2025 (5) TMI 1306 - AT - Income Tax

Agriculturist Wins Tax Appeal: Unexplained Cash Deposits Deleted After Detailed Bank Statement Review

In the ITAT appeal for AY 2017-18, an agriculturist challenged cash deposit additions under sections 69A and 115BBE. The AO disallowed milk sales ... Addition u/s 69A - cash deposited during demonetization as unexplained money - HELD THAT:- The assessee filed a Paper Book containing the cash book and bank statements and other details. Perusal of the same makes it very clear that the deposits were made on account of sale of milks and agricultural income. There is no substantial increase in the cash deposits during demonetization period comparing with the earlier years. Thus CIT(A) is not correct in holding 50% cash deposit as unexplained. Therefore the entire addition made by the Assessing Officer is hereby deleted. Appeal filed by the Assessee is allowed. Summary:In the appeal before the Income Tax Appellate Tribunal (ITAT), Ahmedabad, concerning Assessment Year 2017-18, the assessee, an agriculturist engaged in milk sales, challenged additions made under section 69A and tax demand under section 115BBE relating to cash deposits of Rs. 10,57,700/- during the demonetization period. The Assessing Officer disallowed the explanation that deposits represented milk sales, making full addition. The Commissioner of Income Tax (Appeals) partly upheld the addition, treating 50% of the cash deposit as unexplained.The ITAT noted the assessee's submission supported by bank statements and cash books, showing no substantial increase in deposits compared to prior years. The Tribunal held that the CIT(A) erred in law and on facts by treating half the deposit as unexplained. Consequently, the ITAT deleted the entire addition made by the Assessing Officer. The appeal was allowed, and the delay in filing the appeal was condoned.Key holdings include:- The addition under section 69A was not justified given the evidence of genuine sales.- The CIT(A)'s partial confirmation of unexplained cash was overturned.- The entire addition under section 115BBE was deleted.Order pronounced on 30-04-2025.