Judgment :

Sanjay K. Agrawal, J.

1. Invoking the jurisdiction of this Court under Section 260A of the Income Tax Act, 1961 (for short, ‘the IT Act’), the appellant herein/husband of the assessee has preferred this appeal calling in question legality, validity and correctness of the judgment & order dated 1-11-2023 passed by the Income Tax Appellate Tribunal, Raipur Bench “SMC”, Raipur in ITA No.180/RPR/2023, by which the ITAT has partly dismissed the appeal treating Rs. 20,50,000/- as unexplained money under Section 69A of the IT Act affirming the order of the Commissioner of Income Tax (Appeals).

2. The aforesaid appeal was admitted for hearing by this Court on 5-2-2024 by formulating the following substantial question of law: -

“Whether the assessment in respect of the closing balance of cash-in-hand, shown in balance sheet of the preceding year which was brought down as an opening balance of the succeeding year, whether it can be an unexplained money under Section 69 A of Income Tax Act, 1961 of succeeding year and can be charged to tax under Section 115 BBE of Income Tax Act?”

3. The original assessee late Smt. Kalawati Agrawal filed her return of income in respect of assessment year 2017-18 on 9-1-2018 declaring a total income of Rs. 12,83,090/-. In the relevant assessment year (demonetization announced by the Central Government on 8-11-2016), the assessee had deposited a sum of Rs. 23,00,000/- in Specified Bank Notes (SBN) in her bank account in Bank of Baroda on 1-12-2016 and reflected the said cash deposits at Part-E – Other Information Column D14(a) of return of income filed in ITR-1S. The case of the assessee was accepted for scrutiny assessment by the Assessing Officer by issuance of notice under Section 143(2) of the IT Act seeking requisite information and documents as to the details of cash deposited relating to nature & source of cash deposits in SBN to which the assessee filed detailed written submissions along with copies of bank statements for the period from 1-4-2014 to 31-3-2015 etc. and capital accounts & balance sheets for the assessment years 2015-16, 2016-17 & 2017-18 to substantiate the availability of cash-in-hand to source the cash deposits made during the demonetization period explaining that she encashed the fixed deposits held by her with Bank of Baroda and subsequent to such encashment, she withdrew a sum of Rs. 1,24,00,000/- in cash in the assessment year 2015-16 (financial year 2014-15) in the months of April & May, 2014 and thereafter, subsequently, an amount of Rs. 1,02,31,000/- was deposited in cash in the months of February & March, 2015 in the bank account with Bank of Baroda and the same was advanced to M/s. Mangal Tyres, Dhamtari. It is also the case of the appellant/assessee that the balance sheets filed in the course of assessment proceedings for the assessment year 2015-16 & 2016-17 reflected cash-in-hand of Rs. 21,60,301/- as on 31-3-2015 and Rs. 23,45,301/- as on 31-3-2016, respectively. In sum and substance, it was the explanation of the assessee that the source of cash deposit to the tune of Rs. 23,00,000/- during the demonetization period had its immediate nexus with the closing cash-in-hand to the tune of Rs. 23,45,301/- appearing in the balance sheet shown as on 31-3-2016 and which was available as opening cash-in-hand in the financial year 2016-17 relevant to assessment year 2017-18.

4. The Assessing Officer in its assessment order passed under Section 143(3) of the IT Act o