ITAT Remanded Rs 5.26 Crore Cash Deposit of Demonetisation for Fresh Adjudication

ITAT Delhi has removed the addition of Rs 9.05 Lakh that was made under Section 69A of the Income tax Act against a partnership firm and ruled that an addition under Section 69A of unaccounted cash is not sustainable if the material which is seized belongs to the partner of the partnership firm separately.

The assessee is a partnership firm and during a survey under Section 133A, the officials found that there is no active stock or any current business activity but only impounded a handwritten order book that contained cash entries calculating up to Rs 9.05 lakh for the financial year 2017-18 and this money was added as unaccounted cash under Section 69A of the Act.

The assessee filed its return of income for the assessment year 2017-18 declaring the income of Rs 7.97 lakh but the AO scrutinised that the assessee had deposited Rs 5.28 crore in the form of old currency notes during demonetization and it is unexplained money under Section 68 r.w.s. 115BE of the Act.

The Tribunal in ITA No. 909/Del/2025 set aside the order of the CIT(A) and directed the AO to conduct a fresh adjudication and give the assessee the opportunity to be heard and submit any further evidence while allowing the appeal.

The Tribunal in ITA No. 908/Del/2025, after assessing the facts and circumstances, held that the impounded book belongs to Mrs Rita Bagga personally for her business and not to the firm and thus held that the addition of Rs 9.05 lakh by the AO under Section 69A was not sustainable and deleted the entire addition while allowing the appeal.