BHIM SINGH,JAIPUR V. I.T.O, WARD 4(1), JAIPUR, JAIPUR

ITA 740/JPR/2025

AI Insights

The case revolves around the appeal by Shri Bhim Singh against the order of the CIT(A) which sustained the addition of Rs.11,50,000 to his income for the assessment year 2017-18 under Section 69A of the Income Tax Act. This addition was based on the AO's finding that the cash deposits made during the demonetization period were from unexplained sources. The assessee argued that these deposits were from accumulated cash and job work income, which were documented in his cash book and bank statements. The Tribunal, after examining the submissions and evidence, including the cash book and bank transactions, concluded that the deposits were from explained sources, thus allowing the appeal and reversing the lower authorities' decisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773878 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 05-05-2025
• Other Referred Cases: CIT v. Ashok Kumar, Durga Prasad More v. CIT, CIT v. Smt. P.K. Noorjahan
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: G.M. MEHTA; OBSERVING AT PARA
• Keywords: Corroborative evidences; Rejection of books of accounts; Income from undisclosed sources
• Section: 143(3); 142(1); 68

Judgement Text

"vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’’SMC” JAIPUR Mk0 ,l- lhrky{eh]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihyla-@ITA No.740/JPR/2025 fu/kZkj.ko\"kZ@AssessmentYear : 2017-18 Shri Bhim Singh C-24, Ambabari Metal Colony Jaipur – 302 023 cuke Vs. The ITO Ward 4(1) Jaipur LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: CFRPS 5909A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri G.M. Mehta, CA jktLo dh vksjls@Revenue by: Shri Gautam Singh Choudhary,JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 16/09/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: : 23/09/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal by the assessee and is directed against the order of the ld. CIT(A) dated 23-04-2025 National Faceless Appeal Centre, Delhi[ hereinafter referred to as (NFAC) ] for the assessment year 2017-18 and thus therein following grounds of appeal; ‘’1. Ld. CIT(A) was not justified in sustaining addition of Rs.11,50,000/- u/s 69A of IT Act on account of deposit of cash in form of SBN during demonetization period, the source of which are appearing in cash book submitted to him and also to AO for relevant year which is inclusive of income earned and accepted in scrutiny assessment. 2. Ld. CIT(A) has erred in providing a wrong recast cash books of earlier years in order u/s 250 of I.T. Act by including cheque payment in cash book (separately entered in bank book) and thereby showing minus cash balances in earlier years to Printed from counselvise.com 2 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR prove that cash book as created afterwards whereas fact is that there was no defect in those cash books and also the cash books of current year, which was neither rejected nor provisions of section145(3) of I.T.Act were applied for which reasons appears that both the lower authorities were fully satisfied that the cash balance in cash book on the day of demonetization consisted major sum drawn from bank a/c on 30-03-2016 which was nowhere used nor use proved by the Department. 3. Without prejudice to Ground No. (2) and (3) above, both the lower authorities were not justified in applying provisions of Sec. 69A of Act on bank deposits of SBN whereas on source of money could not be subject matter of application of provisions of Sec. 69A (unexplained money etc.) 2.1 Apropos to the grounds of appeal of the assessee, it is noticed that the ld. CIT(A) has dismissed the appeal of the assessee by observing at para 15 (Ground No.1), para 16 (Ground No. 2) and Para 17 (Ground No. 3) as under:- ‘’15. Ground No. 1 is against the addition of Rs 11,50.200/- u/s 69A of the Act made by the AO. The appellant claimed that the cash deposits of Rs. 11,50,000/- during the demonetization period (09.11.2016 to 30.12.2016) were made from accumulated cash on hand as per the cash book, which included Rs. 9,40,000/- withdrawn from PNB on 30.03.2016. for a property deal that did not materialize. In order to explain cash in hand, the tippellant created cash book from 01.04.2014 claiming opening balance of Rs.8.40,115/-. However it is a matter of record that the appellant did not file income tax returns for A.Y. 2014-15 and filed the retums for A.Y. 2015-16 and 2016-17 only on 25.11.2016, coinciding with the date of deposit of old currency notes in his PNB account. Furthermore, the cash book purporting to show opening balances from 01.04.2014 onwards was admittedly prepared only after such return filling. Thus, the claimed opening balance of Rs. 8.40,115/- as on 01.04.2014 is without any documentary basis or contemporaneous record. It is a settled law that the onus les on the assessee to substantiate the source of cash deposits. In the absence of returns or books of account for earlier years, the opening balances are unverifable. This view is fortified by the judgment of the Hon'ble Punjab & Haryana High Court in CIT v. Ashok Kumar [(2009) 310 ITR 328 (P&H)], where it was held that unverifiable opening balances could be rejected. Additionally, the appellant filed ITR-1, declaring income under \"Income from Other Sources,\" while claiming to be engaged in embroidery job work, which should have been disclosed under \"BusinessIncome in ITR-4. No corroborative evidence such as Invoices, confirmations, or agreements with clients was furnished. Thus, the Printed from counselvise.com 3 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR explanation lacks credibility and consistency. The cash book also contains arithmetical inconsistencies, including a negative cash balance prior to a deposit, as observed by the AO. In such circumstances, reliance cannot be placed on a self-generated cash book, especially when prepared after the fact. As such, on rejection of opening balance of Rs.8,40,115/- as on 01.04.2014, the availability of cash depositing during demonetization period lacks source. Even the cash deposits in the bank accounts in the intervening period from 01.04.2014 to 31.03.2016 is not explained on the basis of the returns filed and alsodoes not commensurate with the income profile. Thus, I find that the AO was justified in treating the cash deposits as unexplained money u/s 69A. Ground No. 1 is accordingly dismissed. 16. In Ground No. 2, the appellant contended that since the AO has neither rejected the books of accounts nor invoked the provisions of section 145(3) of the Act, no addition can be made u/s 69A of the Act. I do not agree with the contentions of the appellant in this regard. While it is true that the AO did not expressly invoke section 145(3), the books presented were not contemporaneous and were admittedly prepared after the filing of retums. As held by the Hon'ble Supreme Court in Durga Prasad More v. CIT [(1971) 82 ITR 540 (SC)], the tax authorities are entitled to look into the surrounding circumstances and apply the test of human probabilities. In this case, the books lacked contemporaneity, consistency, and reliability. Mere absence of formal rejection u/s 145(3) does not mandate blind acceptance of manipulated records. Hence, no infirmity exists in the AO's action, Accordingly, ground no. 2 is dismissed. 17. In ground no. 3, the appellant has alleged that the AO was not justified in treating the explained cash of Rs.11,50,000/- as unexplained money u/s 69A just to bring it within ambit of section 115BBE of Act. Section 115BBE applies Special Tax Rate for Certain Incomes which are statutory provision as amended by the Finance Act, 2022). Section 115BBE provides for taxation of incomes referred to in sections 68, 69, 69A, 69B, 69C, and 69D at a special rate of tax, irrespective of the regular slab or business taxation provisions. Sub-section (1) provides where the total income of an assessee includes any income referred to in sections 68 to 69D, the income-tax payable shall be chargeable to tax @ 60% on such income (plus surcharge and cess as applicable). Sub-section (2) provides no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed in computing income referred to in sub-section (1). The purpose and legislative intent behind the introduction by Finance Act, 2012, and amended post-demonetization by Taxation Laws (Second Amendment) Act, 2016 was to deter taxpayers from Introducing unaccounted income in the guise of loans, share capital, or unexplained cash/expenses. Especially post-demonetization, this provision was strengthened to impose harsh tax consequences (up to -78% effective rate) on unaccounted cash deposits. The provisions of section 115BBE are triggered when income is added by the AO u/ss 68 (cash credits), 69 to 69D (unexplained money, investments, expenditures, etc.). It applies to both individuals and companies, Printed from counselvise.com 4 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR whether or not they declare such income voluntarily. Section 115BBE is a deterrent provision, designed to penalize tax evasion by imposing a punitive tax rate on incomes that cannot be satisfactorily explained under Sections 68 to 690. With no deductions or loss set-offs allowed, it overrides beneficial provisions of the Act and is strictly applied in line with its anti-abuse objective. Once the amount is held to be unexplained under section 69A, the AO is required to apply section 115BBE for taxation at the prescribed rate. Hon'ble Supreme Court in CIT v. Smt. P.K. Noorjahan [(1999) 237 ITR 570 (SC)] has clarified that where the explanation is found unsatisfactory, the income may be brought to tax under the deeming provisions. Since the addition u/s 69A stands confirmed, the consequential application of section 115BBE is also upheld. Accordingly, ground no. 3 is dismissed. 18. In the result, the appeal is dismissed.’’ 2.2 During the course of hearing, the ld. AR of the assessee has filed following written submission with the prayer that the ld.CIT(A) is not justified in dismissing the appeal of the asssessee. ‘’BRIEF FACTS OF CASE: Assessee an illiterate person, who earlier applied for a license from District Excise Deptt. to run liquor shop in Jaipur but was unsuccessful. The demand drafts of required sums deposited with tender application from time to time were returned by Excise Deptt. On 30th March 2016, he withdrew Rs.9,40,000/- from his PNB a/c. for the sole aim to join some existing liquor shop in capacity as partner but same was not fructified. Cashbook and Bank book were got prepared. On declaration of demonetization in November 2016 the SBN lying with him were deposited in bank a/c. The transactions in both bank accounts were accepted by ld. AO by accepting and assessing declared bank interest of Rs.13,134/- in order u/s. 143(3) of Act. On the other hand, ld. CIT(A), repeated cash book of different years in his order u/s. 250 of Act, pointed out minus cash balance in earlier year only to reject current year’s cash book. With the above brief facts, the grounds of appeal are discussed hereunder:- GROUNDS OF APPEAL: Ground No. (1) Ld. CIT(A) was not justified in sustaining addition of Rs.11,50,000/- u/s. 69A of IT Act on account of deposit of cash in form of SBN during demonetization period, the sources of which are appearing in cash book submitted to him and also to ld. AO for the year ended on 31.03.2017 which is inclusive of income earned and accepted in scrutiny assessment. Printed from counselvise.com 5 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR As per cash book prepared through an Accountant the available balance as on November 2016 was Rs.12,22,381/-. The cashbook/ bankbook were also produced before ld. AO. Out of the available cash balance deposited total Rs.11,50,000/- in his bank a/c. with Punjab National Bank on 28th Nov. 2016. At para (6) at page (3), ld. AO hadrequired from the assessee as under: “Please furnish a copy of day to day cash book for the period 01.04.2014 to 31.03.2016 and bank book for the period of 01.03.2014 to 31.03.2017. In case of any failure, show cause as to why the cash deposited by you in your Punjab National bank (A/c.1586000100096318) amounting to Rs.11,50,000/- may not be treated as your income from unexplained sources”. Assessee had submitted cashbook and bankbook prepared up to 31.03.20217 (though required only up to 31.03.2016), without pointing out any defect, ld. AO treated the cash book and bank book as not tenable and treated cash as introduction of his unaccounted money from business. Even ld. CIT(A), by repeating the gross and taxable income for the period from A.Ys. 2015-16 to 2024-25 and cash book figures from 01.04.2014 to 31.03.2017 did not agree to the availability of cash with the assessee deposited in bank in form of SBN. As per provisions of section 44AA of Income tax Act, assessee was not supposed to maintain regular books of account but to prove availability of cash (major part out of which was drawn from bank on 30.03.2016 -P.B. page 4) cashbook prepared was produced (P.B. page 5 to 8). The SBN, out of opening cash balance of Rs.12,22,381/- in November 2016, was deposited in PNB on declaration of demonetization.(P.B. page 9 to 12). Even ld. AO nowhere proved use of available cash elsewhere . Both the lower authorities were, therefore, not justified in treating the available cash as un-explained. GROUND No. (2) Ld. CIT (A) has erred in providing a wrong recast cash books of earlier years in order u/s. 250 of I.T. Act by including cheque payments in cash book (separately entered in bank book) and thereby showing minus cash balances in earlier years to prove the cash book as created afterwards whereas fact is that there was no defect in those cash books and also the cash book of current year, which was neither rejected nor provisions of section 145(3) of I.T. Act were applied for which reason appears that both the lower authorities were fully satisfied that the cash balance in cash book on the day of demonetization consisted major sum drawn from bank a/c. on 30.03.2016 which was nowhere used nor proved by department.: Neither books of account were rejected nor were provisions of section 145(3) of Act applied in this case. The major part order of ld. CIT(A) {from page No. (19) to (29)} is repetition of details of Income tax Returns and also cash book of different years, referring withdrawal of cash of Rs.9,40,000/- on 30.03.2026 (P.B. page 4 ) without proving use of cash elsewhere, but he did not accept the cashbook because of negative figures of Rs.92,735/- and 59,946/- in immediately preceding year (A.Y. 2016-17) for which no action under Income tax Act was taken or proposed against the assessee but on that very basis, the cash book of A.Y. 2017-18 was not accepted by him, though it is settled law that on given facts, addition u/s. 68/69A Printed from counselvise.com 6 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR cannot be made, more so when book results were not rejected nor provisions of section 145(3) of Act were applied. Further reliance is placed on the following decisions: 1. Anil Verma Vs. Dy. CIT (2019) 201 TTJ (Chand.’A’) 608: Cash deposited in bank. Perusal of cash flow statement as well as opening and closing balance of the year showing that the assessee had funds available on the relevant dates to make the deposits in the bank in account of the assessee, the deposits stood explained, hence addition under section 68 was invalid. 2. Smt. Krishna Agarwal Vs. ITO (2022) 215 TTJ (Jd) 245: Income from undisclosed sources- Addition under section 69A-Cash deposited in bank account. Assessee having explained the cash deposits in her bank account on the basis of cash withdrawals made in earlier two years for the purchase of property which did not fructify and also explained and duly disclosed the source of deposit in the bank account out of which such withdrawal were made, the explanation of the assessee cannot be rejected only for the reason that there was long gap between the said withdrawals and redeposit of the amount in the bank account, and therefore, the impugned addition under section 69A is not sustainable (in assessee’s case, cash was withdrawn for business purposes). 3. Joginder Kaur Vs. ITO (2024) 231 TTJ (Ars) 320: Addition under sec. 69A. Cash deposits in bank account. Assessee having earlier withdrawn large amount of cash from her bank account on various dates as reflected in the bank statement, the contention of the assessee that the same cash has been re-deposited in the bank account has to be accepted in the absence of anything to show that the cash withdrawn from the bank has been invested or utilized elsewhere and, therefore, impugned addition under section 69A is not sustainable. Therefore, the addition under section 69A of I.T. Act was not justified. GROUND No. (3) Without prejudice to ground No. (2) and (3) above, both the lower authorities were not justified in by applying provisions of sec. 69A of Act on bank deposits of SBN whereas on source of money could only be subject matter of application of provisions of sec. 69A (unexplained money etc.) For explained source of cash, provisions of section 69A of I.T. Act (unexplained money etc.) are not applicable, more so when major part of available SBN were withdrawn at the fag end of preceding year and form part of opening cash balance and not proved by the Department as used for any other purpose. ‘’ To support his submission, the ld. AR of the assessee filed a paper book containing following evidence / records ; S.N. Particulars/ short description P.B. Page 1. Written synopsis in support of grounds of appeal. 1 to 3 2. Proof withdrawal of Rs.9,40,000/- from Bank on on30-03- 2016 4 Printed from counselvise.com 7 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR 3. Cash book from 01-04-2016 to 31-03-2016 5-8 4. Bank Book (Punjab National Bank) 9-12 2.3 On the other hand, the ld.DR supported the order of the ld. CIT(A). 2.4 We have heard both the parties and perused the materials available on record. Brief facts of the case are that the assessee e-filed the return of income on 29-012-2017 declaring total income at Rs.2,71,720/- after deduction of Rs.10,000/- under Chapter VIA (80TTA). The case of the assessee was selected for limited scrutiny assessment under CASS and accordingly notice u/s 143(2) of the Act was issued on 11-08-2018 fixing the date of hearing on 27-08-2018 but the assessee failed to respond this notice. Thereafter, notice u/s 142(1) alongwith specific questionnaire was issued on 14-05-2019 asking the assessee to file/ upload requisite information and details by 22-05-2019 which was uploaded by the assessee. The AO examined the same on test check basis and assessed the case. It is found by the AO that the assessee declared total income of Rs.2,71,720/- under the head Income from other Sources (Rs.2,68,581/- Job Work Income+Rs.13,134/- interest on SB a/c) after deduction of Rs.10,000/-under Chapter VIA (80TTA). Thus, the assessee during the year under consideration is stated to have derived the above income from job work of Printed from counselvise.com 8 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR embroidery. The AO further noted that the assessee made cash deposits of Rs.11,50,000/- in his bank account held in Punjab National Bank during demonetization period (i.e. 9-1-2016 to 30-12-2016). The AO desired the assessee to file certain information regarding cash balance and explain the source of such cash deposit with supporting evidence.The assessee uploaded theinformation but the AO found some discrepancy in respect of explanation of source of cash deposits and other related aspects. Hence, the AO issued show cause notice dated 26-08-2019 seeking his explanation on 11-09-2019 (available at pages 2 to 4 of ld.CIT(A)’s order) and the same was replied by the assessee. However, based on the reply submitted by the assessee, the AO concluded that the submission of the assessee regarding availability of cash balance with him from savings and job work income is nothing but an attempt to introduce his unaccounted money in the garb of savings and proceeds of job work to support the cash deposit. In nutshell, the AO held that the cash deposits amounting to Rs.11,50,000/- by the assessee in Punjab National Bank account during demonetization period is nothing but money from unexplained sources in terms of Section 69A. Accordingly, the AO made an addition of Rs.11,50,000/- u/s 69A r.w.s. 115BBE of the Act in the hands of the assessee by observing as under:- Printed from counselvise.com 9 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR ‘’3.5 The shove detailed and categorical discussion leads to the conclusion that the submission of the assessee regarding availability of cash balance with him from savings and job work income is nothing but an attempt to introduce his unaccounted money in the garb of savings and proceeds of job work income. In fact, he has not carried out any job work during the year under consideration or earlier years, it has been established that the assessee has not carried out any job work during the year under consideration and in earlier years. Further, the contention regarding availability of cash with him as savings has also been dealt with elaborately and has been established as false in view of factual and circumstantial findings discussed above. Therefore, the cash amounting to Rs. 11,50,000/- deposited by the assesses in PNB account during demonetization is nothing but money from unexplained sources in terms of sec. 69A of the IT Act and therefore the same is added to the total income of the assessee taxable under the provisions of Sec. 11588E of the IT Act 4 Since, the assessee has deposited money amounting to Rs. 11,50,000/- in his bank account out of money from explained sources and has tried to give it label of earlier savings and job work income which has been refuted well as per discussion in foregoing paras Therefore, penalty proceedings u/s 271AAC of the IT. Act are hereby initiated.’’ In first appeal, the ld.CIT(A) has dismissed the appeal of the assessees as mentioned hereinabove i.e. to say confirmed the addition of Rs.11,50,000/- u/s 69A r.w.s. 115BBE of the Act. In this case, it is noticed that the assessee is an illiterate person who earlier applied for a license from District Excise Deptt to run liquor shop in Jaipur but he was unsuccessful. It is also noted that the demand drafts of required sum deposits with the tender application from time to time were returned by the Excise Department. On 30th March,2016, the assessee withdrew Rs.9,40,000/- from his Punjab National Bank A/c (PB Page 4)for the sole aim to join some existing liquor shop in capacity as partner but the same was not fructified, however, the cash book Printed from counselvise.com 10 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR as well as bank book were submitted to the AO. The ld. AR submitted that on declaration of demonetization, the available SBN were deposited in the bank, and the AO accepted all the transaction of bank by accepting bank interest of Rs.13,134/- in his order dated 17-10-2019 u/s 143(3) of the Act. It is also noted that the available cash balance in Nov. 2016 was at Rs.12,22,381/- (PB Page 7). It is further noted from the records that out of available cash of Rs.12,22,381/-, Rs.11,50,000/- was deposited by the assessee in his bank account (PB 7 & 10) and no defect was pointed out by the AO but in relevant year’s cash book he treated bank deposit of Rs.11,50,000/- as un accounted money from business. It is also pertinent to mention that neither books of accounts were rejected, nor provisions of Section 145(3) were applied. The ld. CIT(A) ignored the withdrawal of Rs.9,40,000/- on 30-03-2016 which was accepted by the AO by accepting bank interest of Rs.13,134/-. Hence, in view of the above facts and peculiar circumstances of the case, we do not concur with the findings of the ld. CIT(A) and thus the appeal of the assessee is allowed considering the withdrawal available as source of the money deposited into the bank account. Printed from counselvise.com 11 ITA NO. 740/JPR/2025 SHRI BHIM SINGH VS ITO, WARD 4(1), JAIPUR 3.0 In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 23 /09/2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 23/09/2025 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Bhim Singh, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward 4(1), Jaipur 3. vk;djvk;qDr@ Theld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File (ITA No. 740/JPR/2025) vkns'kkuqlkj@ By order, lgk;diathdkj@Asst. Registrar Printed from counselvise.com "