SANHATI INFOCOM SERVICES PRIVATE LIMITED,WEST BENGAL vs. INCOME TAX OFFICER, WARD 2(4), DURGAPUR., WEST BENGAL

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ITA 3022/KOL/2025Status: DisposedITAT Kolkata15 April 2026AY 2017-187 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 had adequately explained the source of cash deposits as being from sales proceeds, which were duly accounted for in the books of account. Therefore, the addition made by the AO and sustained by the CIT(A) was not sustainable.

What were the facts?

The assessee, engaged in internet services, did not file an income tax return for AY 2017-18. The Assessing Officer (AO) treated cash deposited during demonetization as undisclosed income under Section 69A. The CIT(A) partly allowed the appeal, sustaining the addition.

What were the issues?

Whether cash deposits made during the demonetization period can be treated as undisclosed income when the assessee has provided sufficient explanation and evidence of the source of funds from business operations.

Which sections of the Income-tax Act were involved?

Section 69A,Section 139(1),Section 142(1),Section 148,Section 133(6)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA

For Appellant: Shri Manish Rastogi, AR
For Respondent: Shri Susanta Saha, DR
Hearing: 29.01.2026Pronounced: 15.04.2026

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 10.10.2025 for the AY 2017-18.

2.

The only issue raised by the assessee is against the confirmation of addition of ₹26,96,730/- by the ld. CIT (A) as made by the ld. AO on account of cash deposited during the demonetization period.

3.

The facts in brief are that the assessee is engaged in the business of providing internet services to commercial as well as residential users besides, doing other activities. The assessee did not file any return of

4.

In the appellate proceedings, the ld. CIT (A) partly allowed the appeal of the assessee by sustaining the addition in respect of cash deposited during the demonetization period and hence, the assessee is in appeal before us.

5.

After hearing the rival contentions and perusing the materials available on record, I find that the assessee is in the business of providing internet services to commercial and residential users. I “3. The facts in brief are that the assessee filed the return of income on 26.10.2017, declaring income of Rs. 9,17,340/-. The case of the assessee was selected for complete scrutiny through Computer Assisted Scrutiny Selection (CASS) on account of large cash deposits and abnormal increase in sales with decrease in profitability. Accordingly, notice u/s 143(2) and 143(1) of the Act along with questionnaire were issued calling for various documents/ evidences from the assessee to prove the source of cash deposits. The ld. AO noted that during the course of assessment proceedings, the assessee has deposited of Rs. 1,70,60,000/- in two bank accounts namely Axis Bank, Ballbhgarh of Rs. 99,80,000 and Karur VyasyaBank,Merrut Br. of Rs. 70,83,000/-. The ld. AO noted that the deposits made in the Axis bank account,

7.

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

Order pronounced on 15.04.2026.

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