Naresh Samala Vs ITO (ITAT Hyderabad)
ITAT Hyderabad: Demonetisation Cash Deposits—Matter Remanded; Opening Cash Balance to Be Accepted
The Hyderabad Bench of the ITAT set aside the NFAC order sustaining addition of ₹88.84 lakh as unexplained cash deposits under section 68 for AY 2017-18 in a demonetisation-related case. The assessee, running a restaurant and bar, claimed the deposits were from sales. The Tribunal observed that the Assessing Officer failed to establish whether deposits were from demonetised currency and also did not consider the opening cash balance available as on 08.11.2016, which—if arising from recorded sales—cannot be treated as unexplained.
However, the Tribunal noted deficiencies in verification: the assessee had not produced the cash book before the AO, and the cash book later filed showed unexplained cash receipts from certain individuals during November 2016, not present before or after the demonetisation period. Given these inconsistencies, the matter was remanded to the AO for fresh verification—directing acceptance (and deletion) to the extent of opening cash balance as on 08.11.2016, and verification of the balance deposits with reference to the cash book, individual receipts, and supporting evidence. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short “NFAC”], Delhi, dated 23.06.2025, pertaining to the assessment year 2017-18.
