Anand Chirania Vs DCIT (ITAT Bangalore)
Bangalore ITAT Deletes ₹1.13 Crore Cash Deposit Addition; Mere Suspicion Cannot Override Accepted Books
The Bangalore ITAT deleted an addition of ₹1.13 crore made under Section 69A read with Section 115BBE, holding that once the assessee’s books of account reflected sufficient cash balances and the Revenue failed to prove that such cash had been utilized elsewhere, the cash deposits could not be treated as unexplained merely on the basis of suspicion or human probabilities.
The assessee had deposited ₹1.29 crore in bank accounts during demonetisation period, explaining that the deposits were sourced from cash withdrawals made in earlier years and from cash balances regularly reflected in his audited books. The Assessing Officer accepted withdrawals of only ₹16.29 lakh made during the relevant year and treated the balance ₹1.13 crore as unexplained, observing that it was improbable for a person to retain such a large amount of cash without utilizing it. The CIT(A) also confirmed the addition by applying the test of human probabilities.
Before the Tribunal, the assessee demonstrated that his books disclosed cash-in-hand of ₹86.17 lakh as on 31.03.2015, ₹1.22 crore as on 31.03.2016 and ₹18.87 lakh as on 31.03.2017, supported by audited financial statements, cash-flow statements and bank records. During FY 2016-17, total cash availability exceeded ₹1.65 crore against deposits of about ₹1.30 crore.
The Tribunal observed that neither the Assessing Officer nor the CIT(A) had brought any material on record to show that the cash balance appearing in the books was fictitious or that the withdrawn cash had been spent elsewhere. The Revenue had merely proceeded on assumptions that maintaining such large cash balances was unusual. The ITAT held that accepted books of account and disclosed cash balances cannot be discarded on conjectures and surmises, particularly when supported by bank withdrawals and there is no contrary evidence. Accordingly, the entire addition of ₹1,13,26,000 was directed to be deleted.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 2524/Bangalore/2025 is filed for assessment year 2000 1718 by Mr.Anand Chirania (the assessee/appellant against the appellate order passed by the National faceless appeal Centre, Delhi (The Learned Commissioner Of Income Tax Appeals/CIT – A) dated 2 September 2025 wherein the appeal filed by the assessee against the assessment order dated 26 November 2019 passed under section 143 (3) of The Income Tax Act, 1961 (The Act) by the Asst Commissioner of income tax, Circle 7 (2) (1), Bangalore (the learned AO) was dismissed.
