Petrol Pump Cash Deposits During Demonetisation: ITAT Dehradun Restricts Section 68 Addition to Rs. 5 Lakh

Case Overview: Sanjay Tewari Vs Circle-2(1)(1) (ITAT Dehradun)

The Income Tax Appellate Tribunal, Dehradun Bench, delivered a significant ruling in Sanjay Tewari Vs Circle-2(1)(1) (ITAT Dehradun) pertaining to Assessment Year 2017-18. The appeal arose from additions made under Section 68 of the Income Tax Act, 1961 in respect of cash deposits made during the demonetisation period. The Tribunal partially allowed the appeal, substantially curtailing the confirmed addition and directing that the assessee be assessed under the normal tax provisions rather than the higher-rate provisions of Section 115BBE.

Background and Factual Matrix

Identity of the Assessee and Nature of Business

The assessee in this case is an individual who operates a petrol pump functioning under the dealership of Bharat Petroleum Corporation Ltd. The business, by its very nature, involves significant cash transactions on a day-to-day basis. Petrol pumps, particularly those falling within what may be characterised as the unorganised retail fuel sector, routinely handle large volumes of cash receipts from customers, making cash-intensive turnover an inherent characteristic of such operations.

Cash Deposits During Demonetisation

Following the Government of India's demonetisation announcement in November 2016, a large number of assessees deposited cash in their bank accounts, which subsequently attracted scrutiny from the Income Tax Department. In the present case, the assessee deposited the following amounts during the demonetisation period:

  • Rs. 2,05,24,000/- — primary cash deposit under scrutiny
  • Rs. 10,50,000/- — additional cash deposit also subject to addition

These deposits were treated as unexplained cash credits under Section 68 of the Income Tax Act, 1961, and added to the assessee's income in the assessment order dated 31.12.2019, passed under Section 143(3) of the Act.

Proceedings Before Lower Authorities

Assessment Order

The Assessing Officer, upon examining the cash deposits, concluded that the assessee had failed to satisfactorily explain the source and nature of these deposits. Accordingly, both the amounts — Rs. 2,05,24,000/- and Rs. 10,50,000/- — were treated as unexplained cash credits and added to the assessee's total income under Section 68 of the Income Tax Act, 1961.

CIT(A)/NFAC Order

The assessee preferred an appeal before the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [CIT(A)/NFAC], Delhi, which was disposed of vide DIN and Order No. ITBA/APL/S/250/2025-26/1088009990(1), dated 27.03.2026.