ARVIND KUMAR RUNGTA,BHAGALPUR vs. THE INCOME TAX OFFICER WARD 1(1), BHAGALPUR, BIHAR

PDF · subscribers
ITA 124/PAT/2025Status: DisposedITAT Patna07 January 2026AY 2017-184 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's explanation regarding the cash withdrawal of ₹9,00,000 on April 16, 2016, for heart surgery, which was subsequently deposited back into his account during demonetization, is reasonable and plausible. The Tribunal disagreed with the CIT(A)'s conclusion that the withdrawal could not be given credit because the assessee had not explained prior cash deposits. The Tribunal found that the assessee had furnished an explanation regarding the source of cash being withdrawals from the bank and personal savings. Therefore, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition of ₹8,00,000. The ratio decidendi is that a reasonable and plausible explanation for cash deposits, even if it involves prior withdrawals, should be accepted if supported by evidence, and the failure to explain earlier deposits should not automatically lead to disallowance if the current explanation is credible.

What were the facts?

The assessee, Arvind Kumar Rungta, filed an appeal against the order of the National Faceless Appeal Centre, Delhi, for Assessment Year 2017-18. The appeal was filed 409 days late, but the Tribunal condoned the delay, finding the reasons to be bonafide and genuine. The dispute concerns an addition of ₹8,00,000 made by the Assessing Officer (AO) under Section 69A of the Income Tax Act, 1961, for unexplained money. The assessee, a salaried employee, had deposited ₹9,00,000 in cash during the demonetization period. The AO added this amount, which was later partly confirmed by the CIT(A) at ₹8,00,000, considering ₹2,00,000 as explained. The assessee claimed the deposit was out of cash withdrawn for heart surgery.

What were the issues?

1. Whether the addition of ₹8,00,000 as unexplained money under Section 69A of the Income Tax Act, 1961, is justified, considering the assessee's explanation regarding cash withdrawal for medical treatment? Assessee's contentions: The assessee argued that the cash deposited during the demonetization period was out of a ₹9,00,000 withdrawal made on April 16, 2016, for his heart surgery. He contended that the surgery did not materialize, and the withdrawn currency was later deposited back into his account. The assessee stated he is a salaried employee with no other source of income. Revenue's contentions: The Revenue, through the AO and CIT(A), argued that the assessee failed to explain the source of cash deposits made prior to the withdrawal of ₹9,00,000. The CIT(A) observed that cash withdrawal cannot be given credit unless prior cash deposits are explained. The Revenue considered ₹2,00,000 as explained and confirmed the addition of ₹8,00,000.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA

Before: SHRI DUVVURU RL REDDY, VP & SHRI RAJESH KUMAR, AM

For Appellant: Shri Deepak Kumar, AR
For Respondent: Shri Ashwani Kr. Singal, DR
Hearing: 28.11.2025Pronounced: 07.01.2026

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 08.11.2023 for the AY 2017-18.

2.

At the outset, we note that the appeal of the assessee is barred by limitation by 409 days for which condonation petition alongwith affidavit is filed. At the time of hearing, the counsel of the assessee explained the reasons for delay in filing the appeal. The Ld. D.R , on the other hand strongly opposed the request for condoning the delay as the reasons aare not sufficient. After hearing the rival contentions and perusing the materials available on record, we find that the delay

3.

The only issue raised by the assessee in various grounds of appeal is against the confirmation of addition of ₹8 lacs by the ld. CIT (A) as made by the ld. AO u/s 69A of the Act on account of unexplained money.

3.1. The facts in brief are that the assessee filed the return of income on 02.05.2017, declaring total income of ₹2,61,800/-. The assessee derives income by way of salary and other sources. The case of the assessee was selected for limited scrutiny on the ground that the assessee has deposited huge cash in demonetization period. Accordingly, the statutory notices along with questionnaire were issued and duly responded by the assessee. The ld. AO noted that the assessee has deposited ₹9 lacs during demonetization period. However, the ld. AO noted that the total cash deposit in the bank account during the financial year 2016-17, was ₹10 lacs comprising 2 deposits of ₹1 lacs prior to demonetization period and second 9 lacs during demonetization period. Accordingly, same was added u/s 69A of the Act.

3.2. During the appellate proceedings, the ld. CIT (A) affirmed the order of ld. AO by observing and holding as under:-

“I have gone through the submissions of the appellant and also the bank statements furnished. The income shown by the appellant in his return of income is only being income from salary. There is no other income shown by the appellant in his return. Now the claim of the appellant is that he had withdrawn Rs.9,00,000/- on 16.04.2016 and the same was deposited after demonetisation. However, as seen from the bank account, there have been several deposits made in cash prior to the withdrawal of Rs.9,00,000/-. The appellant has not given the source of the said cash deposits of Rs.9,00,000/-. The appellant does not have any other income offered to tax in the return filed. Therefore, withdrawal of cash cannot be given credit to unless the deposits of cash made earlier to the withdrawal are explained. As the appellant has not

4.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 07.01.2026.

More judgments on Section 69A

All 15,297 judgments and leading authorities on Section 69A →

Recent GST High Court judgments

Search GST case law →