INCOME TAX OFFICER, WARD-4(1)(10, ALIGARH V. SONU VARSHNEY, ALIGARH

ITA 495/AGR/2025

AI Insights

The case involves an appeal by the Income-tax Officer against the order of the Commissioner of Income-tax (Appeals), which had deleted the additions made by the Assessing Officer regarding unexplained cash credits and contributions to the Pradhan Mantri Garib Kalyan Yojna during the demonetization period. The assessee, Sonu Varshney, had deposited a significant amount of cash, which was scrutinized and initially deemed unexplained by the Assessing Officer. However, the CIT(A) reversed this decision, leading to the Revenue's appeal. The assessee also filed a cross-objection challenging the applicability of section 115BBE for the assessment year 2017-18 based on a decision by the Hon'ble Madras High Court.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 830256 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Agra
• Assessment Year: misc
• Appeal Filed On: 30-10-2025
• Other Referred Cases: S.M.I.L.E. Microfinance Ltd. vs. ACIT, W.P. (MD) No. 2078 of 2020 & 1742 of 2020
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: RAJ KUMAR; SURAJ GUPTA
• Keywords: Unexplained cash credit; Tax effect
• Section: 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 495/Agr/2025 Assessment Year: 2017-18 Income-tax Officer, Ward 4(1)(1), Aligarh. Vs. Sonu Varshney, Pratishtha, Pragati Vihar, Ramghat Road, Aligarh. PAN :ACUPV9679E (Appellant) (Respondent) C.O. 08/Agr/2025 (in ITA No. 495/Agr/2025) Assessment Year: 2017-18 Sonu Varshney, Pratishtha, Pragati Vihar, Ramghat Road, Aligarh. Vs. Income-tax Officer, Ward 4(1)(1), Aligarh. (Appellant) (Respondent) Assessee by Sh. Raj Kumar, C.A. & Sh. Suraj Gupta, Advocate. Department by Sh. Shailendra Srivastava, Sr. DR Date of hearing 17.12.2025 Date of pronouncement 15.01.2026 ORDER PER : S. RIFAUR RAHMAN, ACCOUNTANT MEMBER: The Revenue has filed this appeal against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 20.08.2025 for the Assessment Year 2017-18. Assessee has also filed cross-objection in this appeal. Printed from counselvise.com ITA No.495 & CO 08/Agr/2025 2 | P a g e 2. Brief facts of the case are, the case of the assessee was selected for scrutiny on the basis that the assessee has deposited cash during demonetization period of Rs.1,71,50,000/-. The assessee did not submit the relevant evidences before the Assessing Officer nor produced any books of account, cash book, ledger etc. during the assessment proceedings. The Assessing Officer observed on perusal of cash flow chart that the assessee did not make cash sales in the preceding month. After considering the opening cash in hand during the month of November, 2016 amounting to Rs.1,20,246/- and Rs.20,00,000/- declared in PMGKY-2016, the difference of Rs.1,50,29,754/- was considered as unexplained cash credits. Accordingly, he proceeded to make addition u/s. 68 of the Income- tax Act, 1961 (“the Act” for short) and taxed the same u/s. 115BBE of the Act. Further, he observed that the assessee has contributed in Pradhan Mntri Garib KalyanYojna to the extent of Rs.20,00,000/- in cash. Accordingly, he proceeded to make the above said addition of Rs.20,00,000/-. 3. Aggrieved with the above order, the assessee preferred an appeal before NFAC, Delhi and the assessee filed a detailed submission before the learned CIT(A). The same is reproduced by the learned CIT(A) at pages 2 to 40 of the impugned order. After considering the detailed submissions of the assessee, learned CIT(A) deleted the additions made Printed from counselvise.com ITA No.495 & CO 08/Agr/2025 3 | P a g e by the Assessing Officer and found that the source of cash is out of business carried on by the assessee and also deleted the amount contributed in Pradhan Mantri Garib KalyanYojna. 4. Aggrieved with the above order, Revenue is in appeal before us and at the same time, assessee has also filed a cross-objection. 5. At the time of hearing, learned AR of the assessee submitted that the appeal preferred by the Revenue is below the tax effect as per Circular issued by CBDT No. 09/2024 dated 17.09.2024. Further, he submitted that the assessee has raised ground No.3 in cross objection, as per which, the provisions of section 115BBE are not applicable for assessment year 2017- 18 based on the decision of Hon’ble Madras High Court in the case of S.M.I.L.E. Microfinance Ltd. vs. ACIT, W.P. (MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024. By applying the decision of Hon’ble Madras High Court, the tax should be calculated on the basis of normal tax rate of 30%. It being so, the total tax demand on the additions made by the Assessing Officer would be Rs.53,40,823/- as under : Tax @ 30% on 1,50,29,754/- 45,08,924/- Surcharge @ 15% 6,76,339/- Education Cess @ 3% 1,55,558/- 53,40,823/- 6. Further, learned AR submitted that the additions made u/s. 68 does not fall under exceptions issued by the CBDT vide Circular No. 05/2024 Printed from counselvise.com ITA No.495 & CO 08/Agr/2025 4 | P a g e dated 15.03.2024, as referred in para-3 of the Circular dated 17.09.2024. He filed a copy of the said circulars. 7. On the other hand, learned DR relied on the findings of the lower authorities. 8. Considered the rival submissions and material placed on record. 9. After giving effect to the decision of Hon’ble Madras High Court in the case of S.M.I.L.E. Microfinance Ltd.(supra), the tax demand relating to the additions proposed by the Assessing Officer is reduced to Rs.53,40,823/-, which is below the monetary limit fixed by CBDT, to which the Revenue cannot contest in appeal before ITAT. 10. In the result, Revenue’s appeal is dismissed and the cross-objection filed by assessee is partly allowed. Order pronounced in the open court on 15.01.2026. Sd/- Sd/- (SUNIL KUMAR SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 15.01.2026 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra Printed from counselvise.com "