ITAT Raipur Deletes Section 69A Addition on Demonetisation Cash Deposits Recorded in Regular Business

Background of the Dispute

The Raipur Bench of the Income Tax Appellate Tribunal in Shri Tukaram Vs ITO examined whether cash deposits in Specified Bank Notes (SBNs) made during the demonetisation window could be treated as unexplained money under Section 69A of the Income Tax Act 1961, when such deposits were claimed to be sourced from recorded business receipts.

The appeal related to Assessment Year 2017-18, arising from an order passed by the Ld. CIT(Appeals)/NFAC, Ahmedabad dated 28.01.2025, wherein an addition of Rs. 2,29,500 made by the Assessing Officer was confirmed. The assessee carried the matter to the Tribunal.

Issues Raised in Appeal

The assessee challenged the order of the Ld. CIT(Appeals)/NFAC on multiple grounds, broadly contending that:

  • The order of the CIT(A)/NFAC was contrary to the factual matrix and applicable law.
  • The Assessing Officer, ITO Ward-Dhamtari, erred in treating cash deposits of Rs. 2,29,500 in SBNs during the demonetisation period (denominations of Rs. 500 and Rs. 1000) as unexplained money under Section 69A, despite the source of cash having been duly explained.
  • The deposits represented business receipts arising from sale of mobile recharge coupons, properly accounted for in the regular books of account, which were never rejected by the Assessing Officer.
  • Acceptance of SBNs was legally permissible up to 31.12.2016, and merely depositing such notes in a bank could not, by itself, render the money unexplained.
  • It was not the Revenue’s case that the deposits originated from any undisclosed activity or were part of an attempt to launder unaccounted income.

The assessee also reserved the right to modify, add, or withdraw grounds at the time of hearing.

Facts Considered by the Tribunal

Nature of Business and Cash Deposits

  • The assessee was engaged in the business of mobile recharge receipts.
  • During the demonetisation period, the assessee deposited Rs. 2,29,500 in SBNs into a bank account.
  • The Assessing Officer invoked Section 69A and treated the amount as unexplained money, on the sole ground that the deposits comprised SBNs during the demonetisation phase.
  • The Ld. CIT(Appeals)/NFAC affirmed the addition without disputing the core facts of the business.

Acceptance of Books and Business Turnover

The Tribunal highlighted the following undisputed factual aspects:

  1. Business Acceptance

    • The Revenue authorities accepted that the assessee was carrying on the business of selling mobile recharge coupons.
    • There was no challenge to the genuineness of the business itself.

  2. Purchase and Sales Not Disputed

    • The purchases and sales recorded by the assessee were not questioned.
    • No discrepancy was pointed out in the trading results or declared turnover.

  3. Books of Account Accepted

    • The books of account were neither rejected nor found to be unreliable.
    • No defects were brought on record by the Assessing Officer in the method of accounting or maintenance of records.