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Judgment
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 30.12.2025, for Assessment Year 2017-18.
Shri C.M. Jain, appearing on behalf of the assessee, submits that the solitary issue raised in the present appeal pertains to the addition of Rs.32,99,208/- made u/s. 68 r.w.s. 115BBE of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on account of alleged unexplained cash deposits in the bank account during demonetization period. The Id. AR submits that the assessee is engaged in trading of jewellery under proprietorship firm M/s. G.D. Jewellers. The Id. Counsel referred to the month-wise details of cash sales and cash deposits for the period from 01.04.2016 to 08.11.2016, placed at pages 170 and 171 of the paper book, to demonstrate the pattern of cash sales and corresponding cash deposits in the Bank throughout the year. He further submitted that similar cash sales and cash deposit pattern was in the Financial Year 2015-16. The ld. Counsel submitted that the cash deposits in the bank account during demonetization period were out of cash-in-hand and regular business receipts from cash sales. He, therefore, prayed for deletion of the addition.
Per contra, Shri Manoj Kumar, representing the department vehemently placed reliance on the decision of CIT(A) and prayed for dismissing appeal of the assessee.
Both sides heard. The solitary addition made by the Assessing Officer in the instant case is on account of cash deposits in the bank account during demonetization period. The case of the assessee is that cash deposits are out of cash sales during the relevant period. The assessee has furnished month-wise details of cash sales and corresponding cash deposits for the period from 01.04.2016 to 08.11.2016, the same is reproduced as under:-
| Month wise | Opening cash in hand | Cash sales | Cash deposit in Bank | Cash withdrawn from the bank | Expenses & Drawings | Closing cash in hand |
| (April-2016) | 282668.00 | 310162.00 | 270000.00 | 500000.000 | 225100.00 | 797730.00 |
| (May-2016) | 797730.00 | 0.00 | 0.00 | 0.00 | 35600.00 | 762129.00 |
| (June-2016) | 762129.00 | 154934.00 | 200000.00 | 0.00 | 35200.00 | 681864.00 |
| (July-2016) | 681864.00 | 649728.00 | 700000.00 | 0.00 | 34501.00 | 597091.00 |
| (August-2016) | 597091.00 | 183790.00 | 150000.00 | 0.00 | 35000.00 | 595881.00 |
| (September-2016) | 595881.00 | 240687.00 | 200000.00 | 0.00 | 34900.00 | 601668.00 |
| (October-2016) | 601668.00 | 3332487.00 | 600000.00 | 0.00 | 66746.00 | 3267409.00 |
| (November-2016) | 3267409.00 | 557899.00 | 0.00 | 0.00 | 29500.00 | 3795807.00 |
A similar pattern of cash sales and deposits is evident from the sales chart furnished by the assessee for the immediately preceding financial year. From the chart furnished by assessee it emanates that the assessee was having substantial cash in hand in the month of October 2016 and owing to festival season, there were increase in cash sales and corresponding cash deposits in October, 2016 i.e. prior to demonetization. Considering entire of facts, I find that the assessee has been able to satisfactorily explain the source of cash deposits amounting to Rs.32,99,208/- as arising from cash sales and cash-in-hand available as on the date of demonetization, deposited in two ICICI Bank accounts bearing Nos. 663405500164 and 663405500058. The entire cash was deposited on a single day i.e. 16.11.2016. The Bank statements are at page 132 & 142 of the paper book.
Considering entire facts of the case, I find merit in the submissions of the assessee. Accordingly, addition of Rs.32,99,208/- u/s.68 of the Act is directed to the deleted.
In the result, impugned order is set aside and appeal of the assessee is allowed.