Chauntra Service Co-operative Society Limited Vs ITO (ITAT Chandigarh)
The Income Tax Appellate Tribunal (ITAT) Chandigarh heard an appeal by Chauntra Service Co-operative Society Limited against the Commissioner of Income Tax (Appeals) order for the assessment year 2017-18. The Assessing Officer had added Rs. 12,00,000 to the assessee’s income on account of cash deposited during the demonetization period, alleging it as unexplained income. The CIT(A) had upheld this addition and also sustained another addition of Rs. 4,14,248 relating to balance sheet provisions, which the assessee did not contest.
The ITAT observed that the amount of Rs. 12,00,000 was received from the society’s members, and the source of the deposits was undisputed. While the acceptance of demonetized currency may have violated Government notifications, it did not render the amount unexplained income under the Income Tax Act. Since the Assessing Officer and CIT(A) had not doubted the legitimacy of the deposits, the ITAT held that the addition was unsustainable. Consequently, the Tribunal deleted the Rs. 12,00,000 addition and partly allowed the assessee’s appeal.
The order was pronounced on 6th November 2025, clarifying that cash deposits during demonetization, if sourced genuinely, do not constitute unexplained income.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The present appeal has been preferred by the assess ee against the order dated 31.03.2025 of the Commissioner of Income Tax (Appeals) Addl./ JCIT(A)-2, Gurgaon [in short ‘the CIT (Appeals)] pertaining to 2017-18 assessment year.
2. The assessee in this appeal has taken the following grounds of appeal :
1. That order passed it’s 250 of the Income Tax Act, 1961 by (he Learned Addl. Commissioner of Income Tax ( Appeals )-2, Gurugram is against law and facts on the file in as much as Learned CIT(Appeal) was not justified to uphold the addition of Rs. 12,00.000′- made by the Learned Assessing Officer on account of cash deposited during demonetization period.
2. That the Learned CIT(A) gravely cited in upholding the addition of Rs. 4,14,248/- made by the Learned Assessing Officer which actually pertains to provisions made in the balance sheet.
3. At the outset, the ld. counsel for the assessee has stated at bar that he does not press ground No.2 of appeal, therefore, ground No.2 of the appeal is dismissed as not pressed.
4. So far as the addition made by the lower authorities of Rs. 12 lacs on account of amount received by the assessee from its members is concerned, the receipt of the amount from members has not been doubted by the Assessing Officer. The only allegation is that the amount was received
on 15. 1 1.2016 i.e. during demonetization period. The assessee may have violated the Circular/Notification issued by the Government by accepting the demonetized currency but it is not a case of unexplained income of the assessee. The source of the deposits has not been doubted by the lower authorities, therefore the impugned addition is not sustainable and the same is, accordingly, ordered to be deleted.
4. In the result, appeal of the assess ee is partly allowed.
Order pronounced on 06th November,2025.
