Nanakchand Agrawal, L/H Of Kalawati Agrawal, Age 65 Years, Neartelephone Tower, Baster Road, P.o., P.s. And Tahsil Dhamtari, Districtdhamtari (C.g.) v. The Income-Tax Officer, Ward, Income-Tax Office, Harna Bandha,Dhamtari, District Dhamtari (C.g

(Tax Case No.8/2024) 2025:CGHC:43944-DB AFR TAXC No. 8 of 2024 {Arising out of order dated 1-11-2023 passed by the Income TaxAppellate Tribunal, Raipur Bench “SMC”, Raipur in ITANo.180/RPR/2023} -(Assessment Year 20172018) --Judgment reserved on: 1282025 --Judgment delivered on: 2982025 Nanakchand Agrawal, L/h of Kalawati Agrawal, Age 65 years, NearTelephone Tower, Baster Road, P.O., P.S. and Tahsil Dhamtari, DistrictDhamtari (C.G.) - 493773, PAN: ... Appellant versus The Income-tax Officer, Ward, Income-tax Office, Harna Bandha,Dhamtari, District Dhamtari (C.G.) ... Respondent For Appellant : Mr. S. Rajeswara Rao, Advocate.For Respondent : Mr. Ajay Kumrani, Advocate on behalf of Mr. AmitChaudhari, Standing Counsel for the Income TaxDepartment.For Respondent : Mr. Ajay Kumrani, Advocate on behalf of Mr. AmitChaudhari, Standing Counsel for the Income TaxDepartment. AmicusCuriae: Mr.Nikhilesh Begani, Advocate. -Division Bench: Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Deepak Kumar Tiwari, JJ. C.A.V. Judgment Sanjay K. Agrawal, J. 1. Invoking the jurisdiction of this Court under Section 260A of theIncome Tax Act, 1961 (for short, ‘the IT Act’), the appellant herein/Income Tax Act, 1961 (for short, ‘the IT Act’), the appellant herein/ (Tax Case No.8/2024) husband of the assessee has preferred this appeal calling inquestion legality, validity and correctness of the judgment & orderdated 1-11-2023 passed by the Income Tax Appellate Tribunal,Raipur Bench “SMC”, Raipur in ITA No.180/RPR/2023, by whichthe ITAT has partly dismissed the appeal treating ₹ 20,50,000/- asunexplained money under Section 69A of the IT Act affirming theorder 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 ofcash-in-hand, shown in balance sheet of the preceding yearwhich was brought down as an opening balance of thesucceeding year, whether it can be an unexplained moneyunder Section 69 A of Income Tax Act, 1961 of succeedingyear and can be charged to tax under Section 115 BBE ofIncome Tax Act?”cash-in-hand, shown in balance sheet of the preceding yearwhich was brought down as an opening balance of thesucceeding year, whether it can be an unexplained moneyunder Section 69 A of Income Tax Act, 1961 of succeedingyear and can be charged to tax under Section 115 BBE ofIncome Tax Act?” 3. The original assessee late Smt. Kalawati Agrawal filed her return ofincome in respect of assessment year 2017-18 on 9-1-2018declaring a total income of ₹ 12,83,090/-. In the relevantassessment year (demonetization announced by the CentralGovernment on 8-11-2016), the assessee had deposited a sum of ₹23,00,000/- in Specified Bank Notes (SBN) in her bank account inBank of Baroda on 1-12-2016 and reflected the said cash deposits atPart-E – Other Information Column D14(a) of return of incomefiled in ITR-1S. The case of the assessee was accepted for scrutinyassessment by the Assessing Officer by issuance of notice underSection 143(2) of the IT Act seeking requisite information and (Tax Case No.8/2024) 3. The original assessee late Smt. Kalawati Agrawal filed her return ofincome in respect of assessment year 2017-18 on 9-1-2018declaring a total income of ₹ 12,83,090/-. In the relevantassessment year (demonetization announced by the CentralGovernment on 8-11-2016), the assessee had deposited a sum of ₹23,00,000/- in Specified Bank Notes (SBN) in her bank account inBank of Baroda on 1-12-2016 and reflected the said cash deposits atPart-E – Other Information Column D14(a) of return of incomefiled in ITR-1S. The case of the assessee was accepted for scrutinyassessment by the Assessing Officer by issuance of notice underSection 143(2) of the IT Act seeking requisite information and (Tax Case No.8/2024) documents as to the details of cash deposited relating to nature &source of cash deposits in SBN to which the assessee filed detailedwritten submissions along with copies of bank statements for theperiod from 1-4-2014 to 31-3-2015 etc. and capital accounts &balance sheets for the assessment years 2015-16, 2016-17 & 2017-18to substantiate the availability of cash-in-hand to source the cashdeposits made during the demonetization period explaining thatshe encashed the fixed deposits held by her with Bank of Barodaand subsequent to such encashment, she withdrew a sum of ₹1,24,00,000/- in cash in the assessment year 2015-16 (financialyear 2014-15) in the months of April & May, 2014 and thereafter,subsequently, an amount of ₹ 1,02,31,000/- was deposited in cashin the months of February & March, 2015 in the bank account withBank of Baroda and the same was advanced to M/s. Mangal Tyres,Dhamtari. It is also the case of the appellant/assessee that thebalance sheets filed in the course of assessment proceedings for theassessment year 2015-16 & 2016-17 reflected cash-in-hand of ₹21,60,301/- as on 31-3-2015 and ₹ 23,45,301/- as on 31-3-2016,respectively. In sum and substance, it was the explanation of theassessee that the source of cash deposit to the tune of ₹23,00,000/- during the demonetization period had its immediatenexus with the closing cash-in-hand to the tune of ₹ 23,45,301/-appearing in the balance sheet shown as on 31-3-2016 and whichwas available as opening cash-in-hand in the financial year 2016-17relevant to assessment year 2017-18. (Tax Case No.8/2024) 4. The Assessing Officer in its assessment order passed under Section143(3) of the IT Act on 14-11-2019 made an addition of ₹23,00,000/- treating it as unexplained money invoking thedeeming fiction engrafted under Section 69A of the IT Act chargingthe same to higher rate of tax as prescribed under Section 115BBEof the IT Act ascribing the following reasons: -143(3) of the IT Act on 14-11-2019 made an addition of ₹23,00,000/- treating it as unexplained money invoking thedeeming fiction engrafted under Section 69A of the IT Act chargingthe same to higher rate of tax as prescribed under Section 115BBEof the IT Act ascribing the following reasons: - 1. Purpose of making cash withdrawal in the assessment year2015-16 and holding the cash balance for nearly 32 months isnot explained.2015-16 and holding the cash balance for nearly 32 months isnot explained. 2. Interest income from two sources viz., from M/s. MangalTyres and from short term loans and advances treateddifferently and shown under two heads in return filed for theassessment year 2016-17 viz., as income from other sourcesand income from business.Tyres and from short term loans and advances treateddifferently and shown under two heads in return filed for theassessment year 2016-17 viz., as income from other sourcesand income from business. 3. List of persons to whom money was given and interest earnedwas not furnished.was not furnished. 1. Purpose of making cash withdrawal in the assessment year2015-16 and holding the cash balance for nearly 32 months isnot explained.2015-16 and holding the cash balance for nearly 32 months isnot explained. 2. Interest income from two sources viz., from M/s. MangalTyres and from short term loans and advances treateddifferently and shown under two heads in return filed for theassessment year 2016-17 viz., as income from other sourcesand income from business.Tyres and from short term loans and advances treateddifferently and shown under two heads in return filed for theassessment year 2016-17 viz., as income from other sourcesand income from business. 3. List of persons to whom money was given and interest earnedwas not furnished.was not furnished. 4. Return of income for the assessment year 2016-17 showingsufficient cash balance filed on 2-12-2016 i.e. subsequent tomaking of cash deposit during demonetization period on 1-12-2016.sufficient cash balance filed on 2-12-2016 i.e. subsequent tomaking of cash deposit during demonetization period on 1-12-2016. 5. Intention of the assessee was to deposit her unaccountedmoney in the bank account and by using ITR-4S form todeclare the cash balance of ₹ 23,45,301/- therein and treatinginterest income differently is just an afterthought to show themoney in the bank account and by using ITR-4S form todeclare the cash balance of ₹ 23,45,301/- therein and treatinginterest income differently is just an afterthought to show the (Tax Case No.8/2024) cash balance in the return of income to merely cover up the cash deposit during demonetization period. 5. Feeling aggrieved and dissatisfied with the order of the AssessingOfficer, the assessee preferred an appeal before the Commissionerof Income Tax (Appeals) to which the learned CIT (Appeals)primarily concurred with the findings of the Assessing Officer anddismissed the appeal by order dated 23-3-2023. Officer, the assessee preferred an appeal before the Commissionerof Income Tax (Appeals) to which the learned CIT (Appeals)primarily concurred with the findings of the Assessing Officer anddismissed the appeal by order dated 23-3-2023. 6. Questioning the order passed by the CIT (Appeals) affirming theorder passed by the Assessing Officer, the appellant hereinpreferred appeal before the Income Tax Appellate Tribunal (ITAT)which the ITAT by the order impugned dated 1-11-2023 partlyallowed to the extent of ₹ 2,50,000/-, as per the circular of theCBDT (Central Board of Direct Taxes), holding that the assesseehad regularly been assessed to tax for the last so many years,sustaining the balance cash deposit of ₹ 20,50,000/- treating it asunexplained money invoking the deeming fiction engrafted underSection 69A of the IT Act charging the same to higher rate of tax asprescribed under Section 115BBE of the IT Act assigning thefollowing reasons: -order passed by the Assessing Officer, the appellant hereinpreferred appeal before the Income Tax Appellate Tribunal (ITAT)which the ITAT by the order impugned dated 1-11-2023 partlyallowed to the extent of ₹ 2,50,000/-, as per the circular of theCBDT (Central Board of Direct Taxes), holding that the assesseehad regularly been assessed to tax for the last so many years,sustaining the balance cash deposit of ₹ 20,50,000/- treating it asunexplained money invoking the deeming fiction engrafted underSection 69A of the IT Act charging the same to higher rate of tax asprescribed under Section 115BBE of the IT Act assigning thefollowing reasons: - 1. The utilization of cash withdrawals made in the precedingassessment years simultaneously for the purpose of makingcash deposits during demonetization period and for thepurpose of advancing interest bearing short term loans &advances, at the same time, is incomprehensible and in theassessment years simultaneously for the purpose of makingcash deposits during demonetization period and for thepurpose of advancing interest bearing short term loans &advances, at the same time, is incomprehensible and in the (Tax Case No.8/2024) absence of any documentary evidences to buttress the saidclaim, the contention of the appellant cannot be summarilyaccepted. 2. Availability of the said fund with the assessee in theassessment year 2016-17 parked as short term interestbearing loans had not been proved, though the ITAT as alsoheld that availability of cash-in-hand out of cash withdrawalsmade by the assessee in the assessment year 2016-17 couldnot be summarily discarded on the ground that a substantialperiod had elapsed.assessment year 2016-17 parked as short term interestbearing loans had not been proved, though the ITAT as alsoheld that availability of cash-in-hand out of cash withdrawalsmade by the assessee in the assessment year 2016-17 couldnot be summarily discarded on the ground that a substantialperiod had elapsed. 3. The assessee had failed to discharge the primary onus castupon her to substantiate the ‘nature’ and ‘source’ of cashdeposit in terms of Section 69A of the IT Act.upon her to substantiate the ‘nature’ and ‘source’ of cashdeposit in terms of Section 69A of the IT Act. 7. The order impugned passed by the learned ITAT is sought to bechallenged in appeal filed before this Court by the legal heir of theassessee i.e. husband of Kalawati Agrawal namely, NanakchandAgrawal in which the substantial question of law has beenformulated which has been catalogued in the opening paragraph ofthis judgment.challenged in appeal filed before this Court by the legal heir of theassessee i.e. husband of Kalawati Agrawal namely, NanakchandAgrawal in which the substantial question of law has beenformulated which has been catalogued in the opening paragraph ofthis judgment. 8. Mr. S. Rajeswara Rao, learned counsel appearing on behalf of theappellant herein, submits that the accepted closing cash balance ofthe assessment year 2016-17 could not be taxed in the assessmentyear 2017-18, because each year is an independent assessment unitunder the IT Act and it is contrary to the provisions contained inappellant herein, submits that the accepted closing cash balance ofthe assessment year 2016-17 could not be taxed in the assessmentyear 2017-18, because each year is an independent assessment unitunder the IT Act and it is contrary to the provisions contained in (Tax Case No.8/2024) Section 69A of the IT Act which clearly provides that “where in anyfinancial year the assessee is found to be owner of any money” andin the present case, the assessee was found to be owner of themoney in the preceding years viz., assessment year 2016-17. Hewould further submit that the income, whether unexplained orundisclosed, of relevant financial year alone can be assessed to taxin the same assessment year and not of the preceding assessmentyear and as such, Section 69A of the IT Act is not attracted. Hewould rely upon the decision of the M.P. High Court in the matter--of Harlal Mannulal v. Commissioner of Incometax, M.P.I1 to support his contention. (Tax Case No.8/2024) Section 69A of the IT Act which clearly provides that “where in anyfinancial year the assessee is found to be owner of any money” andin the present case, the assessee was found to be owner of themoney in the preceding years viz., assessment year 2016-17. Hewould further submit that the income, whether unexplained orundisclosed, of relevant financial year alone can be assessed to taxin the same assessment year and not of the preceding assessmentyear and as such, Section 69A of the IT Act is not attracted. Hewould rely upon the decision of the M.P. High Court in the matter--of Harlal Mannulal v. Commissioner of Incometax, M.P.I1 to support his contention. 9. Mr. Ajay Kumrani, learned counsel appearing on behalf of therespondent herein/Revenue, would support the impugned orderand submit that the ITAT has recorded well-reasoned findings offact, which have not been shown to be perverse or unsupported byrecord. He would further submit that the ITAT has rightly heldthat a heavy burden lies upon the assessee to prove the source andavailability of ₹ 23,00,000/- on 1-12-2016 and mere presence of aclosing cash balance in the balance sheet, unsupported bycorroborative cash flow or recovery details, cannot ipso facto provethe availability of that cash as a source for subsequent cash deposit,particularly where the assessee admits to having deployed that cashfor lending activities. Therefore, the appeal deserves to bedismissed as having no merit, as the ITAT has also granted relief to 1(1984) 147 ITR 11 (MP) (Tax Case No.8/2024) the extent of ₹ 2,50,000/- on estimated cash-in-hand, whichdemonstrates judicious application of mind and fairness. He wouldfinally submit that the findings of the ITAT are based on cogentreasoning, appreciation of material facts and settled legalprinciples under Sections 69A and 115BBE of the IT Act. In thatview of the matter, the appeal deserves to be dismissed byanswering the substantial question of law against the assessee andin favour of the Revenue. 10. We have heard learned counsel for the parties and considered theirrival submissions made herein-above and also went through therecord with utmost circumspection. rival submissions made herein-above and also went through therecord with utmost circumspection. 11. The assessee deposited a sum of ₹ 23,00,000/- in Specified BankNotes (SBN) in her bank account with Bank of Baroda on 1-12-2016and during that period, the Government of India had announceddemonetization on 8-11-2016 vide notification No.SO 3407(E). Theavowed objective of Demonetization of 2016 announced by theGovernment of India was aptly noticed by the Constitution Benchof the Supreme Court in a challenge as to the validity of decision-making process adopted prior to demonetization, whether thenotification dated 8-11-2016 is liable to be struck down applyingthe test of proportionality etc., in the matter of Vivek Narayan-Sharma and others (Demonetisation Case5J.) v. Union ofIndia and others2 in which their Lordships have assigned threeconcerns which state as under: - (Tax Case No.8/2024) “275. The impugned notification has been issued with anobjective to meet the following three concerns: 275.1. Fake currency notes of the SBNs have been largely incirculation and it has been found to be difficult to easilyidentify genuine bank notes from the fake ones. 275.2. It has been found that high denomination bank noteswere used for storage of unaccounted wealth which wasevident from the large cash recoveries made by lawenforcement agencies. 275.3. It has also been found that fake currency is being usedfor financing subversive activities such as drug traffickingand terrorism, causing damage to the economy and securityof the country.” 12. In the above background, the present case eventually revolves around the interpretation of the provisions contained in Section 69A of the IT Act, which states as under: - 275.1. Fake currency notes of the SBNs have been largely incirculation and it has been found to be difficult to easilyidentify genuine bank notes from the fake ones. 275.2. It has been found that high denomination bank noteswere used for storage of unaccounted wealth which wasevident from the large cash recoveries made by lawenforcement agencies. 275.3. It has also been found that fake currency is being usedfor financing subversive activities such as drug traffickingand terrorism, causing damage to the economy and securityof the country.” 12. In the above background, the present case eventually revolves around the interpretation of the provisions contained in Section 69A of the IT Act, which states as under: - “69A. Unexplained money, etc.—Where in any financialyear the assessee is found to be the owner of any money,bullion, jewellery or other valuable article and such money,bullion, jewellery or valuable article is not recorded in thebooks of account, if any, maintained by him for any source ofincome, and the assessee offers no explanation about thenature and source of acquisition of the money, bullion,jewellery or other valuable article, or the explanation offeredby him is not, in the opinion of the Assessing Officer,satisfactory, the money and the value of the bullion, jewelleryor other valuable article may be deemed to be the income ofthe assessee for such financial year.” 13. A focused perusal of the provisions contained in Section 69A of theIT Act would show that this provision is in the nature of deemingfiction engrafted under the IT Act which deems the money, bullion,jewellery or other valuable article to be income of the assessee forthe financial year in which the assessee is found to be the owner ofsuch money, bullion, jewellery or valuable article if the stipulated (Tax Case No.8/2024) conditions are satisfied necessitating the invocation of the deeming fiction. 14. The provisions of Section 69A of the IT Act came up forconsideration and interpretation before the Supreme Court in theconsideration and interpretation before the Supreme Court in the matter of D.N. Singh v. Commissioner of Income Tax,Central, Patna and another3 wherein the contours of the saidprovision was expounded with precision by their Lordships asunder: - “25. Section 69 and Section 69-A, apart from being closeneighbours, do bear resemblance with one another. Section69 deals with unexplained investment. Section 69-A dealswith unexplained money, bullion, jewellery or other valuablearticles. Section 69-A was inserted by the Amending Act 5 of1964 and it came into effect w.e.f. 1-4-1964. Both sectionsrequire that the subject-matter of the provisions viz.investments in the case of Section 69 and money, bullion,jewellery or other valuable articles in the case of Section 69-Aare not recorded in the books of accounts. That is, in a casewhere books of accounts are maintained. In the case ofinvestments under Section 69, necessarily, the law givercontemplates the assessing officer finding that the assesseehad made the investments. In the case of Section 69-A, theassessee must be found to be the owner of the money,bullion, jewellery or other valuable articles. In both cases, ifthe assessee is able to offer an explanation for the nature andthe source for the investments and money, bullion, jewelleryor other valuable articles, respectively, and it is not foundunsatisfactory, there can be no deemed income under eithersection. 26.Turning more to Section 69-A, it may be broken downinto the following essential parts: (a) The assessee must be found to be the owner; (b) He must be the owner of any money, bullion, jewellery orother valuable articles; (c) The said articles must not be recorded in the books ofaccounts, if any maintained; (d) The assessee is unable to offer an explanation regardingthe nature and the source of acquiring the articles inquestion; or 26.Turning more to Section 69-A, it may be broken downinto the following essential parts: (a) The assessee must be found to be the owner; (b) He must be the owner of any money, bullion, jewellery orother valuable articles; (c) The said articles must not be recorded in the books ofaccounts, if any maintained; (d) The assessee is unable to offer an explanation regardingthe nature and the source of acquiring the articles inquestion; or The explanation, which is offered, is found to be, in theopinion of the Officer, not satisfactory; (e) If the aforesaid conditions are satisfied, then, the value ofthe bullion, jewellery or other valuable article may be deemedas the income of the financial year in which the assessee isfound to be the owner; (f) In the case of money, the money can be deemed to be theincome of the financial year;” 15. Having noticed the provisions contained in Section 69A of the ITAct read with the principles of law laid down by their Lordships ofthe Supreme Court in D.N. Singh (supra) for invoking Section69A of the IT Act, if the facts of the present case are examined, itwould clearly emerge that the source of cash deposits made duringthe demonetization period pertains to and has its immediateinextricable nexus with cash withdrawals made by the assesseefrom regular disclosed bank account in the assessment year 2015-16 relevant to financial year 2014-15, which were thereafteradvanced to various persons as short term loans and advances onwhich interest income was earned in the assessment year 2016-17relevant to financial year 2015-16 and which were thereafterreturned/refunded and consequently, lying with the assessee ascl0osing cash-in-hand as on 31-3-2016 in the balance sheet drawnfor the financial year 2015-16 and thereafter was carried out to thenext financial year viz., financial year 2016-17 relevant to (Tax Case No.8/2024) assessment year 2017-18 as opening balance and pursuant todemonetization announced by the Government, the same wasdeposited in SBN on 1-12-2016. 16. It is the case of the assessee that the short term loans and advanceswere returned back to her in the assessment year 2016-17 itself andformed part of her disclosed cash balance in the return of incomefiled in respect of the assessment year 2016-17 and lying unutilizedas on 31-3-2016 which is clearly evidenced by the balance sheet ason 31-3-2016 filed on record of the Assessing Officer. The assesseehad filed her return of income for the assessment year 2016-17 on2-12-2016, wherein the cash balance to the tune of ₹ 23,45,301/-was diligently declared. were returned back to her in the assessment year 2016-17 itself andformed part of her disclosed cash balance in the return of incomefiled in respect of the assessment year 2016-17 and lying unutilizedas on 31-3-2016 which is clearly evidenced by the balance sheet ason 31-3-2016 filed on record of the Assessing Officer. The assesseehad filed her return of income for the assessment year 2016-17 on2-12-2016, wherein the cash balance to the tune of ₹ 23,45,301/-was diligently declared. 17. The Assessing Officer has miserably failed to appreciate that theprovisions of sub-section (4) of Section 139 of the IT Act, at therelevant time, provided an outer time-limit till 31-3-2017 to theassessee to file return of income for the assessment year 2016-17.Further, the said return of income was duly processed on 21-1-2017vide an intimation order issued under the provisions of Section143(1)(a) of the IT Act wherein the returned income was assessedas such. The Assessing Officer has further failed to appreciate thatnon-issuance of mandatory scrutiny notice under the provisions ofSection 143(2) of the IT Act selecting the case for scrutinyassessment by the outer time limitation of 30-9-2017, the return ofincome filed by the assessee attained finality with all the figuresprovisions of sub-section (4) of Section 139 of the IT Act, at therelevant time, provided an outer time-limit till 31-3-2017 to theassessee to file return of income for the assessment year 2016-17.Further, the said return of income was duly processed on 21-1-2017vide an intimation order issued under the provisions of Section143(1)(a) of the IT Act wherein the returned income was assessedas such. The Assessing Officer has further failed to appreciate thatnon-issuance of mandatory scrutiny notice under the provisions ofSection 143(2) of the IT Act selecting the case for scrutinyassessment by the outer time limitation of 30-9-2017, the return ofincome filed by the assessee attained finality with all the figures (Tax Case No.8/2024) declared therein well within the knowledge of the Income TaxDepartment and forming part of the assessment records and eventhereafter, there were no fetters on the powers of the AssessingOfficer and he was not estopped in law nor debarred to take up thecase for reassessment by issuance of reassessment notice underSection 148 of the IT Act, which as per the provisions of Section149 of the IT Act, provided for an outer time limit of six years fromthe end of the relevant assessment year i.e. till 31-3-2023,particularly when the assertion of the source of cash deposit tracingit to closing balance as on 31-3-2016 was well before him in theregular assessment proceedings ongoing in the year 2019 itself. 18. In the matter of Chintels India Limited v. Deputy-4Commissioner of Incometax, it was held by the Delhi HighCourt that once an assessee does not receive a notice under Section143(2) of the IT Act within the period stipulated then such anassessee can take it that the return filed by him has become finaland no scrutiny proceedings are to be started in respect of thatreturn. 19. Similarly, in the matter of Principal Commissioner of Income Tax, Central-3 v. Abhisar Buildwell Private Limited5, onthe aspect of the return attaining finality when accepted in anassessment undertaken under Section 143(1)(a) of the IT Act andmandatory scrutiny notice under Section 143(2) not issued by the 4(2017) 397 ITR 416 5(2024) 2 SCC 433 (Tax Case No.8/2024) stipulated time limit and the same being treated as a case ofcompleted/unabated assessment in the context of provisions ofSection 153A assessments in cases of search and seizure, it washeld by their Lordships of the Supreme Court that the completed/unabated assessments can be re-opened by the AO in exercise ofpowers under Sections 147/148, subject to fulfillment of theconditions as envisaged/mentioned under Sections 147/148 andthose powers are saved. Tax, Central-3 v. Abhisar Buildwell Private Limited5, onthe aspect of the return attaining finality when accepted in anassessment undertaken under Section 143(1)(a) of the IT Act andmandatory scrutiny notice under Section 143(2) not issued by the 4(2017) 397 ITR 416 5(2024) 2 SCC 433 (Tax Case No.8/2024) stipulated time limit and the same being treated as a case ofcompleted/unabated assessment in the context of provisions ofSection 153A assessments in cases of search and seizure, it washeld by their Lordships of the Supreme Court that the completed/unabated assessments can be re-opened by the AO in exercise ofpowers under Sections 147/148, subject to fulfillment of theconditions as envisaged/mentioned under Sections 147/148 andthose powers are saved. 20. Not only this, the provisions of Section 69A of the IT Actcontemplate that the ‘money’ (cash deposit in the present case)could be deemed to be in the nature of income only in the financialyear in respect of which the assessee is found to be the owner andin the instant case, by offering plausible explanation tracing thesource of money to closing balance of preceding year, the assesseewas found to be the owner of the ‘asset’/cash in the assessmentyear 2016-17 and hence, the explanation of nature and source ofsuch money and invocation of deeming fiction engrafted underSection 69A could have been sought/examined by the AssessingOfficer in the assessment year 2016-17 and could not have beendone in the assessment year 2017-18 going by the express languagecontained in Section 69A and not otherwise. Furthermore, thefactum of liquidation/refund of short term loans and advances andits consequential accumulation as cash-in-hand as on 31-3-2016could have been examined in the assessment year 2016-17 onlyparticularly when the Assessing Officer has not discharged the (Tax Case No.8/2024) burden cast upon him to implicate the assessee into the sweep ofSection 69A. As such, the Assessing Officer has made addition onpure guess. It is well settled principle of law that while making anassessment under the provisions of the IT Act, the Income TaxOfficer is not entitled to make a pure guess and to resort to anassessment without reference to any evidence or any material at alland that suspicion howsoever strong cannot take the place of proofbeyond reasonable doubt. (See Dhakeswari Cotton MillsLimited v. Commissioner of Income Tax, West Bengal6.) 21. The Supreme Court in the matter of Lalchand Bhagat AmbicaRam v. Commissioner of Income Tax, Bihar and Orissa7while dealing with an addition made by the AO in a caseconcerning the deposit of High Denomination Notes, sternlydeprecated the practice of the Assessing Officer and the Tribunal toindulge into conjectures, suspicion and surmises and actingwithout any cogent evidence, expounded as – “(i) that the entries in the Rokar and the Almirah account ofthe appellant showed that there was an aggregate cashbalance of Rs.3,10,681 and it was highly probable that highdenomination notes of the value of Rs.2,91,000 wereincluded therein. The books of account of the appellant werenot challenged in any other manner except in regard to theinterpolations relating to the number of high denominationnotes and the Tribunal accepted these books of account asgenuine and worked up its theory on the basis of the entrieswhich obtained in these books of account. It was not,therefore, open to the Tribunal to accept the genuineness ofthese books of account and accept the explanation of the 6(1954) 2 SCC 602 7(1959) 37 ITR 288 (Tax Case No.8/2024) appellant in part as to Rs. 1,50,000 and reject the same inregard to the sum of Rs. 1,41,000. 6(1954) 2 SCC 602 7(1959) 37 ITR 288 (Tax Case No.8/2024) appellant in part as to Rs. 1,50,000 and reject the same inregard to the sum of Rs. 1,41,000. (ii) that the circumstances relied on by the Income-tax Officerwere matters of pure conjecture, suspicion and surmises: thenotoriety for smuggling foodgrains was merely a backgroundof suspicion and the appellant could not be held to haveindulged in smuggling without any evidence; the cancellationof the foodgrain licence and the prosecution of the appellantwere of no consequence inasmuch as the licence was wasrestored and the appellant was acquitted of the offence withwhich it was charged; the mere possibility of the appellantearning considerable amounts in the account year was amatter of pure conjecture; and the fact that the appellantindulged in speculation did not legitimately lead to theinference that the profits in speculative transactions couldexceed the value of the notes; (iii) that the Appellate Tribunal could not have come to theconclusion that the sum of Rs.1,41,000 comprising 141 highdenomination note was not satisfactorily explained unless ithad at the back of its mind the various probabilities relied onby the Income-tax Officer; (iv) that therefore the Tribunal in arriving at its conclusionindulged in suspicions, conjectures and surmises and actedwithout any evidence or upon a view of the fats which couldnot reasonably be entertained: the facts found were such thatno person acting judicially and properly instructed as to therelevant law could have found; (v) that there was no material to support the finding of theAppellate Tribunal that the sum of Rs.1,41,000 was profitsliable to income-tax and excess profits tax in the hands of theappellant.” 22. In view of the aforesaid analysis, we are of the considered opinion that the learned ITAT is absolutely unjustified in dismissing theappeal partly upholding the addition of ₹ 20,50,000/- treating it asunexplained money invoking the deeming fiction engrafted underSection 69A of the IT Act charging the same to higher rate of tax asprescribed under Section 115BBE of the IT Act. As such, the (Tax Case No.8/2024) impugned order passed by the Assessing Officer affirmed by theCIT (Appeals) and further partly affirmed by the ITAT is hereby setaside. It is hereby held that ₹ 20,50,000/- cannot be said to beunexplained money under Section 69A of the IT Act. Accordingly,the substantial question of law is answered in favour of theassessee and against the Revenue. 23. The appeal is allowed to the extent indicated herein-above, leavingthe parties to bear their own cost(s).the parties to bear their own cost(s). 24. This Court appreciates the valuable assistance rendered by Mr.Nikhilesh Begani, Advocate, who in short notice submitted writtensynopsis along with citations relevant for the purpose of resolvingthe controversy. We place his assistance on record.Nikhilesh Begani, Advocate, who in short notice submitted writtensynopsis along with citations relevant for the purpose of resolvingthe controversy. We place his assistance on record. Sd/- (Sanjay K. Agrawal)JUDGE Sd/- (Deepak Kumar Tiwari)JUDGE Soma