Manoj Kumar vs The Income Tax Officer

PER MADHUMITA ROY, J. M.:

The instant appeal filed by the assessee is directed against the order dated 07.08.2025 passed by the Ld. Commissioner of Income-tax (Appeals), [hereinafter referred to as the Ld. CIT(A)]/National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short) under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the Assessment Order dated 23.12.2019 passed by the Assessment Unit, Income-tax Department (hereinafter referred to as ‘the ld. AO’) under Section 143(3) of the Act for Assessment Year 2017-18.

The addition under Section 69A on account of cash deposit made by the assessee is a subject matter before us.

The assessee has made cash deposit during demonization to the tune of Rs. 57,74,800/- which was added in the hands of the Assessee in the absence of any cogent evidence establishing the source of such deposit made by the assessee. Before the Ld. CIT(A) relevant requisite documents were duly filed by the assessee by way of an application under Section 46A of the Act and such additional documents were duly sent to the Ld. A.O. seeking remand report whereupon the Ld. A.O. disproved the same as those documents, though opportunitywas given to the assessee not furnished before him. The remand report sent by the Ld. A.O. is reproduced at Page No. 5 of the order of the Ld. CIT(A). According to the Ld. CIT(A), the documents not correlating into external record.Further that, no cash flow statements, patient admission register or sales register of the pharmacy was filed. The source, therefore, is found to be mis-conceived as of the opinion of the Ld. CIT(A) and finally the order passed by the Ld. A.O. was upheld.

It is the case of the assessee before us as argued by the Ld. AR Mr. Gagan R Khandelwal, that addition under Section 69A of the Act, in the facts and circumstances of the matter does not lie as the provisions of Section 69A is only applicable in anyfinancial year where as the assessee is found to be the owner of any money, bullion, jewellery or valuable article, which is not recorded in the books of account, if any, maintained by him for any source of income. No such incident as above is present in the case in hand and, therefore, addition invoking the provision of Section 69A is not applicable in the case in hand as further submitted by him. Such case made out by the assessee has not been able to be further controverted by the Ld. DR.

The books of accounts filed by the Assessee, further justifies the cashbalance which could be considered as the source of cash deposit of Rs. 57,74,800/-, this cash balance is nothing but the sale of medicine and hospital receipts cannot be added in the hands of the assessee by invoking the provision of Section 69A of the Act. Therefore, there is no justification treating such cash sales as unexplained cash credit under Section 69A of the Act. In this regard, we have further considered the judgment passed by the Co-ordinate Bench of the Tribunal in the case of Ajit Batra Vs. ITO in ITA No. 3099/Del/2024, the books of accounts maintained by the assessee as also produced before us, entries whereof relating to cash deposits were also not considered its proper perspective as because the explanation offered by the assessee towards sources of cash deposit was not found to be satisfactory, thus addition under any circumstances under Section 69A is not sustainable in the eyes of law. Thus, having regard to the entire respect of the matter when the cash deposit has been made out of the cash sales recorded in the books of account addition invoking the provision of Section 69A of the Act is found to be bad in law and, therefore, quashed.

The addition under Section 115BBE has been challenged before us for AY 2017-18 as the provision of Section 115BBE of the Act which enhanced the rate of tax, could be made applicable only w.e.f. 01/04/2017. In this regard he has relied upon the judgment passed by the Co-ordinate Bench of the Tribunal in ITA No. 4855/Del/2025 in the case of World Wide Textile Pvt. Ltd. Vs. ACIT wherein on the identical issue addition under Section 115BBE of the Act for A.Y 2017-18 was deleted relying upon the judgment passed by the Hon’ble Madras High Court with the following observation:-

The Ld. DR could not controvert the submission made by the Ld. AR, neither could rely upon any order contrary to the ratio laid down by the Co-ordinate Bench as above. Thus, having heard the Ld. Counsels appearing for the parties and having regard to the entire facts and circumstances of the matter when admittedly the provision of Section 115BBE is made applicable w.e.f 01.04.2017 for A.Y 2018-19, in the instant case, addition under Section 45BBE for A.Y 2017-18 is found to be bad in law, not sustainable and therefore, quashed.

In the result, appeal filed by the assessee is allowed.