MUKUND EQUITY DEALERS PRIVATE LIMITED,HOWRAH V. ITO, WARD 4(2), KOLKATA

ITA 1634/KOL/2025

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Mukund Equity Dealers Private Limited appealed against the order of the Ld. Additional/Joint Commissioner of Income Tax (Appeals), Panchkula, which confirmed the addition of Rs. 7,00,000 as unexplained money under section 69A of the Income Tax Act, 1961. The addition was based on the assessee's cash deposits of Rs. 9,50,000 in Specified Bank Notes (SBNs) during the demonetisation period. The Tribunal considered the revised tax audit report and the opening cash balance, which indicated that the deposits were less than the cash available on hand, thus explaining the source of the deposits. Consequently, the Tribunal allowed the appeal, removing the addition made under section 69A.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 848246 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Kolkata
• Assessment Year: 2017-2018
• Appeal Filed On: 23-07-2025
• Other Referred Cases: Chuharmal Vs. Commissioner of Income Tax [1988] 172 ITR 250 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAS MONDAL
• Assessee Lawyers: AMIT AGARWAL
• Section: 143(3); 142(1); 133(6); 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No. 1634/KOL/2025 Assessment Year : 2017-2018 Mukund Equity Dealers Private Limited, 29/1, Ganapath Rai Khemka Lane, Howrah - 711204 [PAN: AABCM9824C] Vs. Income Tax Officer, Ward 4(2), Kolkata Aayakar Bhawan, P-7, Chowringhee Square, Kolkata - 700069 APPELLANT RESPONDENT Assessee by : Amit Agarwal, Advocate Revenue by : Manas Mondal, Sr. DR Date of hearing : 12.03.2026 Date of Pronouncement : 25.03.2026 O R D E R This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by the Ld. Additional/Joint Commissioner of Income Tax (Appeals), Panchkula [hereinafter referred to as “the Ld. CIT(A)] dated 17.06.2025, DIN & order No. ITBA/APL/S/250/2025-26/1077096499(1) on the following grounds of appeal: “1. That the Appellate Order dated 17th June, 2025 passed by the Ld. Addl/JCIT(Appeals), Panchkula is illegal, invalid and bad-in-law being passed against the facts and laws applicable in the instant case. 2. That the impugned assessment-order passed by the Assessing Officer u/s 143(3) of the Act on 30th December, 2019 are liable to be quashed since the same were based on issue of a defective Notice, dated 24.09.2018, issued u/s Printed from counselvise.com 2 ITA No. 1634/KOL/2025 Mukund Equity Dealers Pvt. Ltd. 143(2) of the Act as the same was not issued in the Format prescribed in CBDT Circular No.F NO.225/157/2017/ITA.II dated 23.06.2017 3. That the learned AddI/ JCIT(Appeals), Panchkula erred in arbitrarily confirming the addition to the tune of Rs.7,00,000 on estimated basis, out of the admitted cash deposit of Specified Bank Notes (SBNs) of Rs.9,50,000, which addition made as unexplained money u/s. 69A of the Income Tax Act, 1961 on the basis of suspicions, surmises and conjectures and preponderance of probabilities alone and further without bringing on record any credible documentary evidences 4. That the learned AddI/ JCIT(Appeals), Panchkula erred in arbitrarily confirming the addition to the tune of Rs. 7,00,000 as unexplained money u/s. 69A of the Income Tax Act, 1961 by arbitrarily contending that the AO's decision to add the amount under section 69A implies that the nature and source of the cash deposits through SBNs were not found to be adequately explained by the 5 That the learned AddI/ JCIT(Appeals), Panchkula erred in arbitrarily confirming the addition to the tune of Rs.7,00,000 as unexplained money u/s. 69A of the Income Tax Act, 1961 although no defect or lacuna was pointed in the documentary evidences furnished by the Assessee Company and more so when admittedly the books of accounts of the Assessee was not rejected by Assessing Officer and as there is finding that the entries recorded in the books of accounts were false or fabricated. 6. That the learned AddI/ JCIT(Appeals), Panchkula erred in arbitrarily confirming the addition to the tune of Rs.7,00,000 as unexplained money u/s. 69A of the Income Tax Act, 1961, although evidently the Assessing Officer had failed to conduct relevant enquiries, without appreciating that the Ld.CIT(A) was duty bound to conduct such enquiries himself and/or to direct the AO to conduct relevant enquiry in the facts of the case 7 That the learned National Faceless Appeal Centre, Delhi had erred in confirming the impugned addition of Rs. 12,79,500/- made by the Assessing Officer under section 69A of the Income Tax Act, 1961 r.w.s 115BBE without appreciating that the said provisions of section 115BBE of the Act will not apply to the cash deposited by the Assessee during the demonetization period, which falls under FY 2016-17 relevant to AY 2017-18, as the said provisions will be applicable from the Financial Year beginning from 01st April, 2017 relevant to Assessment Year 2018-19.” 2. Briefly stated the facts of the case are that as per the information available with the income tax department that the assessee has deposited cash of Rs. 47,89,527/- in bank account for the FY 2016-17 demonetisation period from 08.11.2016 to 31.12.2016 cash deposited amount of Rs. 9,50,000/- was in the forms of demonetised currency is Printed from counselvise.com 3 ITA No. 1634/KOL/2025 Mukund Equity Dealers Pvt. Ltd. Rs. 13,37,000/-. The assessee filed return of income u/s 139 of the Act on 07.11.2017 declaring income of Rs. 4,44,190/-. The case was selected for scrutiny manually as per CBDT Instruction No. 4/2018. Accordingly, notice u/s 143(2) of the Act dated 04.09.2018 and notice u/s 142(1) of the Act was issued to the assessee and subsequently other statutory notices were issued to the assessee and show cause notice was issued to the assessee dated 25.11.2017 in the show cause notice, it was noticed that during the demonetisation period the assessee has cash deposited of Rs. 47,89,527/- but in the audited financial statement, the demonetised currency as reported at Rs. 13,37,000/-. Further, as per the information received from Bank Branch Manager, Karyr Vysya Bank Ltd., Salt Lake Branch, AA-47, Sector-1, Kolkata – 700064 maintained with A/c No. 3106135000001952 u/s 133(6) of the Act which was received by the AO on 26.11.2019 and the AO relied on the judgment of Hon’ble Apex Court in the case of Chuharmal Vs. Commissioner of Income Tax reported in [1988] 172 ITR 250 (SC) in respect of show cause notice, the assessee furnished reply and the AO observed that the cash deposits during the demonetisation period as per financial statements, the demonetised currency for Rs. 13,37,000/- which were remained unexplained the AO noted that the assessee is unable to explain the source of cash deposits and treated it as unexplained money u/s 69A of Printed from counselvise.com 4 ITA No. 1634/KOL/2025 Mukund Equity Dealers Pvt. Ltd. the Act. Accordingly, the income was added u/s 69A of the Act at Rs. 13,37,000/- and income was assessed at Rs. 17,81,190/-. 3. Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A). During the course of appellate proceedings, the assessee filed detailed reply which is extracted in the order of Ld. CIT(A). It was submitted that the assessee company is associated/distributor of Patanjali Ayurveda Ltd. AFMCH Company and started business on 01.04.2016, on query of the distributorship of Patanjali Ayurveda Limited, wherein goods are sold total cash and credit and collection from customers were made mostly in cash which were deposited in the bank account and utilised for making purchase of trading goods. The assessee company deposited the cash and aggregate amount of Rs. 29,57,102/-. During the demonetisation period which has been offered for tax and because of wrong reporting the figures in the tax audit report revised tax audit report it was filed during the course of assessment proceedings the AO brushed aside it and alleged that no documents were filed. The Ld. CIT(A) noted that the actual cash deposited during demonetisation period is Rs. 9,50,000/- which is also tallied with the information available with the AO at the time of reopening proceedings. The Ld. CIT(A) allowed the relief to the assessee of Rs. 2,50,000/- and sustained the addition of Rs. 7 lacs. Accordingly, he partly allowed the appeal of the assessee. Printed from counselvise.com 5 ITA No. 1634/KOL/2025 Mukund Equity Dealers Pvt. Ltd. 4. Aggrieved from the above order, the assessee filed appeal before the ITAT. 5. The Ld. Counsel reiterated the submissions made before the lower authorities and submitted that the Ld. CIT(A) has arbitrarily confirming the addition of Rs. 7 lacs on estimated basis out of cash deposit of Rs. 9,50,000/- in SBNs, whereas the revised tax audit report filed by the assessee was accepted the tax auditor wrongly reported in the tax audit report which was revised later on and filed with the income tax department. It was also field during the course of assessment proceedings as well as the first appellate proceedings, the actual both cash deposit was Rs. 29,57,102/- during demonetisation period due to typographical mistake, the cash deposited in SBNs was shown at Rs. 13,37,000/- instead of Rs. 9,50,000/-, it was also wrongly mentioned in the audit balance sheet. The opening balance on 08.11.2016 was Rs. 47,87,527.47/- instead of Rs. 12,81,482.17/- of all these while rectified. He submitted that the actual cash deposited in SBNs 9,50,000/- which is less than opening cash in hand on 09.11.2016, therefore, no addition should have been made. Revised tax audit report has been accepted by the revenue, therefore, there should not be any addition u/s 69A of the Act because the opening balance has also been accepted. 6. On the other hand, the Ld. DR relied on the order of lower authorities and submitted that the assessee himself reported wrong Printed from counselvise.com 6 ITA No. 1634/KOL/2025 Mukund Equity Dealers Pvt. Ltd. figures which was rectified later which is best known to the assessee the audit report is prepared on the basis of books of accounts by an independent Accountant as defined u/s 288 of the Act which was revised therefore, he doubted on the veracity of audit report. 7. Considering the rival submissions and perusing the entire material available on record and the orders of authorities below. I noted that the case has been selected for the cash deposited during the demonetisation period of Rs. 9,50,000/- and there is a difference in the audit report wherein it was mentioned that Rs. 13,37,000/- later on the audited report was revised before completion of assessment and the Ld.CIT(A) has also accepted the tax audit report and as per the revised report the opening cash balance on 09.11.2016 is Rs. 12,81,482.17/- and originally it was Rs. 47,87,527.47/-. Therefore, considering the closing balance on 08.11.2016 the actual cash deposited in the SBNs are Rs. 9,50,000/- which is less than closing balance appearing in the books on 08.11.2016. Therefore, the cash deposited in SBNs are explained and no addition shall be called for. 8. In the result, appeal of the assessee is allowed. Order pronounced on 25.03.2026. Sd/- (Laxmi Prasad Sahu) Accountant Member Printed from counselvise.com 7 ITA No. 1634/KOL/2025 Mukund Equity Dealers Pvt. Ltd. Dated: 25.03.2026 AK, Sr. P.S. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "