 Date of pronouncing the order : 28.10.2025
ORDER
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
The present appeal arises from the order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), dated 30.11.2023, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)].
1.1 In this case, the main point of dispute revolves around cash deposit of Rs. 8,08,32,060/- in the bank account of the assessee. It is seen from the Ld. AO’s order that while the assessee maintained that the assessee Mandakini Dkhar was beyond taxation considering the provision of section 10(26) of the Act. The Ld. AO had persistently enquired about the nature and source of such cash deposits, with evidence. Needless to say, the Ld. AO made the impugned addition after an allegedly unsatisfactory response from the assessee.
1.2 The assessee carried this matter before the Ld. CIT(A), where also she could not succeed. The Ld. CIT(A) mainly relied on the findings of the Ld. AO. It is also seen from para 18 at page 11 of the impugned order that the Ld. CIT(A) was considerably persuaded by the fact that the notice issued by the Ld. AO for eliciting response from the assessee, were not adequately responded to. It is also seen from the impugned order that attempts to verify the nature and extent of business from the VAT returns pertaining to the state of Meghalaya also did not result in any fruitful outcome. Thereafter, the Ld. CIT(A) upheld the action of Ld. AO.
1.3 Aggrieved with this action, the assessee has approached the ITAT with the following grounds:
“1 For That on the facts and in the circumstances of the case, The Ld. CIT(A) erred in upholding the addition made u/s 69A to the tune of Rs. 8,08,32,060/- and charging tax as per section 115BBE on the basis of mere surmise and his conjecture. 2 For That on the facts and in the circumstances of the case the Ld. CIT(A) ought to have deleted the addition made u/s 69A of the Act, 1961 and applying of section 115BBE of the IT Act, 1961 since the appellant falls under the exempted category of assessee u/s 10(26) and satisfies all the conditions laid down in this section. 3 For that the CIT(A) was wrong in dismissing the appeal of appellant mere on his surmise and conjecture without considering the provisions of section 10(26) and addition of deposit made as unexplained Money u/s 69A of the Income Tax Act, 1961. 4 That the CIT(A) was wrong in dismissing the appeal of the appellant which is prejudicial to the interest of appellant without enquiring the facts, without verifying the evidences and documents, without applying his mind and dismissed in routine manner without affording proper opportunity of being heard.
Mandakini Dkhar 5 The appellant prays for the stay of such demand till the disposal of this appeal. 6 That the appellant craves leave to add, alter, amend or modify any ground or grounds of appeal before or at the time of hearing.”
2. Before us, the Ld. AR pleaded that as per Ground No. 4 there is a prayer regarding denial of adequate opportunity. It was the submission that the assessee was not required to file income tax return under the belief that the assessee had no liability for the same considering the provisions of section 10(26) of the Act. The Ld. AR pleaded that in case an opportunity is provided then the assessee would be able to establish that the impugned deposits arose from her legitimate business.
2.1 We have carefully considered the documents before us and have considered the rival submissions. It is seen that the Ld. AO has added the impugned amount u/s 69A of the Act on the assumption that the source and nature of such deposits are not covered under section 10(26) of the Act. This assumption arose in light of inadequate presentation of facts by the assessee before the authorities below. Considering the totality of facts and circumstances, we are of the view that the assessee deserves a second chance to prove her bonafide and for this purpose, we are setting aside the impugned order and remanding this matter back to the file of Ld. AO for fresh assessment. Needless to say, the assessee would present all necessary documents, including VAT returns etc. to show that the receipts have arisen from the specified geographical area and are from which part of her business. The Ld. AO would evaluate the evidence presented before him and arrived at a fair conclusion.
In result, this appeal is allowed for statistical purposes.
Order pronounced on 28.10.2025