ARVIND KUMAR RUNGTA,BHAGALPUR V. THE INCOME TAX OFFICER WARD 1(1), BHAGALPUR, BIHAR

ITA 124/PAT/2025

AI Insights

The case involves Arvind Kumar Rungta, who appealed against the order of the National Faceless Appeal Centre, Delhi, which confirmed the addition of  lacs as unexplained money by the Assessing Officer under section 69A of the Income Tax Act. The addition was based on the assessee's cash deposits during the demonetization period, which were scrutinized due to their timing and amount. The Tribunal examined the reasons for the delay in filing the appeal, accepted the condonation petition, and focused on the substantive issue of the source of the cash deposits. The Tribunal found that the assessee had provided a satisfactory explanation for the deposits, which were linked to withdrawals made for a planned but ultimately unexecuted heart surgery, and thus allowed the appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827181 (ITAT-PATNA)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 14-03-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWANI KR. SINGAL
• Assessee Lawyers: DEEPAK KUMAR
• Keywords: Set aside; Salary income

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “PATNA” BENCH, PATNA BEFORE SHRI DUVVURU RL REDDY, VP AND SHRI RAJESH KUMAR, AM ITA No.124/PAT/2025 (Assessment Year: 2017-18) Arvind Kumar Rungta Station Road, Naugachi 853204, Bihar, Bhagalpur, Bihar-812002 Vs. Income Tax officer, Range Office, Anand Chiktshalaya Road, Bhagalpur, Bihar (Appellant) (Respondent) PAN No. ACIPR2657J Assessee by : Shri Deepak Kumar, AR Revenue by : Shri Ashwani Kr. Singal, DR Date of hearing: 28.11.2025 Date of pronouncement: 07.01.2026 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 08.11.2023 for the AY 2017-18. 2. At the outset, we note that the appeal of the assessee is barred by limitation by 409 days for which condonation petition alongwith affidavit is filed. At the time of hearing, the counsel of the assessee explained the reasons for delay in filing the appeal. The Ld. D.R , on the other hand strongly opposed the request for condoning the delay as the reasons aare not sufficient. After hearing the rival contentions and perusing the materials available on record, we find that the delay Printed from counselvise.com Page | 2 ITA No. 124/PAT/2025 Arvind Kumar Rungta; A.Y. 2017-18 is for bonafide and genuine reasons and hence, we condone the delay and admit the appeal for adjudication. 3. The only issue raised by the assessee in various grounds of appeal is against the confirmation of addition of ₹8 lacs by the ld. CIT (A) as made by the ld. AO u/s 69A of the Act on account of unexplained money. 3.1. The facts in brief are that the assessee filed the return of income on 02.05.2017, declaring total income of ₹2,61,800/-. The assessee derives income by way of salary and other sources. The case of the assessee was selected for limited scrutiny on the ground that the assessee has deposited huge cash in demonetization period. Accordingly, the statutory notices along with questionnaire were issued and duly responded by the assessee. The ld. AO noted that the assessee has deposited ₹9 lacs during demonetization period. However, the ld. AO noted that the total cash deposit in the bank account during the financial year 2016-17, was ₹10 lacs comprising 2 deposits of ₹1 lacs prior to demonetization period and second 9 lacs during demonetization period. Accordingly, same was added u/s 69A of the Act. 3.2. During the appellate proceedings, the ld. CIT (A) affirmed the order of ld. AO by observing and holding as under:- “I have gone through the submissions of the appellant and also the bank statements furnished. The income shown by the appellant in his return of income is only being income from salary. There is no other income shown by the appellant in his return. Now the claim of the appellant is that he had withdrawn Rs.9,00,000/- on 16.04.2016 and the same was deposited after demonetisation. However, as seen from the bank account, there have been several deposits made in cash prior to the withdrawal of Rs.9,00,000/-. The appellant has not given the source of the said cash deposits of Rs.9,00,000/-. The appellant does not have any other income offered to tax in the return filed. Therefore, withdrawal of cash cannot be given credit to unless the deposits of cash made earlier to the withdrawal are explained. As the appellant has not Printed from counselvise.com Page | 3 ITA No. 124/PAT/2025 Arvind Kumar Rungta; A.Y. 2017-18 explained the deposits of cash made prior to 16.04.2016 in his bank account, the withdrawal made on 16.04.2016 cannot be given credit while considering the deposits made by the appellant during demonetisation period. Considering the fact that the appellant must have had some cash to be deposited out of his salary income which he was holding as cash in hand as on the day of demonetisation, Rs.2,00,000/-of such deposits is considered as explained and balance of Rs.8,00,000/- are treated as unexplained money and brought to tax u/s.69A of the Act. The appellant gets relief of Rs.2,00,000/-. Ground no.1 is partly allowed.” 3.3. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has submitted before us as well as the authorities below that assessee is a salaried employee and is no other source of income. We note that the assessee has withdrawn ₹9 lacs on 16.04.2016, for heart surgery. The assessee submitted that the said deposit was out of cash withdrawn by the assessee for his treatment. The plea of the assessee was not accepted and the ld. AO added the entire amount. The ld. CIT (A) partly allowed the appeal by allowing relief to the tune of ₹2 lacs and confirmed the addition of ₹8 lacs, after observing that withdrawal of cash cannot be given credit unless the deposit of cash made earlier to the withdrawal are explained. The ld. CIT (A) noted that since the assessee has not deposited of cash prior to 16.04.2016 in his bank account, the withdrawal made on 16.04.2016, cannot be given credit while considering the deposits made by the assessee during the demonetization period. We find from the facts before us that the assessee has furnished the explanation before the ld. AO as well as before the ld. CIT (A) about the source of cash which was out of the withdrawals from the bank account and the remaining 1 lacs out of the personal saving. The assessee explained that the said withdrawal was made for heart surgery which could not happen and ultimately the currency was demonetized and the amount was deposited back in the account of the assessee. In our opinion the explanation of the assessee is Printed from counselvise.com Page | 4 ITA No. 124/PAT/2025 Arvind Kumar Rungta; A.Y. 2017-18 reasonable and plausible and cannot be rejected on the ground that assessee has not explained the source of deposit prior to withdrawal of cash. Therefore, we are not in agreement with the conclusion drawn by the ld. CIT (A) on this issue. Accordingly, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. 4. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 07.01.2026. Sd/- Sd/- (DUVVURU RL REDDY) (RAJESH KUMAR) (VICE PRESIDENT) (ACCOUNTANT MEMBER) Kolkata, Dated: 07.01.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "