MALINI JIGNESH DOSHI,AHMEDABAD V. ITO WARD 5(3)(1), AHMEDABAD

ITA 755/AHD/2025

AI Insights

Malini Jignesh Doshi appealed against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 17,63,000 as unexplained cash deposits during the demonetization period. The Assessing Officer had initially treated these deposits as unexplained under section 69A of the Income Tax Act, applying tax as per section 115BBE. The Tribunal noted that the assessee had made substantial cash withdrawals prior to the demonetization, and there was no evidence to suggest that these funds were used for other purposes. The Tribunal also considered the CBDT Instruction No. 3/2017, which advises verification of claims of redeposits from earlier withdrawals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783777 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 09-04-2025
• Other Referred Cases: Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC), N. Balakrishnan v. M. Krishnamurthy [(1998) 7 SCC 123], Anil Goel v. CIT [2008] 306 ITR 212 (P&H), Ajit Bapu Satam v. DCIT [2023] 147 taxmann.com 222 (Mumbai - Trib.), Ajay Data v. ACIT [2025] 171 taxmann.com 308 (Jaipur - Trib.), M/s. Murlidhar Ice Cream & Sweet Parlour v. ITO (ITA No. 531/Ahd/2012, ITAT Ahmedabad)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA
• Assessee Lawyers: ANKIT CHOKSI
• Keywords: Condonation of delay; Principle of natural justice; Source of fund
• Section: 143(3); 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.755/Ahd/2025 (Assessment Year: 2017-18) Malini Jignesh Doshi, A-104, Sugam Avenue, Vikas Gruh Road, Opp. Mahalaxmi Complex, Paldi, Ahmedabad-380007 Vs. Income Tax Officer, Ward-5(3)(1), Ahmedabad [PAN No.AGZPD5058Q] (Appellant) .. (Respondent) Appellant by : Shri Ankit Choksi, AR Respondent by: Shri Ravindra, Sr. DR Date of Hearing 03.11.2025 Date of Pronouncement 06.11.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 27.03.2024 passed for A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal: “1. Ld. CIT(A) erred in law and on facts in confirming the addition made by the AO of Rs. 17,63,000/-, representing the cash deposits made in bank accounts of appellant during the demonetization period, u/s 69A of the I.T. Act. 2. The AO and Ld. CIT(A) erred in law and acted against the principles of natural justice in not considering the documentary evidences submitted by appellant during the assessment proceeding which had effect of proving the source of the said cash deposits of Rs. 17,63,000/-. Printed from counselvise.com ITA No. 755/Ahd/2025 Malini Jignesh Doshi vs. ITO Asst.Year –2017-18 - 2– 3. The Appellant reserves the right to add, alter, amend and withdraw any of the above grounds of appeal.” Application for condonation of delay: 3. The assessee has filed an application for condonation of delay of 313 days in filing the present appeal along-with an Affidavit. The assessee has submitted that the delay in filing of appeal occurred due to circumstances beyond her control. The assessee has submitted that the delay was caused because all communications during the appellate proceedings before the learned CIT(Appeals) were made to her previous consultant’s email address, and the assessee, being unaware of the technical procedure, relied entirely on the said consultant for necessary compliances. It was only upon making inquiries in March 2025 that the assessee came to know that the CIT(Appeals) order had been passed on 27.03.2024 without her knowledge. Immediately thereafter, the assessee appointed a new consultant and filed the present appeal. 4. Considering the reasons stated in the Affidavit, which demonstrate that the delay was neither intentional nor deliberate but occurred due to circumstances beyond the assessee’s control, we find sufficient cause to condone the delay. In view of the principles laid down by the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC) and N. Balakrishnan v. M. Krishnamurthy [(1998) 7 SCC 123], which have held that substantial justice should prevail over technical considerations, we hereby condone the delay of 313 days in filing the appeal. Accordingly, the application for condonation of delay stands allowed and the case is allowed to be heard on Merits. Printed from counselvise.com ITA No. 755/Ahd/2025 Malini Jignesh Doshi vs. ITO Asst.Year –2017-18 - 3– On Merits 5. The brief facts of the case are that the assessee is an individual who filed her return of income for Assessment Year 2017-18 declaring a total income of Rs. 3,51,900/-. The case of the assessee was selected for limited scrutiny for verification of cash deposits made during the demonetization period. During the course of assessment proceedings, the Assessing Officer observed that the assessee had deposited total cash of Rs. 17,63,000/- in her bank accounts maintained with ICICI Bank and The Mahila Vikas Co- operative Bank during the demonetization period. The Assessing Officer issued various notices under sections 143(2) and 142(1) of the Act calling for details from the assessee regarding the source of the cash deposits, but there was no compliance on part of the assessee. In the absence of any explanation or documentary evidence, the Assessing Officer completed the assessment under section 143(3) of the Act and treated the cash deposits aggregating to Rs. 17,63,000/- as unexplained money under section 69A of the Act and applied the tax at the rate specified in section 115BBE of the Act. Accordingly, the assessee computed the total income of the assessee at Rs. 21,14,900/- and penalty proceedings under section 271AAC were also initiated separately. 6. The assessee preferred an appeal before the learned CIT(Appeals) against the addition made by the Assessing Officer. During the appellate proceedings before us CIT(Appeals), he issued several notices to the assessee, but there was no compliance on any of the scheduled dates. The CIT(Appeals) noted that despite sufficient opportunities provided, the assessee failed to make any submission or furnish any documentary evidence Printed from counselvise.com ITA No. 755/Ahd/2025 Malini Jignesh Doshi vs. ITO Asst.Year –2017-18 - 4– in support of her contentions. Relying on the observations of the Assessing Officer and placing reliance on the judgment of the Hon’ble Punjab & Haryana High Court in Anil Goel v. CIT [2008] 306 ITR 212 (P&H), the CIT(Appeals) held that in the absence of any submission, no independent reasons were required to be recorded for affirming the Assessing Officer’s order. Accordingly, the CIT(Appeals) confirmed the addition of Rs. 17,63,000/- made under section 69A and dismissed the appeal of the assessee. 7. The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing her appeal. Before us, the learned counsel for the assessee submitted that both the Assessing Officer and the CIT(Appeals) have failed to appreciate the factual and evidentiary position on record. The Counsel for the assessee submitted that the cash deposits of Rs. 17,63,000/- made during the demonetization period were fully explainable and arose from (i) earlier cash withdrawals of Rs. 10,00,000/- from the Mahila Vikas Co- operative Bank prior to November 2016, and (ii) accumulated savings and income disclosed in earlier years amounting to Rs. 7,63,000/-. The counsel further pointed out that the assessee had consistently filed income tax returns in preceding years declaring regular sources of income such as tuition fees, rent, and interest, all of which were in cash and duly disclosed to the Income Tax Department. It was further submitted that the bank statements clearly reflect the earlier withdrawals made during June and July 2016 aggregating to Rs. 10,00,000/-, and there is no finding by the Assessing Officer that such withdrawn cash was utilized elsewhere. Hence, the subsequent redeposit of such cash during the demonetization period cannot be treated as unexplained. The counsel relied on judicial precedents including Ajit Bapu Satam v. Printed from counselvise.com ITA No. 755/Ahd/2025 Malini Jignesh Doshi vs. ITO Asst.Year –2017-18 - 5– DCIT [2023] 147 taxmann.com 222 (Mumbai - Trib.), Ajay Data v. ACIT [2025] 171 taxmann.com 308 (Jaipur - Trib.), and M/s. Murlidhar Ice Cream & Sweet Parlour v. ITO (ITA No. 531/Ahd/2012, ITAT Ahmedabad), wherein it was held that when cash deposits are traceable to earlier withdrawals and there is no evidence of alternate utilization, such deposits cannot be treated as unexplained under section 69A. The Counsel also drew attention to CBDT Instruction No. 3/2017 dated 21.02.2017, which directs Assessing Officers to verify claims of redeposits of earlier withdrawals and past savings in a reasonable manner keeping in view normal human conduct. The Counsel for the assessee submitted that the impugned addition made solely on presumption and without verification of the assessee’s explanation or documentary evidences on record is unsustainable in law. 8. The learned Departmental Representative, on the other hand, relied on the findings of the lower authorities. 9. We have heard the rival contentions and perused the material on record. It is evident from the records that the assessee had made substantial cash withdrawals aggregating to Rs. 10,00,000/- from her Mahila Vikas Co- operative Bank account prior to the demonetization period. The Assessing Officer has not disputed these withdrawals nor has he brought any material to show that such cash was utilized for any other purpose. Therefore, the assessee’s explanation that the subsequent deposits during the demonetization period were made from such earlier withdrawals cannot be brushed aside without any contrary material. The legal position in this regard is well settled. The Hon’ble ITAT Ahmedabad in M/s. Murlidhar Ice Printed from counselvise.com ITA No. 755/Ahd/2025 Malini Jignesh Doshi vs. ITO Asst.Year –2017-18 - 6– Cream & Sweet Parlour v. ITO (ITA No. 531/Ahd/2012) held that where cash deposits in a bank account are made out of earlier withdrawals and there is no evidence of their alternate use, such deposits cannot be treated as unexplained. Similar view has been taken in Ajit Bapu Satam v. DCIT [2023] 147 taxmann.com 222 (Mumbai - Trib.) and Ajay Data v. ACIT [2025] 171 taxmann.com 308 (Jaipur - Trib.). In all these cases, the principle applied is that unless the Assessing Officer demonstrates that the earlier withdrawn cash was used elsewhere, the redeposit thereof cannot give rise to addition under section 69A of the Act. 10. Further, the CBDT Instruction No. 3/2017 dated 21.02.2017 also supports this approach, directing officers to consider claims of redeposits from earlier withdrawals and past savings after due verification. In the present case, the assessee has been regularly filing returns and offering her income from tuition, rent, and interest to tax. Her explanation that the remaining Rs. 7,63,000/- was from accumulated household savings and disclosed income of preceding years is reasonable and supported by record. Considering the smallness of income, the modest background of the assessee, and the absence of any material to suggest otherwise, the explanation offered deserves acceptance. 11. In view of the above facts and the judicial precedents discussed, we are of the considered opinion that the addition of Rs. 17,63,000/- made under section 69A of the Act is unsustainable. Accordingly, the same is directed to be deleted. Printed from counselvise.com ITA No. 755/Ahd/2025 Malini Jignesh Doshi vs. ITO Asst.Year –2017-18 - 7– 12. The appeal of the assessee is allowed, and the addition of Rs. 17,63,000/- made under section 69A of the Act is hereby deleted. 13. In the result, the appeal filed by the assessee is allowed. This Order pronounced in Open Court on 06/11/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 06/11/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 06.11.2025 (Hon’ble Member dictated on his dragon software) 2. Date on which the typed draft is placed before the Dictating Member 06.11.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .11.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 06.11.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 06.11.2025 7. Date on which the file goes to the Bench Clerk 06.11.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………… 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "