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
