VIKRAM SINGH,BALOTRA vs. INCOME TAX OFFICER, BALOTRA

The Ld. DR, on the other hand, supported the orders of the authorities below. It was submitted that the notification of 08.11.2016 prohibited the acceptance of SBNs post demonetisation and, therefore, even if the deposits were related to trade, they were not legally permissible. The Department contended that such deposits clearly fell within the ambit of unexplained money under section 69A and the orders of the Assessing Officer and the CIT(A) deserved to be upheld.

We have carefully considered the rival submissions and perused the material on record. It is not in dispute that the assessee had produced documentary evidence including the names of the persons who deposited the money, the transport receipts showing the movement of cloth material to West Bengal and the corresponding sales invoices. These documents demonstrate that the deposits in the bank account of the assessee were directly relatable to the business transactions of sale of cloth, which were duly recorded in the books of account. The only basis for sustaining the addition was that the deposits were made in SBNs after the date of demonetisation. We find merit in the contention of the assessee that when the non-SBN deposits of the same nature were accepted as trade receipts, of the same parties, there was no justification to treat deposits in SBNs as unexplained, particularly when supported by cogent evidence.

1 At the same time, keeping in mind the peculiar circumstances surrounding demonetisation and to balance the equities, we consider it reasonable to sustain a part of the addition to address possible discrepancies or unverifiable aspects of the evidence. We accordingly sustain an addition of Rs.3,00,000/- and direct deletion of the balance addition of Rs.12,85,000/-. Our view is fortified by the decision of the Co-ordinate Bench of the ITAT Jodhpur, where in identical facts it was held that trade receipts duly recorded in the books cannot be taxed as unexplained money merely because they were received in SBNs during demonetisation.

In the result, the appeal of the assessee is partly allowed. The addition is restricted to Rs.3,00,000/- and the balance stands deleted. (Order pronounced in the open Court on 30/10/2025) (LALIET KUMAR) JUDICIAL MEMBER AG Copy of the order forwarded to: