Case Law Details
Akhil Parkash (HUF) Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, partly allowed the appeal of the assessee by deleting the addition of ₹23,46,000 made under Section 69A of the Income Tax Act in respect of cash deposits made during the demonetization period.
The assessee, a Hindu Undivided Family (HUF), owned medical equipment that had been leased to its Karta, Dr. Akhil Prakash, a neuro surgeon. The assessee received instrument charges in cash every year for the use of the equipment. To substantiate this claim, the assessee produced copies of income tax returns, computation of income, capital accounts, and balance sheets for Assessment Years 2015-16 to 2017-18. It was submitted that these records reflected receipt of instrument charges and an accumulated cash-in-hand balance of ₹22,74,240 as on 31 March 2016. The assessee also relied on the Profit and Loss Accounts of Dr. Akhil Prakash, which showed corresponding instrument charges claimed as expenditure. It was contended that the cash deposited in November 2016 during demonetization represented accumulated cash-in-hand and that the instrument charges had already been offered to tax in the respective years.
The Revenue argued that the explanation regarding accumulation of instrument charges was an afterthought and supported the findings of the Assessing Officer and the Commissioner of Income Tax (Appeals).
The Tribunal noted that the assessee had deposited ₹23,46,000 in three instalments during November 2016. After examining the records, it found that the assessee had consistently disclosed instrument charges in its books and returns for the preceding assessment years. It also observed that Dr. Akhil Prakash had claimed corresponding expenditure in his Profit and Loss Accounts and that the assessee’s balance sheet as on 31 March 2016 reflected accumulated cash-in-hand of ₹22,74,240. On this basis, the Tribunal held that the source of the cash deposits stood explained and that no addition under Section 69A was warranted. Accordingly, the addition of ₹23,46,000 was deleted.
The Tribunal further noted the assessee’s challenge to the levy of tax at 60% under Section 115BBE. Referring to the decision in SMILE Microfinance Ltd., it observed that the amended provisions of Section 115BBE applied from Assessment Year 2018-19 onwards. In any event, since the addition under Section 69A had been deleted, the issue became infructuous. The Tribunal held that the levy of interest under Sections 234A, 234B, and 234D was consequential and mandatory, dismissed that ground, and also rejected the alternate prayer for remand as infructuous.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of Additional/Joint Commissioner of Income Tax (Appeals), Madurai [in short ‘the CIT(A)’] dated 21.01.2026, for Assessment Year 2017-18 upholding addition of Rs.23,46,000/- made u/s.69A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) consequent to cash deposit by assessee in his bank account during demonetization.
2. Shri Sandeep Sapra, appearing on behalf of the assessee submits that Dr. Akhil Prakash, a Neuro Surgeon is ‘Karta’ of the assessee/appellant. The assessee (HUF) owns medical equipment which were leased out to Dr. Akhil Prakash, on which the assessee/appellant is receiving instrument charges in cash every year since long. In order to substantiate instrument charges received by the assessee, the assessee has placed on record copies of Income Tax Returns and computation of income for the respective assessment years from A.Y. 2015-16 to A.Y. 2017-18 and copy of Capital Accounts and Balance Sheets for the corresponding Financial Year. He pointed that it would be evident from perusal of the Capital Accounts and Balance Sheets that the assessee had been receiving instrument charges from Dr. Akhil Prakash (Individual). Thus, the cash-in-hand accumulated over a period of time aggregate to Rs.22,74,240/-as on 31.03.2016. The ld. Counsel submits that for A.Ys. 2009-10 to 2014-15, no return of income was filed by the assessee (HUF) as its income was below the taxable limit. To further buttress his arguments, the ld. Counsel referred to the Profit & Loss Accounts of Dr. Akhil Prakash for Financial Years 2010-11 to 2015-16 to show that Dr. Akhil Prakash had been claiming instrument charges as expenditure in his Profit & Loss Account. The ld. Counsel contended that since the assessee has already offered to tax instrument charges received in cash in each of the assessment years, the same amount cannot be taxed again u/s 69A of the Act as unexplained money. The ld. Counsel asserted that the cash deposits made in the month of November, 2016 in three instalments in the bank account of the assessee during demonetization were out of accumulated cash-in-hand. He thus prayed for deleting of the addition.
The ld. Counsel further submits that the Assessing Officer (AO) has levied tax @60% u/s 115BBE of the Act on the addition of Rs.23,46,000/- made u/s 69A of the Act. Placing reliance on the decision rendered in the case of SMILE Microfinance Ltd. vs. ACIT, WP (MD) No. 2078 of 2022 decided on 19.11.2024, he submitted that the special rate of tax @60% would be applicable only w.e.f. A.Y. 2018-19 and not in the impugned assessment year.
3. Per contra, Shri Manoj Kumar, representing the Department defending the impugned order submits, that the source of cash deposits as explained by the assessee, i.e., accumulation of instrument charges received by the assessee in cash, is merely an afterthought. Reiterating findings of the AO and CIT(A), he prayed for upholding the impugned order and dismissing appeal of the assessee.
4. Both sides heard, orders of the lower authorities examined. The short issue in the instant appeal is acceptability of explanation furnished by the assessee to justify cash deposits amounting to Rs.23,46,000/- during demonetization. The AO has made addition of the entire said amount u/s 69A of the Act as unexplained money. Undisputedly, the assessee had deposited an aggregate sum of Rs.23,46,000/- in the month of November, 2016 in three instalments, i.e., Rs.9,50,000/- on 11.11.2016, Rs.13,00,000/- on 12.11.2016 and Rs.96,000/- on 25.11.2016. The assessee has explained that the source of cash deposits is cash received as Instrument Charges from Dr. Akhil Prakash (Individual) every year, over a period of time. To substantiate its submissions, the assessee furnished copy of its Capital Accounts, Balance Sheets and Income Tax Returns, as well as Profit & Loss Accounts, returns of income and computation of income of Dr. Akhil Prakash (Individual). A perusal of documents available on record reveals that the assessee, in the preceding assessment years, i.e., A.Ys. 2015-16 to 2017-18, had reflected in its books instrument charges received from Dr. Akhil Prakash (Individual). Corresponding expenditure has been claimed by Dr. Akhil Prakash (Individual) in his Profit & Loss Account for the respective assessment years. Further, instrument charges received by the assessee has also been reflected in assessee’s computation of income. The Balance Sheet as on 31.03.2016 of the assessee reflects accumulated cash in hand of Rs.22,74,240/-. Thus, the source of cash-in-hand available with the assessee (HUF) stands explained. Therefore, no addition u/s. 69A of the Act on account of cash deposits during demonetization is warranted. Accordingly, the assessee succeeds on Ground Nos. 1 to 11 of appeal.
5. In ground no. 12 and 13 of appeal, the assessee has assailed charging of higher rate of tax @60% u/s.115BBE of the Act. The Hon’ble Madras High Court in the case of SMILE Microfinance Ltd. vs. ACIT, WP (MD) No.2078 of 2022 decided on 19.11.2024 has held that the amended provisions of section 115BBE of the Act would apply from A.Y. 2018-19 onwards. In any case, since addition u/s.69A of the Act has been deleted, the provisions of section 115BBE would not apply.
Thus, grounds no. 12 and 13 of appeal have become infructuous.
6. In ground No. 15 of appeal, the assessee has assailed charging of interest u/s 234A, 234B and 234D of the Act. Levy of interest under aforesaid sections is consequential and mandatory, therefore, ground No. 15 of appeal is dismissed.
7. In ground No. 16 of appeal, the assessee has made an alternate prayer to restore the issue to the file of the AO. Since relief has been granted to the assessee (HUF) and the addition made by the AO u/s 69A of the Act has been deleted, ground No. 16 of appeal has become infructuous and the same 5is dismissed as such.
8. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on Thursday the 04th of June, 2026.
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