ITO Vs Raghav Goel (ITAT Delhi)
Demonetisation Cash Deposits Fully Explained: ITAT Delhi Deletes Entire Section 69A Addition
The Delhi Bench of the ITAT dismissed the Revenue’s appeal and allowed the assessee’s cross-objection in the case of Raghav Goel (AY 2017-18), thereby deleting the entire addition of ₹2.81 crore made under section 69A on account of cash deposits during the demonetisation period.
During survey proceedings under section 133A, the assessee had deposited ₹5.81 crore in cash. Out of this, ₹3 crore was voluntarily declared under PMGKY, 2016, while the balance ₹2.81 crore was claimed to be genuine cash sales duly recorded in the regular books of account. The Assessing Officer treated the balance amount as unexplained money under section 69A. The CIT(A) restricted the addition to 2% of the deposits, treating the assessee as earning only a commission element.
The ITAT held that once the books of account, sales invoices, cash book, stock records and VAT returns were produced and not rejected, the cash deposits could not be treated as unexplained merely on suspicion. The Tribunal noted that:
- Stock and inventory were verified during survey, with no discrepancy found;
- VAT returns for November 2016 matched the sales figures and were accepted by the AO;
- Cash deposits were not confined to the demonetisation period, and in fact higher deposits were made in earlier months (as evident from the cash-monthly summaries placed on record); and
- The AO failed to point out any specific defect in the books or evidence.
Relying on settled law, including Lalchand Bhagat Ambica Ram (SC) and Pilani Industrial Corporation Ltd. (ITAT Delhi), the Tribunal held that the Revenue cannot accept books of account and yet make additions on conjectures and surmises. Even the sustenance of a 2% addition by the CIT(A) was found to be legally unsustainable.
Accordingly, the ITAT set aside the orders of both the AO and the CIT(A), deleted the entire addition under section 69A, dismissed the Revenue’s appeal, and allowed the assessee’s cross-objection in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal filed by the department of revenue and Cross Objection filed by the assessee are against the order dated 10.01.2025 of the Ld. Commissioner of Income Tax (Appeals), Delhi (hereinafter referred to as ‘ld. CIT’) u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of Assessment Order dated 30.12.2019 of the Ld. Assessing Officer/the Income Tax Officer, Ward – 30(5), Delhi (hereinafter referred to as ‘Ld.AO’) u/s 143(3) of the Act for Assessment Year 2017-18.
