Income Tax Appellate Tribunal - Chennai
Nishar Ahamed,Salem vs The Income-Tax Officer, Ward 1(2), , ... on 19 March, 2026
आयकर अपीलीय अिधकरण, 'सी' ायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH: CHENNAI
ी जॉज जॉज के, उपा एवं सु ी पदमावती यस, लेखासद$ के सम
BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND
MS. PADMAVATHY.S, ACCOUNTANT MEMBER
आयकर अपील सं ./ITA No.2770/Chny/2025
िनधारण वष /Assessment Year: 2017-18
Nishar Ahamed, The Income Tax Officer,
10A, Salia Venkatraman Street, Vs. Ward-1(2),
Shevapet, Salem - 636 002. Salem.
PAN: ACQPN 3071N
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ( की ओर से/ Appellant by : Mr. Akash, Advocate
*+थ( की ओर से /Respondent by : Mr. Ilayaraja, Addl. CIT
सुनवाई की तारीख/Date of Hearing : 17.03.2026
घोषणाकी तारीख /Date of Pronouncement : 19.03.2026
आदे श / O R D E R
PER PADMAVATHY.S, A.M:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Addl./JCIT(A), Thane (in short "FAA") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 03.09.2025 for Assessment Year (AY) 2017-18. The grounds of appeal raised by the assessee are as under:
1) Learned Commissioner of Income-tax (Appeals) is not justified in confirming addition of Rs. 7,00,000 as unexplained cash deposits under section 69A in the circumstances of the case.
(2) Learned Commissioner (Appeals) ought not to have held that the appellant failed to substantiate the cash balance of Rs. 61,07,452 as on 08-11-2026.ITA No.2770/Chny/2025
Nishar Ahamed :- 2 -:
(3) Facts that books of account viz., cash book, VAT Returns for Sales, Month-wise Sales & Purchases, Details of Cash Sales & Cash Deposits for the period from 01-04-2016 to 08-11-2016 and the corresponding earlier year's figures have been submitted at the time of assessment proceedings, should have been considered by the Learned Commissioner of Income-tax (Appeals).
(4) For these and other reasons which may be stated, at the time of hearing of the appeal, it is prayed that the Hon'ble Income Tax Appellate Tribunal may kindly be please to delete the addition."
2. The assessee is an individual and engaged in garlic business. The assessee filed the return of income for AY 2017-18 on 10.07.2017 declaring total income of Rs. 5,00,860/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The A.O noticed that the assessee has made a cash deposit of Rs.37,90,000/- during the demonetization period and called on the assessee to furnish the details with regard to the source of the said deposit. The A.O made an addition of Rs. 7,00,000/- out of the total cash deposited with the following observations:
"4.1 On examination of details filed by the assessee, it is noticed that, the assessee had made a sales of Rs.74,22,549/- during the period 01.11.2016 to 08.11.2016. Comparing the one week's sale with the month wise sale during the year under consideration, the sale made during the one week is noticed on the higher side. The assessee's closing cash in hand position for the A.Y.2015-16 and 2016-17 is compared thoroughly and cash in hand position is noticed on the higher side as on 08.11.2016. Considering the pattern of cash in hand and sale made of the earlier month the credit for the deposits made on 10.11.2016, 11.11.2016, 12.11.2016 and 14.11.2016 to the tune of Rs.30,90,000/- is allowed to the assessee and the balance amount of Rs.7,00,000/- is treated as from unexplained sources and brought to tax as unexplained investment u/s 69A of the Income Tax Act, 1961 and taxed at the rates specified under Section under Section 115BBE of the Income-tax Act"
3. Aggrieved, the assessee filed further appeal before the CIT(A). The CIT(A) upheld the addition made by the A.O by holding that:
"6.1.2 During the course of appellate proceedings, the appellant submitted that sufficient cash balance was available as per books of account, and therefore the deposits were fully explained. It was submitted that cash balance stood at ITA No.2770/Chny/2025 Nishar Ahamed :- 3 -:
Rs.61,07,452/- as on 08.11.2016, and this was more than sufficient to cover deposits of Rs.37,90,000/-. Bank certificates were filed showing that deposits were accepted in specified bank notes under RBI guidelines. However, no books of accounts such as cash book or sales register have been produced to substantiate the claim. Mere mentioning closing cash balance, without supporting documentary evidences, cannot be treated as conclusive evidence. Accordingly, the addition of Rs.7,00,000/- made u/s 69A is hereby confirmed. The appeal on these grounds is dismissed."
4. The assessee is in appeal before the Tribunal against the order of the CIT(A).
5. The Ld. Authorized Representative (AR) of the assessee submitted that the source for the cash deposited was explained by the assessee as the sales from the garlic business and that the assessee has submitted all the relevant details including the financial statements, cash book, etc. before the A.O. The Ld. AR further submitted that the A.O has not rejected the books of accounts and has also accepted the sales declared by the assessee in the return of income. The Ld. AR also argued that the only reason for A.O to make the addition is that the assessee has made higher sales in the first week of November just before demonetisation as compared to the other periods of the year. The Ld. AR in this regard drew our attention to the monthly sales details as per the VAT return, which is extracted as under:
ITA No.2770/Chny/2025Nishar Ahamed :- 4 -:
6. The Ld. Departmental Representative (DR), on the other hand, relied on the orders of the lower authorities.
7. We have heard the parties, and perused the material available on record. During the year under consideration, the assessee has deposited cash amounting to Rs. 37,90,000/- into the bank account. The assessee submitted before the A.O that the sales is the source for the cash deposits and that the opening balance of cash in hand as on 08.11.2016 was at Rs. 61,07,452/-. The A.O did not accept the submissions of the assessee stating that the cash sales just before the demonetization was higher as compared to the other periods in the year. The A.O gave credit towards cash deposited on 10.11.2016 to 14.11.2016 to the tune of Rs. 30,90,000/- and made the addition for the balance amount u/s 69A of the Act. From the perusal of the orders of the lower authorities, we notice that the assessee having opened cash balance of Rs. 61,07,452/- as on 08.11.2016 has not been disputed. However the CIT(A) has not accepted the opening cash balance stating that no books of accounts such as cash book, sales register, etc. submitted by the assessee and hence the balance could not be verified. However, it is relevant to notice that the A.O while giving credit to the tune of Rs.30,90,000/- has considered the deposits made on specific dates and the A.O has also acknowledged the sales declared by the assessee. Therefore, we see merit in the argument of the Ld. AR that the observations of the CIT(A) with regard to non-submissions of the books of accounts is factually incorrect. Further, from the perusal of the table containing the monthly sales details as extracted hereinabove, we notice that the turnover of the assessee has shown consistent increase through the year and that the sales during October and November are not reflecting any abnormal spike. The submission that when the books of accounts and the ITA No.2770/Chny/2025 Nishar Ahamed :- 5 -:
sales declared by the assessee are not rejected the A.O cannot treat the cash deposit as unexplained also has merits. We also notice that the opening cash balance as on 08.11.2016 more than the cash deposited by the assessee during the demonetization period. In view of this discussion and considering the overall facts and circumstances of the case, we are of the view that the lower authorities are not correct in rejecting the claim of the assessee that as cash sales is the source for cash deposited into the bank account without recording any specific adverse findings regarding the details submitted by the assessee and without considering the opening cash balance. Accordingly, we direct the A.O to delete the addition of Rs.7,00,000/- treated as unexplained.
8. In the result, the appeal of the assessee is allowed.
Order pronounced on 19th day of March, 2026 at Chennai.
Sd/- Sd/-
(जॉज जॉज के) (पदमावती यस)
(George George K) (Padmavathy.S)
उपा / Vice President लेखा सद य /Accountant Member
th
चे नई/Chennai, दनांक/Dated: 19 March, 2026.
EDN, Sr. P.S
आदे श क ितिल प अ े षत/Copy to:
1. अपीलाथ /Appellant
2. थ /Respondent
3. आयकर आयु /CIT, Chennai/Madurai/Coimbatore/Salem
4. िवभागीय ितिनिध/DR
5. गाड फाईल/GF
EJTADA Digitally signed by
EJTADA DURGA NARESH
DURGA Date: 2026.03.25
NARESH 12:17:47 +05'30'