Loading judgment…
Facts
The assessee appealed against the order of the NFAC, which upheld the addition made by the AO for assessment year 2017-18. The AO treated a cash deposit of Rs. 20,96,000/- in the assessee's bank account as unexplained under section 69A of the Income-tax Act, 1961.
Held
The Tribunal noted that the assessee had provided all financial statements and documentation, including those for the cash deposits made during the demonetization period. Relying on a coordinate bench's decision, the Tribunal found that section 69A is not applicable when transactions are recorded in the books of account.
Key Issues
Whether the addition made under section 69A for unexplained cash deposits is sustainable when the transactions are duly recorded in the books of account.
Sections Cited
69A, 144, 250, 44AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. MITHA LAL MEENA, HONBLE & SHRI ANIKESH BANERJEE, HONBLE
Per Bench: The instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi(for brevity, ‘Ld.CIT(A)'] order passed under section 250 of the Income-tax Act, 1961 (in short, 'the Act'), for Assessment Year 2017-18, date of order 31/08/2024. The impugned order emanated from the order of the Ld.ITO, W.1, Barmer, [for brevity, the "Ld. AO"] passed under section 144 of the Act, date of order, 03/12/2019. 2. The Ld.AR argued and filed a paper book containing pages 1 to 367, which is kept on record. The Ld.AR stated that the cash was deposited amount to Rs.20,96,000/- in the bank account of the assessee and the Ld.AO treated it AY as unexplained deposit of cash in the bank account and addition was made under section 69A of the Act. The Ld.AR, in argument, only focused his argument on the legal issue. The cash was deposited during the period of demonetisation and finally, explanation was furnished before the revenue authorities. The relevant documents are annexed at APB pages 1 to 343. The assessee explained that the said amount was deposited from the amount received from different members of the assessee-samiti. But without considering the fact, the addition was made by Ld.AO which was upheld by Ld.CIT(A). The Ld.AR further argued that the entire addition was wrongly made under section 69A of the Act. So, the Ld.AO erred in application of section 69A related to deposit of cash in bank account. The said legal issue is duly agitated before the Ld.CIT(A). But the Ld.CIT(A), without considering the issue, confirmed the addition.
The Ld.DR argued and fully relied on the order of the revenue authorities.
We heard the rival submissions and considered the materials on record. Considering the provisions of section 69A, we find that the issue is only related to unexplained money etc. The contention of the Ld. AR that the section 69A of the Act will not be applicable if it is recorded in books of accounts. The cash was deposited in the bank account. The Ld.AR respectfully relied on the order of ITAT, Delhi Bench"A" in the case of Balsons Jewellers vs ITO in ITA No.563/Del/2024, date of pronouncement 16/06/2025. The relevant para 8 on page 7 is extracted below:- "
Heard rival submissions, perused the orders of the authorities below. The primary contention of the assessee is that the provisions of section 69A are not applicable when the transactions are recorded in the books of account. The cash deposits made during demonetization period were duly recorded in the books of account by the assessee and the books were audited u/s 44AB of the Act. AV 3 Kitnoriya Gram Seva Sahkari Samiti Limited The assessee in the course of assessment proceedings furnished all the financials including the audited balance sheet and the profit and loss account and also copies of VAT returns, sales tax, assessment order, copies of purchase bills and purchase ledger, copy of stock register, copy of cash book, copy of sales ledger, copy of bank statements, copies of all the sales bills issued by the assessee to various customers, etc. Therefore, it is not in doubt 8. Heard rival submissions, perused the orders of the authorities below. The primary contention of the assessee is that the provisions of section 69A are not applicable when the transactions are recorded in the books of account. The cash deposits made during demonetization period were duly recorded in the books of account by the assessee and the books were audited u/s 44AB of the Act. The assessee in the course of assessment proceedings furnished all the financials including the audited balance sheet and the profit and loss account and also copies of VAT returns, sales tax, assessment order, copies of purchase bills and purchase ledger, copy of stock register, copy of cash book, copy of sales ledger, copy of bank statements, copies of all the sales bills issued by the assessee to various customers, etc. Therefore, it is not in doubt." Following the order of the co-ordinate bench of the Tribunal, we find that the revenue authorities have erred to apply provisions of section 69A of the Act to deposit of cash in bank account. Accordingly, we delete the addition of Rs.20,96,000/-.
In the result, appeal of the assessee bearing ITA No.821/Jodh/2024 is allowed. म겠다 Order pronounced in the open court on 22 August, 2025 (DR.MAHALAL MEENA) ACCOUNTANT MEMBER Jodhpur, Dt: 22nd August, 2025 Pavanan E JUDICIAL MEMBER 4 Kitnoriya Gram Seva Sahkari Samiti Limited Copy of the Order forwarded to: 1. 2. 3. 4. 5. अपीलार्थी/The Appellant, प्रतिवादी/ The Respondent. आयकर आयुक्त CIT विभागीयप्रतिनिधि, आय. अपी. अधि., मुबंई/DR, ITAT, Jodhpur गार्डफाइल/Guard file. //// Details BY ORDER, (Asstt.