Vishal Pundir vs Income Tax Officer, Ward 3(3)(5)

PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Additional/Joint Commissioner of Income Tax (Appeals)-12, Mumbai [in short ‘the CIT(A)’] dated 17.10.2025, for Assessment Year 2017-18.

The assessee in appeal has assailed the order of CIT(A) in confirming addition of Rs.10,12,500/- u/s.69A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) made by the Assessing Officer (AO) on account of cash deposits during demonetization.

Shri Sanjay Kumar appearing on behalf of the assessee submits that the assessee is running Amul Milk Booth under the proprietorship of M/s. Shree Ram Diary. The cash deposits in the bank during demonetization was from sale of milk and milk products. The ld. Authorized Representative (AR) of the assessee submitted that a notification was issued by the Ministry of Finance, Govt. of India dated 08.11.2016 clarifying that demonetized bank notes shall not seized to be legal tender w.e.f. 09.11.2016 until 11.11.2016 in respect of certain transactions which includes purchase of milk from booths operating under authorization of the Central or State Govt. He submits that the milk booth operated by the assessee was duly authorized by the State Govt. He referred to certificate of registered issued by the Department of Food Safety & Drug Administration, Govt. of Uttar Pradesh at page 32 and 33 of the paper book. The ld. AR pointed that the last date for accepting demonetized currency notes was extended to 14.11.2016 vide notification dated 11.11.2016 and thereafter to 24.11.2016 vide notification dated 24.11.2016. He submits that the assessee had deposited cash in demonetized currency notes of Rs.500/- and 1,000/- between 10.11.2016 to 25.11.2016. The entire cash deposits were from sale of Amul milk and milk products. He thus, prayed for deleting the addition.

Per contra, Shri Keshav Kishore Anand representing the department vehemently defending the impugned order and prayed for dismissing appeal of the assessee.

Both sides heard, orders of the authorities below examined. The notifications on which the ld. AR of the assessee has placed reliance considered. It is an undisputed fact that the assessee is running a milk booth. The assessee has explained that the cash deposits aggregating to Rs.10,12,500/- during demonetization was from sale of Amul milk and milk products. The assessee has placed on record a copy of certificate issued by Punjab National Bank (at page 30-31 of the paper book), wherein, the assessee is having account and in which cash was deposited by the assessee during demonetization. The certificate issued by bank clearly indicates that the cash deposited was in demonetized currency notes of Rs.500/- and Rs.1,000/- from 10.11.2016 to 25.11.2016. The assessee has also placed on record a copy of cash ledger for FY 2016-17 and monthly cash summary at pages 50 to 71 of the paper book. The notification issued by Ministry of Finance on 08.11.2016 clearly shows that the demonetized currency notes were to be considered as legal tender till 11.11.2016 for purchase of milk at milk booths operating under authorization of the Central and State Govt. Thereafter, the date was extended to 14.11.2016 and finally to 24.11.2016 by the Ministry of Finance vide notifications dated 11.11.2016 and 14.11.2016, respectively. The assessee has also placed on record registration certificate issued by State Govt. to show that the assessee qualifies for accepting demonetized currency notes beyond the date of demonetization as per the notifications issued by Ministry of Finance (supra). Thus, in light of facts of the case and documents available on record, I see no reason to uphold the addition, hence, the addition of Rs.10,12,500/- on account of cash deposits in demonetized currency during demonetization is directed to be deleted.

In the result, impugned order is set aside and appeal of the assessee is allowed.