NIKHIL BECTOR,SARABHA NAGAR LUDHIANA V. DCIT, CIRLCE-1, LUDHIANA

ITA 762/CHANDI/2025

AI Insights

The case revolves around an appeal by Nikhil Bector against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 25,52,000 as unexplained cash deposits during the demonetization period in India. The Assessing Officer had initially treated these deposits as unexplained, rejecting the assessee's explanation that they were from prior bank withdrawals intended for a family marriage. The Tribunal examined the validity of the withdrawals and the occasion for the expenditure, ultimately finding that the assessee's explanation was plausible and supported by the circumstances of the demonetization announcement and the timing of the withdrawals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822647 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 26-05-2025
• Other Referred Cases: Shiv Charan Das (P&H HC), Gurjeet Singh (ITAT Chandigarh)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: ASHISH AGGARWAL; C.A
• Keywords: Principle of natural justice

Judgement Text

"आयकरअपीलीयअिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमारअŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM &SHRI. MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No. 762/Chd/ 2025 िनधाŊरणवषŊ / Assessment Year : 2017-18 Nikhil Bector 13-C, Sarabha Nagar, Ludhiana-141001 Punjab बनाम The DCIT Circle-1 Ludhiana ˕ायी लेखासं./PAN NO: ALCPB3392D अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओरसे/Assessee by : Shri Ashish Aggarwal, C.A राजˢकी ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 23/12/2025 उदघोषणा की तारीख/Date of Pronouncement : 24/12/2025 आदेश/Order PER LALIET KUMAR, J.M: This appeal by the Assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 29/04/2024 for the Assessment Year 2017-18. 2. In the present appeal Assessee has raised the following grounds: 1. That the Ld. CIT(A), NFAC, has erred in deciding the appeal of the assessee without affording reasonable opportunity in as much as the assessee had requested for personal hearing through Video Conferencing (VC) which was not given. There by the order of Ld. CIT (A) is against the principle of natural justice and deserves to be quashed. 2. That the Ld. CIT(A), NFAC has erred in confirming the addition of a sum of Rs. 25,52,000/- under section 69A on account of cash deposited by the assessee out of cash in hand available ignoring the submissions made in respect of the said deposits. Printed from counselvise.com 2 3. That in any case the disallowance made is against the law and facts of the cases. 4. That the learned Assessing Officer has erred in charging interest u/s 234B, 234C and 234D of the Income Tax Act, 1961. 5. That the appellant craves to amend, alter, delete or supplement any ground of appeal before the appeal is finally heard and disposed off. 3. Briefly, the facts of the case are that the assessee filed a return of income on 01/08/2017. The case was selected for scrutiny to verify large cash deposits during the demonetization period. The Assessing Officer (AO) observed that the assessee deposited cash totaling Rs. 25,52,000/- on 10.11.2016 and 15.11.2016. The AO rejected the explanation that these deposits originated from prior bank withdrawals and treated the same as unexplained money. (i) The assessee filed the appeal before the Ld. CIT(A), however, no relief has been granted to the assessee. (ii) Now the assessee is in appeal before us. 4. The learned AR contended that the lower authorities erred in ignoring the availability of cash-in-hand from recorded withdrawals. The withdrawals made by the assessee during 2016 are summarized as follows: Date of Withdrawal Amount (in Rs.) Purpose (as per Record) 04.05.2016 2,00,000/- Personal expenses 31.08.2016 2,00,000/- Personal expenses 02.09.2016 5,00,000/- Cousin's Marriage 09.09.2016 2,00,000/- Personal expenses 17.09.2016 5,00,000/- Cousin's Marriage 06.10.2016 7,00,000/- Cousin's Marriage 14.10.2016 2,50,000/- Cousin's Marriage 24.10.2016 2,00,000/- Personal expenses 28.10.2016 5,00,000/- Cousin's Marriage Total 32,50,000/- Printed from counselvise.com 3 5. The AR submitted that these funds were accumulated for a family marriage held on 11.11.2016. Due to the demonetization announcement on 08.11.2016, the unutilized cash was redeposited. 6. The learned DR supported the lower authorities, arguing that withdrawals for specific purposes should have been spent and that accumulation fails the test of human probabilities. 7. We have perused the record and considered the rival submissions. The core of the dispute rests on whether the cash deposited during demonetization can be linked to prior withdrawals. 8. Upon careful examination, we observe that the Revenue has not disputed two critical factual components:  Validity of Withdrawals: The Assessing Officer and the Ld. CIT(A) have not doubted the factum or the quantum of the cash withdrawals totaling Rs. 32,50,000/- made from the assessee's bank accounts.  Occasion for Expenditure: The lower authorities have not doubted the occurrence of the assessee's cousin's marriage, which took place on 11.11.2016. 9. The rejection of the assessee's explanation is based solely on the \"theory of human probability,\" assuming that cash withdrawn over a period of time \"must have been spent\". However, it is a well-recognized practice in Indian society to accumulate cash over several months in anticipation of a significant family event like a wedding. The sudden announcement of demonetization on 08.11.2016 fundamentally altered the utility of such cash holdings. It is entirely plausible and indeed logical that an assessee, faced with the prospect of unspent high-denomination notes becoming invalid, would seek to redeposit them into his bank account. 10. The Revenue cannot sustain an addition under Section 69A on a mere presumption of expenditure when the withdrawal from a disclosed source is Printed from counselvise.com 4 admitted and a legitimate occasion for holding such cash exists. Following the judicial precedents in Shiv Charan Das (P&H HC) and Gurjeet Singh (ITAT Chandigarh), we have that in the absence of evidence showing alternate utilization of the withdrawn funds, the source of the subsequent deposit stands explained. The proximity of the withdrawals to the marriage date and the subsequent demonetization announcement form a coherent and credible chain of events that favours the assessee. 11. Accordingly, the addition of Rs. 25,52,000/- under Section 69A is deleted. 12. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 24/12/2025. Sd/- Sd/- मनोज क ुमारअŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखासद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟/JUDICIAL MEMBER AG आदेशकी Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकरआयुƅ/ CIT 4. आयकरआयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकरअपीलीयआिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "