Section 69A Inapplicable For Audited Cash Deposits: ITAT Deletes ₹58.50 Lakh Unexplained Money Addition [Read Order]
The Tribunal deleted the addition of Rs. 58.50 lakh under Section 69A, ruling that the provision does not apply to cash deposits recorded in audited books of account, as the assessee provided sufficient evidence of business cash sales during the demonetization period.
![Section 69A Inapplicable For Audited Cash Deposits: ITAT Deletes ₹58.50 Lakh Unexplained Money Addition [Read Order]](https://images.taxscan.in/h-upload/2025/07/17/2064555-unexplained-money-taxscan.webp "Section 69A Inapplicable For Audited Cash Deposits: ITAT Deletes ₹58.50 Lakh Unexplained Money Addition [Read Order]")
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of Rs. 58,50,000 made under Section 69A of the Income Tax Act, 1961, as unexplained money and held that the provision is inapplicable when cash deposits are duly recorded in audited books of account. Balsons Jewellers (assessee), a partnership firm engaged in the jewellery business, filed its return of...
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of Rs. 58,50,000 made under Section 69A of the Income Tax Act, 1961, as unexplained money and held that the provision is inapplicable when cash deposits are duly recorded in audited books of account.
Balsons Jewellers (assessee), a partnership firm engaged in the jewellery business, filed its return of income for Assessment Year (AY) 2017-18 declaring Rs. 2,02,420. During scrutiny assessment, the Assessing Officer (AO) noted cash deposits of Rs. 58,50,000 into the assessee’s bank account during the demonetization period.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The assessee explained these as arising from cash sales recorded in its books, supported by bank statements, sales and purchase ledgers, stock registers, and VAT returns. The AO treated the deposits as unexplained under Section 69A, citing the timing post-demonetization and lack of immediate deposits.
Aggrieved by the AO’s order, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) upheld the addition. Aggrieved by the CIT(A)’s order, the assessee then appealed to the ITAT.
The Counsel for the assessee argued that Section 69A applies only to unrecorded assets and that the deposits were from audited business sales, accepted by VAT authorities.
The two-member bench comprising Challa Nagendra Prasad (Judicial Member) and S. Rifaur Rahman (Accountant Member) observed that the assessee’s books were audited under Section 44AB, and all deposits were recorded with supporting documents like cash books, stock registers, sales bills, and VAT assessments.
Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here
The Tribunal observed that Section 69A requires the asset to be unrecorded in books for its application. However, in the present case they were duly accounted under section 44AB of the Income Tax Act.
The bench relied on precedents, including Rakesh Kumar Babulal Agarwal vs. PCIT (Gujarat HC), Hemant Samarataji Lohar vs. CIT(A) (Mumbai ITAT), and Durga Fire Work vs. ITO (Delhi ITAT), affirming that recorded cash cannot be treated as unexplained under Section 69A of the Income Tax Act.
The Tribunal held that the AO and CIT(A) erred in applying Section 69A, as the deposits from verifiable business activities. It directed the AO to delete the addition. The appeal of the assessee was partly allowed.
Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
