CHAYA RANGRAO MORE,SANGLI V. INCOME TAX OFFICER, WARD 5, SANGLI

ITA 2575/PUN/2025

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The case involves Chaya Rangrao More, a businesswoman engaged in the retail sale of country liquor, who appealed against the order of the Additional/Joint Commissioner of Income Tax (Appeals)-3, Ahmedabad. The appeal was related to an addition of Rs.2,50,000 to her income for the Assessment Year 2017-18, which was claimed to be unexplained cash. The Assessing Officer had added this amount under section 69A of the Income Tax Act, 1961, during the demonetization period, questioning the source of the cash deposits. The Tribunal considered the nature of the assessee's business, the substantial cash sales, and the practice of saving cash for personal emergencies, ultimately ruling in favor of the assessee.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841272 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 04-11-2025
• Other Referred Cases: CIT v SMILE Microfinance Ltd (2025) 479 ITR 172 (Mad)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJITESH KUMAR MEENA
• Assessee Lawyers: AMOD VAZE
• Keywords: Business income
• Section: 15

Judgement Text

" आयकर अपीलीय अधिकरण ”एस एम सी” न्यायपीठ पुणे में। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC” :: PUNE BEFORE DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपऩल सं. / ITA No.2575/PUN/2025 निर्धारण वषा / Assessment Year: 2017-18 Chaya Rangrao More, Gandhi Nagar, Ashta Walwa, Sangli – 416301. Vs Income Tax Officer, Ward-5, Sangli. PAN:AIIPM1136H Appellant/ Assessee Respondent /Revenue Assessee by Shri Amod Vaze Revenue by Shri Ajitesh Kumar Meena – Addl.CIT Date of hearing 29/01/2026 Date of pronouncement 26/02/2026 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Assessee against the order of Ld.Addl/Joint Commissioner of Income Tax(Appeal)-3, Ahmedabadpassed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18dated 20.08.2025 emanating from the Assessment Order passed under section 144of the I.T.Act, 1961 dated 27.11.2019. The Assessee has raised following grounds of appeal : Printed from counselvise.com ITA No.2575/PUN/2025 [A] 2 “1. The Ld CIT(A), NFAC has erred in law as well as in fact in confirming the addition of Rs 2,50,000/- u/s 69A even though the cash in hand was for personal emergencies and was out of business receipts already offered to tax. 2. Without prejudice to ground 1 above, the lower authorities have erred in law as well as in fact in disregarding the CBDT Circular No.03/2017 dated 21/02/2017. 3. Without prejudice to ground no. 1 and 2 above, the lower authorities have erred in law as well as in fact in applying section 115BBE as it is not applicable to cash deposits during demonetization of special bank notes. 4. The appellant craves leave to add, alter, omit or substitute any of the grounds at the time of hearing of the appeal.” Submission of ld.AR : 2. Ld.Authorised Representative(ld.AR) for the Assessee filed a paper book and written submission. Relevant part of the written submission filed by ld.AR is reproduced here as under : “8. The assessee is in the business of retail sale of country liquor where entire sale proceeds are received in cash. As the shop is located in small town, the customers pay in cash across the counter and there is no culture of using credit cards The present UPI system was not in vogue at that time 9 The cash collected through cash sales is periodically deposited in bank accounts after keeping aside cash required for operational expenses. The cash deposited is almost equal to payments to suppliers. The balance cash sales is held by the assessee as cash in hand. She is in Printed from counselvise.com ITA No.2575/PUN/2025 [A] 3 the habit of keeping huge cash in hand Just to indicate this fact, I am submitted the ITR for AY 2018-19 and the latest audited financial statements for FY 2024-25. Cash in hand as on 31/03/2018-Rs 35,74,993/- (Page 5 of ITR) Cash in hand as on 31/03/2025-Rs 54,25,547/- (BS as uploaded along with Tax Audit Report for AY 2025-26) 10. The cash sales is an established practice over the years and it is not an unusual event or transaction of the current year 11 Given below is the total monthly cash sales and corresponding deposits in the bank account. Also given below is the payments made to the suppliers through the bank for purchase of stock. Month Cash Sales Cash deposited in bank Bank payment to Vendors Apr 2016 19,33,476.00 15,90,000.00 15,40,000.00 May 2016 19,41,144.00 8,00,000.00 8,00,000.00 Jun 2016 19,17,312.00 5,72,000.00 5,75,000.00 Jul 2016 18,70,146.00 10,95,000.00 9,45,000.00 Aug 2016 20,70,766.00 18,95,000.00 19,92,000.00 Sept 2016 23,49,692.00 9,90,000.00 10,90,000.00 Oct 2016 25,07,820.00 7,80,000.00 7,80,000.00 Nov 2016 22,54,538.00 18,88,000.00 19,00,000.00 Dec 2016 20,98,868.00 3,64,000.00 21,60,000.00 Jan 2017 15,12,388.00 12,55,500.00 24,74,312.00 Feb 2017 10,94,319.00 11,22,600.00 34,00,000.00 Mar 2017 8,98,259.00 12,26,500.00 30,01,830.00 Total 2,24,48,728.00 1,35,78,600.00 2,06,58,142.00 12. The assessee also had the tendency of saving money in cash for unforeseeable medical emergencies. These savings are generally made in high denomination currency notes for ease and convenience. The source of such savings in cash is from the business receipts. 13 The assessee is staying in a joint family consisting of 15 members. So it was necessary to keep cash for medical emergencies as the assessee with other family members are staying in Village Ashta. Taluka Walva. Dist. Sangli. Printed from counselvise.com ITA No.2575/PUN/2025 [A] 4 Ground No. 3: 14. The provisions of sec 115BEE are not applicable to sec 69A additions for AY 2017-18 15. Without prejudice to whatever stated in para 813 above, and in case, an addition is confirmed by the Hon'ble Tribunal in the present appeal, it is submitted that the newly inserted sec 115BBE is applicable from AY 2018-19 This has been so held by Hon'ble Madras High Court in CIT v SMILE Microfinance Ltd (2025) 479 ITR 172 (Mad). Photocopy of the decision enclosed at Page 19 of this submission.\" Submission of ld.DR : 3. Ld.Departmental Representative(ld.DR) for the Revenue relied on the order of Assessing Officer. Findings & Analysis : 4. We have heard both the parties and perused the records. Assessee is in the business of liquor trade. In this case, during Demonetization Period, Assessee had deposited Rs.15,52,000/-. Out of the said amount, Rs.8,70,000/- were in the form of Demonetized Currency. The deposits of Demonetized Currency were as under : Date Amount 08/11/2016 Rs.3,60,000/- 10/11/2016 Rs.1,50,000/- 11/11/2016 Rs.50,000/- 13/11/2016 Rs.82,000/- 15/11/2016 Rs.2,28,000 Total Rs.8,70,000/- Printed from counselvise.com ITA No.2575/PUN/2025 [A] 5 5. The Assessing Officer has accepted assessee’s explanation regarding the deposits made on 08.11.2016 and 10.11.2016. During the assessment proceedings, Assessee submitted that amount of Rs.3,60,000/- deposited between 11.11.2016 to 15.11.2016 was savings from her proprietary business and family member’s savings. However, Assessing Officer noted that if Assessee had Rs.3,60,000/- prior to Demonetization, why Assessee has not deposited the entire amount immediately and why Assessee has deposited on three different dates. Therefore, AO rejected assessee’s explanation and added Rs.2,50,000/-. Aggrieved by the assessment order, Assessee filed appeal before the ld.CIT(A). 6. Assessee filed an elaborate submission before ld.CIT(A) who confirmed the addition. 7. Aggrieved by the order of ld.CIT(A), Assessee filed appeal before this Tribunal. 8. During the proceedings, it was again submitted that Assessee had tendency of saving money in cash for family needs. It was submitted that Assessee stay in joint family consisting of 15 members in a village. During the proceedings, a chart showing cash Printed from counselvise.com ITA No.2575/PUN/2025 [A] 6 deposits out of Liquor Sale was submitted to demonstrate that Liquor Business generates cash. 9. We have perused all the facts, it is noted that during the year, Assessee’s cash sales was Rs.2,24,48,728/-. It is also observed that throughout the year Assessee has been depositing cash. In these facts and circumstances of the case, having cash of Rs.3,60,000/- for personal needs cannot be ruled out. Therefore, in these facts and circumstances of the case, we direct Assessing Officer to delete the addition of Rs.2,50,000/-. Accordingly, grounds of appeal raised by the Assessee are allowed. 10. In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 26 February, 2026. Sd/- Sd/- VINAY BHAMORE Dr.DIPAK P. RIPOTE JUDICIAL MEMBER ACCOUNTANT MEMBER पपणे / Pune; ददिधंक / Dated : 26 Feb, 2026/ SGR आदेशकीप्रनिनलनपअग्रेनषि / Copy of the Order forwarded to : 1. अपऩलधर्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. नवभधगऩयप्रनिनिनर्, आयकर अपऩलऩय अनर्करण, “एस एम सऩ” बेंच, पपणे / DR, ITAT, “SMC” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. Printed from counselvise.com ITA No.2575/PUN/2025 [A] 7 आदेशधिपसधर / BY ORDER, / / TRUE COPY / / सहधयक रनिस्ट्रधर /Assistant Registrar आयकर अपऩलऩय अनर्करण, पपणे/ITAT, Pune. Printed from counselvise.com "