ITAT Agra Rules Declared Commission Income Qualifies as Explained Source Against Demonetisation-Era Cash Deposits
Case Overview: Anshuman Agarwal Vs ACIT (ITAT Agra)
The Income Tax Appellate Tribunal, Agra Bench, delivered a significant ruling in Anshuman Agarwal Vs ACIT, partly allowing the assessee's appeal pertaining to Assessment Year 2017-18. The dispute revolved around additions made under Section 69A of the Income Tax Act, 1961 on account of cash deposits made during the demonetisation period. The Tribunal's order, pronounced on 09th April, 2026, provides important clarification on how income already declared in a return of income should be treated when scrutinising cash deposits during demonetisation scrutiny proceedings.
Background of the Case
Profile of the Assessee and Return Filing
The assessee in this matter was a salaried individual who also earned commission income through property dealing activities, including renting of flats and residential houses. He filed his return of income on 15.08.2017, declaring a total income of Rs. 28,90,710/-. Along with salary income, the return also disclosed Rs. 4,32,000/- as commission income and Rs. 90,000/- as agricultural income.
Why the Case Was Selected for Scrutiny
The case was flagged under the Computer Assisted Scrutiny Selection (CASS) system for limited scrutiny, primarily on account of disproportionately large cash deposits made during the demonetisation period compared to the income declared in the return. This was a common basis for scrutiny selection across a large number of assessees in that period.
Assessment History: A Multi-Layered Procedural Journey
Original Assessment Under Section 143(3)
The original assessment was completed under Section 143(3) of the Income Tax Act, 1961 on 22.11.2019, wherein the Assessing Officer assessed total income at Rs. 38,19,815/-, making an addition of Rs. 9,29,105/- over the returned income.
Interference by Principal CIT and Fresh Assessment
Subsequently, the Principal CIT-1, Agra exercised revisionary jurisdiction and set aside the original assessment order dated 22.11.2019, treating it as erroneous and prejudicial to the interest of Revenue. The matter was remanded back to the Assessing Officer for de novo assessment.
Proceedings in the Set-Aside Assessment
After issuance of multiple notices in the fresh proceedings, the assessee filed a reply dated 23.03.2020. In this reply, it was clarified that out of the proposed addition of Rs. 22,75,000/-, an amount of Rs. 7,72,605/- represented the opening cash in hand as on 01.04.2016, duly reflected in the receipts and payments account submitted for the relevant year. The Assessing Officer accepted this explanation for the opening cash balance but proceeded to sustain the remaining addition.