[2025:RJ-JP:46223-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 40/2025 The Principal Commissioner Of Income Tax, Aayakar Bhawan Udaipur Rajasthan Subcity Centre, Savina, Udaipur(Raj.) ----Appellant Versus M/s Suwalka Nad Suwalka Properties And Builders Pvt.ltd., Bundi Road, Kunhari Ladpura, Kota (Pan/gir No. Aahcs7054C) ----Respondent For Appellant(s) : Mr. Shantanu Sharma For Respondent(s) : Mr. Prakul Khurana with Mr. Rajat Sharma Mr. Shubhendra Singh HON'BLE MR. JUSTICE MAHENDAR KUMAR GOYAL HON'BLE MR. JUSTICE BALJINDER SINGH SANDHU Order 17/11/2025 PER:- HON’BLE MAHENDAR KUMAR GOYAL, J. This income tax appeal is preferred against the order dated 03.10.2024 passed by the learned Income Tax Appellate Tribunal, Jaipur Bench (for brevity, ‘learned Tribunal’) whereby, while allowing the income tax appeal no.302/JP/204 filed by he respondent/assessee (for brevity, ‘assessee’), the order dated 17.01.2024 passed by the Commissioner of Income Tax (Appeals), Udaipur-2 [for brevity, ‘CIT (A)’] has been quashed and set aside. The relevant facts in brief are that the assessee is a company engaged in business of real estate as a builder and developer. Its case for the assessment year 2017-18 was selected for scrutiny which culminated into assessment order dated 22.12.2019 passed by the Assistant Commissioner of Income Tax, Circle Kota wherein, it was held that the assessee has failed to explain the source of cash deposition of a sum of Rs.2.79 crores in the demonetization currency [2025:RJ-JP:46223-DB] (2 of 5) [ITA-40/2025] in its bank account during the relevant period and as such, a sum of Rs.2.64 crores was added to its total income as unexplained money as per the provisions of Section 69A of the Income Tax Act, 1961 (for brevity, ‘Act of 1961’). Resultantly, demand of income tax and interest thereupon was raised with initiation of penalty proceedings under Section 271AAC. The appeal preferred thereagainst by the assessee came to be partly allowed by the CIT (A) vide order dated 17.01.2024, the appellate authority reduced the amount of Rs. 2.64 crore from the business income of the assessee and upheld the same as an addition under ‘Income from Other Sources’ under Section 68 of the Act of 1961, treating the cash deposited during demonetization as unexplained credit. Out of the total disallowance of Rs. 15 lakh, the above was sustained to the extent of Rs. 1,92,993/-, and the remaining disallowance of Rs. 13,07,007/- was deleted. The CIT(A) rejected the books of account by invoking Section 145(3) of the Act of 1961 on the issue of addition of Rs. 2.64 crores, holding that the assessee failed to furnish credible evidence in support of the source of cash deposit. Although the CIT(A) partly allowed the appeal, however the Department did not challenge the same in view of the lower tax effect as per the prevailing CBDT circular. However, the order dated 17.01.2024 was assailed by the assessee by way of an appeal before the ITAT, Jaipur, which has been allowed by the learned Tribunal vide the impugned order dated 03.10.2024 Assailing the order impugned, learned counsel for the appellant submits that the learned Tribunal erred in reversing the order of the [2025:RJ-JP:46223-DB] (3 of 5) [ITA-40/2025] CIT (A) and holding that adding the sum of Rs.2.64 crore in total income of the assessee as unexplained money was not justified. He further submits that the learned Tribunal was not justified in recording a finding that since, some part of the deposited cash was not considered by the Assessing Officer as unexplained, the remaining part should not have been considered as unexplained. Learned counsel submits that the appeal involves substantial questions of law and prays that the same may be allowed, the order impugned dated 03.10.2024 may be quashed and set aside and the order passed by the CIT (A) may be restored. Per contra, learned counsel for the assessee, opposing the submissions and supporting the findings recorded by the learned Tribunal, prays for dismissal of the appeal. Heard. Considered. The Assessing Officer has, vide order dated 22.12.2019, in the backdrop of the fact that the assessee has deposited Rs.2.79 crore in its various bank accounts during demonetization period and has mentioned so in the return filed by it on 06.03.2018, did not find the explanation of the assessee that it had sold some material worth Rs.3,24,44,415/- from 01.04.2016 to 08.11.2016, to be satisfactory on the premise that it did not provide any bills or vouchers in support of the claim and after reducing the amount of Rs.15,00,000/- surrendered under the PMGKY Scheme by the assessee-company, added a sum of Rs.2.64 crore in the total income as unexplained money and raised the demand of tax as also the interest thereon with initiation of the penalty proceedings. The appeal preferred thereagainst by the assessee was partly allowed by the CIT (A) vide order dated 17.01.2024 in the manner that the addition of Rs.2.64 [2025:RJ-JP:46223-DB] (4 of 5) [ITA-40/2025] crore was reduced from the business income of the assessee. However, the appeal preferred by the assessee against the order of the CIT (A) has been allowed by the learned Tribunal vide order impugned dated 03.10.2024. In the appeal, the assessee raised two grounds. First, that the CIT(A) erred in rejecting the books of account of the assessee by applying the provisions of Section 145(3) of the Income Tax Act without asking the assessee to produce the books of account and without examining the same. Second, that the CIT(A) erred in making an addition of Rs. 2.64 crores on account of cash deposited in the bank as unexplained cash credit by applying the provisions of Section 68 of the Act and taxing the same by applying the provisions of Section 115 BBE of the Income Tax Act. While allowing the appeal, the learned Tribunal held that the CIT (A) has not advanced any reason or basis of rejection of the book results which were, otherwise, verified moreso, when the Assessing Offcer and the CIT (A) have already considered a part of the amount deposited in the bank account as business receipt; but, the remaining part of the sum was not so considered. Relying upon a judgement of this Court in the case of CIT Vs. Pink City Developers [99 taxmann.com 422 (Rajasthan)], the learned Tribunal held that the CIT (A) erred in rejecting the book results because the assessee had deposited cash in demonetized currency which was not a valid reason to invoke the provision of Section 145 (3) of the Act of 1961. It was further held that when the provision of Section 145 (3) is to be invoked, the assessment is to be completed in the manner laid down under Section 144 of the Act of 1961; but, no such procedure was followed. It was further held that out of the sales worth [2025:RJ-JP:46223-DB] (5 of 5) [ITA-40/2025] Rs.3,24,44,415/-, the sale worth Rs.2.64 crore was not found genuine as the assessee has deposited the amount in the demonetized currency and thus, on the same set of evidence, the revenue was satisfied qua sale worth Rs.60,44,415/-; but, for remaining amount, i.e., Rs.2.64 crore, invoked the provisions of Section 145 (3) which is not tenable. Referring to and relying upon another judgement of this Court in the case of Smt. Harshila Chordia Vs. Income Tax Officer [2008] 298 ITR 349 (Rajasthan), learned Tribunal further held that the Assessing Officer erred in invoking the provisions of Section 68 of the Act of 1961 inasmuch as the sale transactions recorded in the book of accounts were already part of the income credited in the statement of profit and loss account. In view thereof, a categorical finding was recorded by the learned Tribunal that the same could not have been considered as unexplained credit entry of the assessee. Learned counsel for the appellant-revenue could not satisfy this Court that the aforesaid findings recorded by the learned Tribunal suffer from any perversity or patent illegality so as to warrant interference of this Court. We do not find that the instant appeal involves any substantial question of law. Resultantly, the appeal is dismissed. (BALJINDER SINGH SANDHU),J (MAHENDAR KUMAR GOYAL),J PRAGATI/9