Cash Deposits During Demonetisation Not Taxable when Books & Stock Are Intact: ITAT:

Cash Deposits During Demonetisation Not Taxable when Books & Stock Are Intact: ITAT The present appeal has been filed by the Deputy Commissioner of Income Tax (Appellant) against a company named La Solitaire Jewels Private Limited (Respondent) in the Income Tax Appellate Tribunal (ITAT), Delhi (Delhi Bench ‘E’ New Delhi), before Shri Yogesh Kumar U.S. (Judicial Member) and Shri Avdhesh Kumar Mishra (Accountant Member). The case on the matter was heard on August 27, 2025, and was decided on October 30, 2025. The appeal had been filed challenging an order dated November 22, 2023, passed by the CIT (A)/NFAC New Delhi. The order was related to the assessment year 2017-18.

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The assessee filed his income tax return (ITR), declaring a total income of Rs. 61,11,760. The return of the Assessee was processed by CPC. Later on the return was selected for scrutiny in conclusion to the survey conducted on the said case. Thereafter, the department issued a notice under Section 143(2) of the Income Tax Act, 1961, and thereafter issued a Assessment Order dated December 29, 2019, under Section 143(3) of the said Act, making an addition of Rs. 83,051,490 under Section 68 of the said Act on the grounds of unexplained cash deposited during the demonetisation period. Assessee dissatisfied with the assessment order, then approached the Ld. CIT(A) to challenge the order. Ld. CIT(A) deleted the said addition of Rs. 8.30 crore via order dated November 22, 2023 and allowed the appeal filed by the assessee. The addition was originally made on account of unexplained cash deposits during the demonetisation period.

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The Deputy Commissioner of Income Tax, dissatisfied with the order of CIT(A), then approached the Income Tax Appellate Tribunal Delhi (Delhi Bench ‘E’ New Delhi). The tribunal agreed with the findings of CIT(A) and announced its final decision. It cited an earlier judgement where cash deposits linked to recorded sales were not treated as unexplained income. Held that the Revenue failed to point out any defect in books or stock. hence, dismissed the present appeal filed by the Revenue (Income Tax Department). Meaning, the addition of Rs. 8.30 crore under Section 68 was rightly deleted.