Bhola Singh Vs ITO (ITAT Patna)
The ITAT Patna allowed the assessee’s appeal against the order of the CIT(A) for AY 2017-18. The Assessing Officer had completed the assessment under Section 144 and made an addition of ₹6,08,500 under Section 69A read with Section 115BBE by treating cash deposits made during the demonetisation period as unexplained money. The CIT(A) upheld the addition.
The Tribunal proceeded to decide the appeal after hearing the Departmental Representative, as none appeared for the assessee. It noted that the assessee was an agriculturist, a business correspondent of the Central Bank of India, and engaged in trading raw materials for cattle feed and maize.
Regarding the deposit of ₹1,00,000 in the KCC account, the Tribunal noted the assessee’s explanation that the amount represented agricultural sale proceeds intended for the purchase of seeds, fertilizers, and other agricultural inputs during the harvesting season and was deposited during demonetisation. Considering the assessee’s activities and the amount involved, the Tribunal held that the explanation ought to have been accepted.
For the deposits of ₹4,45,000 and ₹54,500 in the OD and SB accounts, the Tribunal noted the assessee’s claim before the CIT(A) that cash deposits followed a consistent turnover pattern in earlier assessment years and remained regular before, during, and after demonetisation. Considering the nature of the assessee’s activities and the consistency of the deposits, the Tribunal deleted the entire addition of ₹6,08,500. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT PATNA
This Appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeal) [“the Ld. CIT(A)”, for short], dated 03.03.2026 passed u/s 250 of the Income Tax Act, 1961 (“the Act”, for short) for the Assessment Year 2017-18.
2. Brief facts of the case are that, Assessee had not filed return of income for the A.Y. 2017-18, an Assessment Order came to be passed u/s 144 of the Act by making an addition of Rs.6,08,500/- u/s 69A r.w.s 115BBE of the Act on account of cash deposited during the demonetisation period by treating the same as unexplained money. Aggrieved by the Assessment Order dated 14.11.2019, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide Order dated 03.03.2026, dismissed the Appeal filed by the Assessee. As Against the Order of the Ld. CIT(A), Assessee preferred the captioned Appeal.
3. None appeared for the Assessee. Considering the issue involved in the present Appeal, we deem it fit to decide the Appeal on hearing the Ld. Department’s Representative and perused the material available on record.
4. The Ld. DR vehemently submitted that Assessee could not prove the source of cash deposited to his bank account during demonetization period, therefore, Assessing Officer has rightly made the addition which has been confirmed by the Ld. CIT(A).
5. We have heard the Ld. DR and perused the material available on record. It is found from the record that the Assessee is an agriculturist, business correspondent of Central Bank of India and also engaged in trading of raw material of cattle feed and maize. During the demonetisation period, Assessee deposited a sum of Rs.1,00,000/- to his KCC Account. As per the Assessee, the source of the cash credited to the bank account is out of proceeds of agriculture produce and the said cash was meant to kept for purchase of seeds, fertilizers and agricultural inputs during peak harvesting season and the same has been deposited to the Bank during demonetization period. Therefore, considering the activities of the Assessee and also looking into the quantum of the amount being Rs.1,00,000/-, we are of the opinion that the Authorities below should have accepted the explanation provided by the Assessee.
6. In so far as the amount of Rs.4,45,000/- and Rs.54,500/-respectively deposited in OD & SB Accounts of the Assessee, Assessee claimed before the CIT(A) that even in the earlier years i.e., AYs 201516 & 2016-17, the consistent cash turnover pattern was in exist, there were no abnormal hike and the deposits made in the bank in cash are regular compared to previous years and the said pattern is consistent in the year under consideration during the pre-demonetization period, during demonetization period and also post-demonetization period. Considering the activities of the Assessee and also the amount which was deposited in the bank being minimal and being regular compare to previous Assessment years, we are of the opinion that the Ld. CIT(A) should have deleted the addition.
7.mIn view of the above discussion, the addition of Rs.6,08,500/-made by the Assessing Officer which has been sustained by the Ld. CIT(A) is hereby deleted.
8. In the result, Appeal of the Assessee is allowed.
Order pronounced on 03.07.2026.
