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Facts
The assessee filed its return of income for AY 2017-18 declaring NIL income and claimed deduction u/s 80P. During demonetization, the assessee made cash deposits of Rs.98,48,830/-. The AO accepted cash in hand of Rs. 26,89,143/- and treated the balance Rs. 71,43,857/- as unexplained cash credit u/s 68.
Held
The Tribunal held that the additions made by the AO were not justified as the assessee claimed cash was received from members with PAN details provided. Further, CBDT Instruction No. 3/2017 discouraged additions in such cases.
Key Issues
Whether the addition made by the AO on account of unexplained cash credit during demonetization is justified when PAN details of members were provided?
Sections Cited
80P, 68, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, DELHI
Before: SHRI ANUBHAV SHARMA & SHRI KRINWANT SAHAY
This appeal is preferred by the assessee against the order dated 24.03.2025 of the National Faceless Appeal Centre (NFAC) Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No.ITBA/NFAC/S/250/2024-25/1074954965(1) arising out of the appeal before it against the order dated 29.12.2019 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the ITO, Ward 59(1) Delhi (hereinafter referred to as the Ld. AO) for Assessment Year 2017-18.
Heard and perused the records. The relevant facts are that the assessee filed its return of income for the A.Y.2017-18 on 27.10.2017 declaring NIL income and claimed deduction u/s 80P of Rs.5,45,853/-.
The case was selected for scrutiny under CASS. As per ITS data for F.Y.2016-17 and the details filed by the assessee in the ROI, the assessee had made cash deposits of Rs.98,48,830/- in its accounts during demonetization period i.e. from 09.11.2016 to 30.12.2016. The submissions of the assessee did not find favour with the AO. Therefore, the source of the cash deposited by the assessee was accepted as out of cash in hand as on 08-11-2016 for Rs. 26,89,143/- and the balance amount of Rs. 71,43,857/- was treated as unexplained cash credit as per provisions of section 68 of the Act. Subject to the above, the AO completed the assessment vide an order u/s. 143(3) dated 29.12.2019, making an addition of Rs.71,43,857/- as unexplained cash credit u/s.68 of the Act, to the total income of the assessee.
Though ld. DR defends the impugned orders, it comes up that assessee claims that the cash was received from the members during the demonetization and details of these members specially the PAN was provided. However, without there being any enquiry from the members the ld. AO has gone to make addition. Now what is material is that financials of assessee have been accepted. There is no discrepancy found in the details of members. Further CBDT Instruction No. 3/2017 dated February 21, 2017 discouraged additions where cash is shown to be received from identifiable persons by way of giving PAN. Thus it was only in cases where PAN was not provided the ld. AO could have even gone further with enquiry.
Thus given the nature of receipts and details given by the assessee, we are of considered view the additions and consequential disallowance u/s 80 P of the Act were not justified. The grounds are sustained. The appeal is allowed.
The appeal of the assessee is allowed.
Order pronounced in the open court on 28.11.2025