S. 69A : Unexplained Investments-Unexplained Money- Demonetization-Deposit of cash-Business receipts-Recorded in Books –Acceptance of Specified Bank Notes (SBNs) prior to 31.12.2016 is not illegal-Addition is deleted.
During assessment, the AO identified substantial cash deposits made during demonetization and sought clarification. The assessee stated the cash, in the form of Specified Bank Notes (SBNs), was received from debtors in the normal course of business and recorded in audited books. The AO, however, dismissed the explanation citing the cessation of SBNs as legal tender from 09/11/2016, and added ₹44.61 lakhs as unexplained under Section 69A. The CIT(A), NFAC, confirmed the addition without granting a personal hearing.
The Hon’ble ITAT, Mumbai, observed that the assessee had satisfactorily discharged the onus of explaining the nature and source of the cash deposits, which were duly supported by documentary evidence and reflected in the regular books of account. The Tribunal held that although SBNs ceased to be legal tender from 09.11.2016, their acceptance in bona fide commercial transactions was not prohibited by law until 31.12.2016. It further held that the mere violation of RBI notifications, if any, does not ipso facto attract the provisions of Section 69A unless the cash remains unexplained. Placing reliance on the decision of the ITAT, Chennai Bench, in Tamil Nadu State Marketing Corporation Ltd. v. ACIT (ITA No. 431/Chny/2023 dt. 7-10-2024), the Tribunal held that the impugned addition was untenable and accordingly directed the deletion of the addition of ₹44.61 lakhs, thereby allowing the appeal. (ITA No. 547/Mum/2024 dt. 17-6-2025) (AY. 2017-18)
Goldman Tapes Private Limited v. ACIT (Mum.)(Trib.) www.itatonline.org.
[Coram : Hon’ble Shri Saktijit Dey, VP & Hon’ble Shri Narendra Kumar Billaiya, Hon’ble AM]