No Additional Sustainable Cash When Deposits Are Properly Recorded in Books: ITAT

ITAT deleted the addition on demonetisation cash deposits after finding that the assessee had adequately explained the source through the recorded opening cash balance and agricultural income.

The present case is filed by Ambalal Shambhudas Patel against the order of the Commissioner of Income Tax (Appeals), NFAC Delhi, dated 29.10.2025, for the Assessment Year 2017-18.

The appeal was filed by the assessee against the addition of Rs. 11,58,000 made by the AO on account of cash deposits during the period of demonetisation. The assessee also challenged the applicability of Section 115BBE of the Income Tax Act, which provides for higher taxation on unexplained income.

The assessee contended that the cash deposited during demonetisation was fully explained. As per records, the assessee had an opening cash of Rs. 27,73,988 as on 01.04.2016 along with agricultural income earned during the year. These amounts were properly taken into the books of account, the cash book, the balance sheet and the profit and loss account.

It was further submitted that the Revenue Department has not led any evidence to show that the cash balance was false/not available to the assessee. The assessee also contended that the CIT(A) had wrongly invoked Rule 46A, where no new evidence was filed during the appeal proceedings.

After considering the facts, the Tribunal observed that the records clearly supported the availability of a sufficient opening cash balance. Since the source of the cash deposits has been satisfactorily explained, the addition could not be sustained.

The Tribunal further held that since there were no valid additions under Sections 68 to 69D of the Income Tax Act, the provisions of Section 115BBE were also not applicable.

Accordingly, the Tribunal deleted the addition and allowed the appeal filed by the assessee.