आयकर अपील(cid:547)य अ(cid:876)धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G. ACCOUNTANT MEMBER आ.अपी.सं /ITA No.29/Hyd/2025 Assessment Year 2017-2018 Assessment Year 2017-2018 Assessment Year 2017-2018 Assessment Year 2017-2018 Assessment Year 2017-2018 Assessment Year 2017-2018 Assessment Year 2017-2018 Assessment Year 2017-2018 Assessment Year 2017-2018 सुनवाई की तारीख/Date of hearing: 16.12.2025 घोषणा की तारीख/Pronouncement: 07.01.2026 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT :

This appeal by the Assessee is directed against the Order dated 01.01.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2017-2018.

2. The assessee has raised the following grounds: 1. “The order of the Appellate Commissioner is contrary to law, facts and circumstances of the case.

2. The Appellate Commissioner ought not to have confirmed the addition of an amount of Rs.3.37,31,000/- as income of the assessee, u/s 69A of the Income Tax Act.

3. The Appellate Commissioner erred in confirming the treatment of the amounts in the cash book as unexplained, ignoring the fact that the same have been included in the books of accounts, and the addition u/s.69A is outside the purview of the said section.

4. The Appellate Commissioner ignored the fact that the deposits in the bank are proceeds of regular sales of the assessee.

5. The Appellate Commissioner, erred in coming to a conclusion similar to that of the A.O, that having accepted that the deposits are sale of ITC products should not have added the same as unexplained credits u/s.69A of the Income Tax Act.

6. The Appellate Commissioner ought to have seen that, the A.O has no jurisdiction to decide on the legality of specified bank notes and should have accepted the same as legal tender.

7. Any other grounds which the Assessee may urge either before or at the time of the hearing.”

3. The assessee company is engaged in the business of wholesale and retail sales of ITC products. The assessee filed its return of income for the year under consideration on 23.09.2017 declaring total income of Rs.10,86,174/-. The case was selected for scrutiny through CASS. During the assessment proceedings, the Assessing Officer noted that there was a cash deposit of Rs.17,16,22,035/- during the demonetization period, out of which, a sum of Rs.3,37,31,318/- was deposited in Specified Bank Notes [ in short “SBNs” ] i.e., demonetized currency of Rs.500/- and Rs.1000/-notes. While completing the assessment u/sec.143(3), the Assessing Officer made the addition of the said amount of Rs.3,37,31,318/- on the ground that after the notification of the demonetization of the currency notes of Rs.500/- and Rs.1000/-, the transactions done in the SBNs is not permitted and consequently, the same was added into the income u/sec.69A of the Income Tax Act [ in short "the Act" ], 1961. The assessee challenged the action before the learned CIT(A) but could not succeed.

4. Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that the deposits made in the bank account during the months of November and December is out of sales of the assessee during the said period. All the transactions of the sales are duly recorded in the books of accounts and also verified by the Commercial Tax Department. He has further submitted that even the Assessing Officer has also not disputed the correctness of the books of accounts of the assessee as well as the turnover of the assessee. Once the assessee has already declared the turnover and offered the income to tax arising from the said turnover including the deposits made in the bank account during the months of November and December comprising of SBNs, then the separate addition cannot be made by the Assessing Officer only on the ground that assessee has deposited this sum of Rs.3,37,31,318/- in SBN. The learned Authorised Repre