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Facts
The assessee, a fruit dealer, deposited Rs. 25,39,000/- in Specified Bank Notes during demonetization. The Assessing Officer treated Rs. 15,39,000/- as unexplained money under Section 69A, considering Rs. 10,00,000/- as normal business deposit. The assessee argued that due to the perishable nature of fruits, payments are received in cash and the entire transactions were reflected in the income disclosed.
Held
The Tribunal held that once the assessee considered the entire transactions in the bank account when computing total income, a portion of it could not be treated as undisclosed income. The AO had not provided sufficient reasons to treat the balance amount as undisclosed income, especially since the assessee disclosed Rs. 3,30,590/- as income for the entire year.
Key Issues
Whether the addition of Rs. 15,39,000/- as unexplained money under Section 69A was justified when the entire deposit was part of disclosed income from a perishable commodity business.
Sections Cited
69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI MADHUSUDAN SAWDIA
Assessee represented by Shri Krishna Prasad Padhy, A.R. Department represented by Shri Sanjib Banerjee, Sr.DR Date of hearing 24/02/2026 Date of pronouncement 24/02/2026 O R D E R PER: BENCH 1. This is an appeal filed by the assessee against the order of the ld. Addl./JCIT(A)-1, Visakhapatnam in Appeal No. CIT(A), Bhubaneswar- 1/14771/2019-20 dated 02/12/2025 for the A.Y. 2017-18.
Shri Krishna Prasad Padhy, ld. A.R. appeared on behalf of the assessee and Shri Sanjib Banerjee, Sr.DR represented on behalf of the revenue.
It was submitted by the ld. AR that the assessee is a dealer of fruits on commission basis. It was the submission that during demonetization period, the assessee had deposited Rs. 25,39,000/- in Specified Bank Notes (SBN) in his bank account with ICICI Bank Ltd. and has also issued cheques to the suppliers of the fruits. It was the submission that the Assessing Officer in the course of assessment, took the stand that Sibaram Raut Vs ITO Rs. 10,00,000/- is a reasonable amount which could have been deposited during demonetization period and made addition of Rs. 15,39,000/- as unexplained money of the assessee under Section 69A of the Income Tax Act, 1961 (in short, the Act). It was the submission that the assessee is dealing in perishable commodity and once the product is sold, the assessee is bound to take whatever currency the purchasers paid in so far as he cannot take back the perishable goods. It was the submission that the bank account of the assessee clearly shows that there are substantial transactions in cash only by the assessee. It is only in regard to the demonetization period that the Assessing Officer holds that there is unaccounted income of the assessee. It was the submission that the assessee is dealing in perishable commodity being fruits, would obviously receive the payments in cash. It was the prayer that the addition as made by the Assessing Officer and as confirmed by the ld. Addl./JCIT(A) is liable to be deleted.
In reply, the ld. Sr.DR vehemently supported the order of the Assessing Officer and the ld. Addl./JCIT(A).
We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the Assessing Officer has taken the stand that the assessee is supplying fruits on commission basis to various persons in Orissa. The Assessing Officer accepts that the fruits supplied to the retailers in around Brahmapur town and the collection Sibaram Raut Vs ITO of the commission sale proceeds are made through the staff regularly touring to various places to collect the money. The Assessing Officer then proceeds further to hold that Rs. 10,00,000/- is proper and normal business account but has treated Rs. 15,39,000/- as income from undisclosed sources. The assessee when filing his return, has disclosed income of Rs. 3,30,590/- in respect of the entire transaction during the year. Once the assessee has considered the entire transactions in the bank account when computing his total income, a portion of the same cannot be treated as undisclosed income of the assessee. This being so, as it is noticed that the Assessing Officer himself has accepted Rs. 10,00,000/- out of the SBN deposited in the bank account as probable business transaction of the assessee and has given no reason for treating the balance of Rs. 15,39,000/- as undisclosed income of the assessee and also on account of the fact that this amount of Rs. 25,39,000/- has been included in the computation in respect of the income of the assessee disclosed at Rs. 3,30,590/-, the addition as made by the Assessing Officer and as confirmed by the ld. CIT(A) stands deleted.
In the result, this appeal of the assessee is allowed. Order dictated and pronounced in the open court on 24/02/2026.