Kishor Vitthal Kolhe Vs DCIT (ITAT Pune)
Demonetisation Cash Deposits: ITAT Pune Partly Sustains Section 68 Addition, Grants 50% Relief
The Pune Bench of the ITAT partly allowed the appeal of an individual assessee for AY 2017-18, restricting the addition made under section 68 read with section 115BBE in respect of cash deposits during the demonetisation period.
The assessee, engaged in travel agency and petrol pump business, had deposited cash of ₹2.60 crore during demonetisation. The Assessing Officer observed a sharp and unexplained increase in cash-in-hand from ₹1.02 crore as on 01.04.2016 to ₹1.67 crore as on 08.11.2016, coupled with frequent cash withdrawals despite high cash balances, and failure to furnish vehicle-wise receipts or trip-wise details. Holding the cash-in-hand to be unreliable, the AO treated the incremental amount of ₹64.94 lakh as unexplained cash credit under section 68 and taxed it u/s 115BBE. The CIT(A)/NFAC confirmed the addition, holding that the assessee failed to satisfactorily explain the source and necessity of such cash accumulation.
Before the Tribunal, while rejecting the assessee’s contention that audited books and accepted sales automatically precluded section 68, the ITAT took note of the fact that the assessee was also a petroleum dealer permitted to accept specified bank notes during demonetisation. Considering the overall facts and probabilities, the Tribunal held that some portion of the cash deposits could be attributable to explained business receipts. To balance the equities, the ITAT restricted the addition to 50% of the amount, i.e. ₹32.47 lakh, and granted partial relief to the assessee. Accordingly, the appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 26.06.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2017-18.
