Unexplained Cash Deposit During Demonetisation Led to Addition in Income: ITAT Restores Matter to AO [Read Order]
The amount was earlier treated as unexplained and added to the income, which was upheld by the CIT(A) through an ex-parte order due to non-compliance with multiple notices.
![Unexplained Cash Deposit During Demonetisation Led to Addition in Income: ITAT Restores Matter to AO [Read Order]](https://images.taxscan.in/h-upload/2025/07/18/2064969-itat-itat-cash-deposits-during-demonetization-taxscan-1.webp "Unexplained Cash Deposit During Demonetisation Led to Addition in Income: ITAT Restores Matter to AO [Read Order]")
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Assessing Officer (AO) noting that the assessee had failed to properly explain a cash deposit of Rs. 26.5 lakh made during the demonetisation period. Maulik Ashokkumar Shah,appellant-assessee,was engaged in a retail business dealing in various types of mobile phones and accessories. He filed...
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Assessing Officer (AO) noting that the assessee had failed to properly explain a cash deposit of Rs. 26.5 lakh made during the demonetisation period.
Maulik Ashokkumar Shah,appellant-assessee,was engaged in a retail business dealing in various types of mobile phones and accessories. He filed his return of income for the assessment year 2017-18 on 03.11.2017, declaring a total income of Rs. 3,77,650/-.
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During the assessment proceedings, the AO noted that he had deposited Rs. 26,50,000/- in cash into his bank account with The Godhra City Co-operative Bank Ltd. during the demonetization period (09.11.2016 to 31.12.2016).
Since the assessee failed to satisfactorily explain the source of this cash deposit with supporting evidence, the amount was treated as unexplained and added to his income under the relevant provisions of the Act. The Commissioner of Income Tax (Appeals)[CIT(A)] subsequently upheld this addition through an ex-parte order dated 15.03.2025.
As per the record, several notices under section 250 of the Act were issued on 11.07.2024, 02.01.2025, 21.02.2025, and 08.03.2025, calling for documents and clarifications regarding the cash deposits. However, the assessee did not respond to any of these notices, leading to the dismissal of the appeal.
The assessee later filed an affidavit dated 08.07.2025 before the tribunal, explaining that the earlier consultant failed to take any action, which led to non-compliance before the CIT(A). By the time a new consultant was appointed, the last notice had already lapsed, and the appeal was decided ex-parte.
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The assessee submitted that the default was unintentional and caused by the earlier consultant’s inaction. He requested another opportunity and assured full cooperation with all necessary documents.
The two member bench comprising Dr. B.R.R Kumar (Vice President) and Suchitra Kamble (Judicial Member) found that the appellant had not given a proper explanation during assessment either. However, to ensure fair hearing, it restored the matter to the AO for de novo assessment. The assessee was directed to respond to notices without seeking unnecessary adjournments.
Accordingly the appeal was allowed for statistical purposes.
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