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Facts
The assessee filed a return of income declaring total income and gross receipts. The case was selected for scrutiny due to abnormal cash deposits during the demonetization period. The Assessing Officer (AO) added Rs. 33,56,000/- under section 69A of the Income Tax Act, treating it as unexplained income.
Held
The Tribunal noted that the AO had not examined the issue in light of CBDT instructions regarding cash deposits during demonetization. The assessee claimed the deposits were from turnover and cited that they are not required to maintain detailed books of account under section 44AA, having filed under section 44AD.
Key Issues
Whether the cash deposits during demonetization period can be treated as unexplained income under section 69A when the assessee claims it is from turnover and is not required to maintain detailed books of account.
Sections Cited
69A, 250, 133(6), 44AD, 44AA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, PATNA
O R D E R This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)] dated 02.09.2025, DIN & order No. ITBA/NFAC/S/250/2025-26/1080271237(1) challenging the addition made u/s 69A of the Act of Rs. 33,56,000/- as per the grounds of appeal:
Briefly stated the facts of the case are that the assessee filed return of income on 24.03.2018 declaring total income of Rs. 4,40,100/- and claimed deduction under Chapter VIA for Rs. 72,656/-
Ram Bilash Sa declaring gross receipts of Rs. 54,96,132/- and filed return of income u/s 44AD of the Act. The case of the assessee was selected for scrutiny under CASS for verification of abnormal cash deposit during demonetization period in the following bank accounts:
Name of the Bank A/c No. Amount SBI Saraigarh 33895594908 12,11,000/- PNB 2491002100001026 15,73,000/- PNB 2491002100001202 5,72,000/- Total 33,56,000/-
A notice u/s 133(6) of the Act was issued to the Manager of the SBI & PNB Bank for furnishing the bank statement and the same was furnished by bank manager. During the course of assessment proceedings, the notice was issued to the assessee but there was no response. Further on perusal of the bank statement it was observed that during demonetisation period the AO noted that there is abnormal figures in cash deposit during demonetisation period as compared to pre demonetisation period, he noted the issue of cash deposit in figures during demonetisation period of Rs. 33,56,000/- stands unverified and unexplained due to non-cooperation of the assessee in spite of providing ample opportunities the same was added u/s 69A of the Act after reducing from the gross turn over shown by the assessee.
Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A)(NFAC). During the course of appellate proceedings, the assessee filed written submission stating that the assessee is engaged in the business of retailer sales of fertilizer and seeds under the name
Ram Bilash Sa an style of M/s Priyanshu Enterprises, return of income for AY 2017-18 was filed showing income of Rs. 4,40,100/- which is 8% on total turnover of Rs. 54,96,132/-, the assessee has maintained three bank accounts with SBI and PNB, wherein total sum of Rs. 36,06,000/- was deposited the source of cash is from turnover of the assessee and in response to the notice the assessee made compliance on various dates and uploaded reply regarding cash deposits in bank accounts and the assessee has explained the source of cash deposits. Therefore, it cannot be considered as unexplained source of income u/s 69A of the Act. The Ld. CIT(A) (NFAC) after considering the submissions of the assesse wrongly noted that the assessee has not filed ledger account purchase, ledger account of sales, cashbook showing the cash in hand position to prove the source the cash. The assesse was not required to maintain the nooks of accounts as per the provisions of the income tax Act. Accordingly, he was agree that the findings recorded by the AO and confirmed the addition made u/s 69A of the Act.
Aggrieved from the above order, the assessee filed appeal before the ITAT.
The Ld. Counsel reiterated the submissions made before the authorities and submitted that the assessee is not require to maintain books of accounts as per section 44AA of the Act. He filed return u/s 44AD of the Act and he also uploaded the VAT return which was accepted by the VAT authorities, the cash deposited was out of cash sales made therefore, the source is explained and the authorities below have not pointed out any defect in the turn over reported and he also referred to the bank statement placed in the paper book.
On the other hand, the Ld. DR relied on the order of lower authorities and submitted that during the course of assessment proceedings, the assessee could not substantiate the source of cash
Ram Bilash Sa deposits with any cogent documents in support of his claim. Merely submitting of VAT return is not sufficient to prove the turnover shown by the assessee even the assessee is not substantiated how the turnover achieved by the assessee. It is seen from the bank statement that during demonetisation period there is abnormal cash deposits pre and post demonetization period therefore he requested that order of the Ld. CIT(A)(NFAC) should be upheld and even during the appellate proceedings, the assessee did not furnish any basic documents to prove the turnover as claimed by the assessee and relying on the judgement which are not applicable in the present facts of the case since the assessee has not proved turnover with cogent documents.
Considering the rival submissions, I noted that the assessee has filed return of income u/s 44AD of the Act declaring total turnover of Rs. 54,96,132/- and the case was selected for scrutiny for verification of the cash deposits during demonetisation period. The AO has obtained bank statement from the assessee’s bank noted supra and there was total cash deposit of Rs. 33,56,000/- and the entire credit has been added u/s 69A of the Act. The assessee could not substantiate the turnover with the cogent documents to prove the source of cash deposits. The assessee has filed paper book containing page no. 16 in which the bank account has been filed. I also noted that the AO has not examined this issue in the light of the CBDT Instructions/notifications issued to verify the cash deposits during demonetisation period. Therefore, considering the facts of the case and interest of justice, I remit this issue back to the file of Ld. AO for fresh examination in the light of the CBDT Instruction/Notification issued time to time and decide the issue is as per law after giving reasonable opportunity of being heard to the assessee and the assessee is directed to substantiate his case with cogent documents in support of the claim and not to seek any unnecessary adjournments for early disposal of the
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 16.01.2026