My cash sales are already in my books and already in my turnover. The officer has added the same money again under section 68 and taxed it at 60%. Can he?
Not on these facts. The Tribunal upheld the deletion of an addition of Rs 4,71,31,500 made under section 68 read with section 115BBE on a jeweller's cash sales of 8 November 2016. The Assessing Officer had accepted the sales and the stock, had not disturbed the closing stock, and had found no defect in the stock register on either of two surveys; purchases, sales and stock are interlinked and inseparable, every purchase increases the stock and every sale reduces it, and where the movement matches the sales there is no basis to disbelieve them. Because the receipts had already been admitted as revenue receipts and offered as turnover, the Tribunal held there was no case for adding them under section 68 or taxing them again under section 115BBE. Suspicion, however strong, cannot decide the matter against the assessee without tangible evidence disproving the sales.
Decided by the ITAT (Income Tax Appellate Tribunal, Visakhapatnam - Shri N.K. Choudhry, Judicial Member, and Shri D.S. Sunder Singh, Accountant Member) on 2021-05-12, reported as [2021] 189 ITD 608 (Visakhapatnam - Trib.). It bears on section 68, section 115BBE, section 44AB, section 133A, section 102 (Act of 2025), section 195 (Act of 2025) of the Income Tax Act 1961, in Cash Credits & Unexplained Money, Cash Transaction Limits and Evidence & Burden of Proof matters.
Almost every demonetisation cash-deposit assessment took the same shape: the trader's sales were in the books, the money went into the bank, and the Assessing Officer added the deposit under section 68 or section 69A and applied the 60% rate, without rejecting the books or touching the stock. This order names the defect in that approach. You cannot accept a sale, accept the stock that went out to make it, leave the closing stock undisturbed, and then tax the sale proceeds as though they had no source. The addition taxes the same money twice. The order also supplies the evidence template. What persuaded the Tribunal was not argument but the trading account, the stock register, the audit report and the match between the reduction in stock and the sales - the documents a trader already has. And it gives the answer to the officer whose case is that the sales are too large to believe: suspicion, however strong, is not enough without tangible evidence disproving them. The section 115BBE point rides along behind: where the assessee carries on one business and has no other source, the receipt is a trading receipt and there is nothing for the special rate to attach to. Read it with Deepak Maratha, which attacks the same 60% rate from the other direction for years before 1 April 2017.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee was a firm of two partners trading in jewellery at Visakhapatnam, assessment year 2017-18. Demonetisation was announced on the evening of 8 November 2016. The firm's books recorded sales of about Rs 4.72 crore on that day, made out in 270 bills between about 7:50 pm and 11:58 pm, and it deposited Rs 5,72,00,000 in specified bank notes. A survey under section 133A was carried out on 27 March 2017 by the Deputy Director of Income-tax (Investigation), and a second survey was carried out on 16 September 2019 during the assessment proceedings. The Assessing Officer was not satisfied with the explanation that the deposits came from cash sales and advances. He pointed to the absence of customer identification and of CCTV footage, and to the size of the day's takings against normal daily sales of about Rs 10 lakh to Rs 16 lakh, about Rs 40 lakh to Rs 50 lakh at peak times, and about Rs 1.5 crore to Rs 3 crore on occasions such as Dhanteras. He added Rs 4,71,31,500 under section 68 and taxed it under section 115BBE at 60%. The Commissioner (Appeals) deleted the addition, accepting that the sales had been credited in the books and offered to tax as revenue receipts, that taxing the same amount again under section 68 would amount to taxing it twice, and that the rush to buy jewellery on that evening was a matter of public record. The Revenue appealed to the Tribunal in I.T.A. No. 253/Viz/2020, and the assessee filed Cross Objection No. 02/Viz/2021.
The Revenue's appeal and the assessee's cross objection were both dismissed, the cross objection having become infructuous once the appeal failed; the order of the Commissioner (Appeals) stood. The Tribunal held that the cash receipts represented the sales, which the assessee had rightly offered for taxation; it went through the trading account and found that there was sufficient stock to effect the sales and no defect in the stock or in the sales; and since the assessee had already admitted the sales as a revenue receipt there was no case for making the addition under section 68 or for taxing the same amount again under section 115BBE. The assessee had explained the source as sales, produced the sale bills and admitted the receipts as revenue. The Assessing Officer had accepted the sales and the stocks and had not disturbed the closing stock, which has a direct nexus with the sales. Both the Deputy Director (Investigation) and the Assessing Officer had surveyed the premises on different dates and independently found no difference in the stock register or the stocks. Purchases, sales and stock are interlinked and inseparable: every purchase increases the stock and every sale decreases it. Suspicion, however strong, should not decide the matter against the assessee without the sales being disproved by tangible evidence.
The Tribunal treated the addition as an accounting impossibility before it treated it as a question of belief. If the sales are accepted, the stock that was sold has gone out of the closing stock and the money has come in. The Assessing Officer accepted the sales, accepted the stock, and left the closing stock untouched. Having done that, he could not then say that the cash which corresponds to those sales came from somewhere else; the two propositions cannot both stand in the same set of accounts. From there the double-taxation point follows without needing a separate doctrine. The receipts had been taken into the profit and loss account as turnover and offered to tax as revenue receipts. Section 68 taxes a credit whose nature and source are not explained. A credit that has been explained as a sale, and taxed as one, is not available to be taxed a second time as an unexplained credit. The evidence the Tribunal relied on is the ordinary evidence of a trading business, which is why the order is useful well beyond demonetisation: the sale bills, the audit report under section 44AB, the financial statements showing the reduction in the stock position matching the sales, and the trading account showing that there was stock enough to make the sales. Against that, the Assessing Officer's material was the improbability of the day's takings and the absence of customer identification and CCTV footage. The Tribunal did not say those observations were irrelevant; it said they were suspicion, and that suspicion, however strong, cannot decide the matter without tangible evidence disproving the sales. Two surveys, by different officers on different dates, had produced no discrepancy in the stock. The section 115BBE conclusion is consequential rather than independent. Once the receipt is a trading receipt of the only business the firm carries on, there is no unexplained credit for the special rate to attach to, and the Tribunal said so in the same sentence in which it refused the section 68 addition.
Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again.
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Handle my notice → Ask a CA on WhatsAppNot on these facts. The Tribunal upheld the deletion of an addition of Rs 4,71,31,500 made under section 68 read with section 115BBE on a jeweller's cash sales of 8 November 2016. The Assessing Officer had accepted the sales and the stock, had not disturbed the closing stock, and had found no defect in the stock register on either of two surveys; purchases, sales and stock are interlinked and inseparable, every purchase increases the stock and every sale reduces it, and where the movement matches the sales there is no basis to disbelieve them. Because the receipts had already been admitted as revenue receipts and offered as turnover, the Tribunal held there was no case for adding them under section 68 or taxing them again under section 115BBE. Suspicion, however strong, cannot decide the matter against the assessee without tangible evidence disproving the sales. This was decided by the ITAT (Income Tax Appellate Tribunal, Visakhapatnam - Shri N.K. Choudhry, Judicial Member, and Shri D.S. Sunder Singh, Accountant Member) and bears on section 68, section 115BBE, section 44AB, section 133A, section 102 (Act of 2025), section 195 (Act of 2025) of the Income Tax Act 1961. It is reported as [2021] 189 ITD 608 (Visakhapatnam - Trib.). Almost every demonetisation cash-deposit assessment took the same shape: the trader's sales were in the books, the money went into the bank, and the Assessing Officer added the deposit under section 68 or section 69A and applied the 60% rate, without rejecting the books or touching the stock. This order names the defect in that approach. You cannot accept a sale, accept the stock that went out to make it, leave the closing stock undisturbed, and then tax the sale proceeds as though they had no source. The addition taxes the same money twice. The order also supplies the evidence template. What persuaded the Tribunal was not argument but the trading account, the stock register, the audit report and the match between the reduction in stock and the sales - the documents a trader already has. And it gives the answer to the officer whose case is that the sales are too large to believe: suspicion, however strong, is not enough without tangible evidence disproving them. The section 115BBE point rides along behind: where the assessee carries on one business and has no other source, the receipt is a trading receipt and there is nothing for the special rate to attach to. Read it with Deepak Maratha, which attacks the same 60% rate from the other direction for years before 1 April 2017. If it applies to you, the first step is this: Show that the sales are in the books and in the returned turnover before you argue anything else. The whole reasoning rests on the money having been offered as a revenue receipt already; if it was not, this order does not help you.
The assessee was a firm of two partners trading in jewellery at Visakhapatnam, assessment year 2017-18. Demonetisation was announced on the evening of 8 November 2016. The firm's books recorded sales of about Rs 4.72 crore on that day, made out in 270 bills between about 7:50 pm and 11:58 pm, and it deposited Rs 5,72,00,000 in specified bank notes. A survey under section 133A was carried out on 27 March 2017 by the Deputy Director of Income-tax (Investigation), and a second survey was carried out on 16 September 2019 during the assessment proceedings. The Assessing Officer was not satisfied with the explanation that the deposits came from cash sales and advances. He pointed to the absence of customer identification and of CCTV footage, and to the size of the day's takings against normal daily sales of about Rs 10 lakh to Rs 16 lakh, about Rs 40 lakh to Rs 50 lakh at peak times, and about Rs 1.5 crore to Rs 3 crore on occasions such as Dhanteras. He added Rs 4,71,31,500 under section 68 and taxed it under section 115BBE at 60%. The Commissioner (Appeals) deleted the addition, accepting that the sales had been credited in the books and offered to tax as revenue receipts, that taxing the same amount again under section 68 would amount to taxing it twice, and that the rush to buy jewellery on that evening was a matter of public record. The Revenue appealed to the Tribunal in I.T.A. No. 253/Viz/2020, and the assessee filed Cross Objection No. 02/Viz/2021. The matter was decided on 2021-05-12 by the ITAT (Income Tax Appellate Tribunal, Visakhapatnam - Shri N.K. Choudhry, Judicial Member, and Shri D.S. Sunder Singh, Accountant Member). On those facts the ITAT held as follows. The Revenue's appeal and the assessee's cross objection were both dismissed, the cross objection having become infructuous once the appeal failed; the order of the Commissioner (Appeals) stood. The Tribunal held that the cash receipts represented the sales, which the assessee had rightly offered for taxation; it went through the trading account and found that there was sufficient stock to effect the sales and no defect in the stock or in the sales; and since the assessee had already admitted the sales as a revenue receipt there was no case for making the addition under section 68 or for taxing the same amount again under section 115BBE. The assessee had explained the source as sales, produced the sale bills and admitted the receipts as revenue. The Assessing Officer had accepted the sales and the stocks and had not disturbed the closing stock, which has a direct nexus with the sales. Both the Deputy Director (Investigation) and the Assessing Officer had surveyed the premises on different dates and independently found no difference in the stock register or the stocks. Purchases, sales and stock are interlinked and inseparable: every purchase increases the stock and every sale decreases it. Suspicion, however strong, should not decide the matter against the assessee without the sales being disproved by tangible evidence.
The Tribunal treated the addition as an accounting impossibility before it treated it as a question of belief. If the sales are accepted, the stock that was sold has gone out of the closing stock and the money has come in. The Assessing Officer accepted the sales, accepted the stock, and left the closing stock untouched. Having done that, he could not then say that the cash which corresponds to those sales came from somewhere else; the two propositions cannot both stand in the same set of accounts. From there the double-taxation point follows without needing a separate doctrine. The receipts had been taken into the profit and loss account as turnover and offered to tax as revenue receipts. Section 68 taxes a credit whose nature and source are not explained. A credit that has been explained as a sale, and taxed as one, is not available to be taxed a second time as an unexplained credit. The evidence the Tribunal relied on is the ordinary evidence of a trading business, which is why the order is useful well beyond demonetisation: the sale bills, the audit report under section 44AB, the financial statements showing the reduction in the stock position matching the sales, and the trading account showing that there was stock enough to make the sales. Against that, the Assessing Officer's material was the improbability of the day's takings and the absence of customer identification and CCTV footage. The Tribunal did not say those observations were irrelevant; it said they were suspicion, and that suspicion, however strong, cannot decide the matter without tangible evidence disproving the sales. Two surveys, by different officers on different dates, had produced no discrepancy in the stock. The section 115BBE conclusion is consequential rather than independent. Once the receipt is a trading receipt of the only business the firm carries on, there is no unexplained credit for the special rate to attach to, and the Tribunal said so in the same sentence in which it refused the section 68 addition. In the words reproduced by the source cited on this page: "Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again."
It was decided by the ITAT on 2021-05-12 and is reported as [2021] 189 ITD 608 (Visakhapatnam - Trib.). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 68, section 115BBE, section 44AB, section 133A, section 102 (Act of 2025), section 195 (Act of 2025), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeal and the assessee's cross objection were both dismissed, the cross objection having become infructuous once the appeal failed; the order of the Commissioner (Appeals) stood. The Tribunal held that the cash receipts represented the sales, which the assessee had rightly offered for taxation; it went through the trading account and found that there was sufficient stock to effect the sales and no defect in the stock or in the sales; and since the assessee had already admitted the sales as a revenue receipt there was no case for making the addition under section 68 or for taxing the same amount again under section 115BBE. The assessee had explained the source as sales, produced the sale bills and admitted the receipts as revenue. The Assessing Officer had accepted the sales and the stocks and had not disturbed the closing stock, which has a direct nexus with the sales. Both the Deputy Director (Investigation) and the Assessing Officer had surveyed the premises on different dates and independently found no difference in the stock register or the stocks. Purchases, sales and stock are interlinked and inseparable: every purchase increases the stock and every sale decreases it. Suspicion, however strong, should not decide the matter against the assessee without the sales being disproved by tangible evidence. It arises in Cash Credits & Unexplained Money, Cash Transaction Limits and Evidence & Burden of Proof matters, on section 68, section 115BBE, section 44AB, section 133A, section 102 (Act of 2025), section 195 (Act of 2025) of the Income Tax Act 1961, and was decided by Income Tax Appellate Tribunal, Visakhapatnam - Shri N.K. Choudhry, Judicial Member, and Shri D.S. Sunder Singh, Accountant Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Tie the cash to the stock. Produce the stock register, the movement of stock across the days in question, the trading account and the audited accounts under section 44AB, and show that the quantity sold left the stock. That link is what the Tribunal found decisive. Ask whether the Assessing Officer disturbed the closing stock or rejected the books. If he accepted both and still added the sale proceeds, say so in terms - he has accepted the sale and taxed the proceeds separately. Point out that the survey found nothing. Two survey teams under section 133A examined the stock on different dates and found no difference; an addition that survives that has to rest on something other than the records. Meet the suspicion head on with documents rather than denial - bills, the sequence and timing of the bills, stock movement, the trading results for the year - because the Tribunal's answer to suspicion was tangible evidence. Take the section 115BBE point separately. Where the assessee has one line of business and no other source, the argument is that the receipt is business income and the special rate has nothing to attach to.
Still good law. This is a Tribunal order, so it binds the Assessing Officer and the Commissioner (Appeals) within the Visakhapatnam Tribunal's jurisdiction and is persuasive elsewhere. It has been taken up widely. The Delhi bench reproduced its reasoning at length in Fine Gujranwala Jewellers v ITO, decided 27 March 2023, and the Jaipur bench quoted the operative holding in ACIT v Mahendra Kumar Agarwal, decided 22 November 2022. Benches at Mumbai, Chennai, Lucknow, Jodhpur and elsewhere have cited it in cash-deposit cases, and it has become the order usually opened first when the question is whether recorded cash sales can be added under section 68. No appeal against it was traced. A search for a High Court decision on it returned nothing, and no order was found declining to follow it. Treat that as the result of a search rather than as a citator report: what can be said is that no later treatment adverse to it was found, not that none exists. The limits are the facts. The order turns on the Assessing Officer having accepted the sales and the stock, on two surveys finding no discrepancy in the stock register, and on the receipts having been offered as turnover. Where the books have been rejected, where the stock cannot support the sales, or where the sales were never taken into the trading account, the reasoning does not reach the case, and an order that is distinguished on its facts is not an order that has been doubted. The Income-tax Act, 1961 was repealed on 1 April 2026 by section 536(1) of the Income-tax Act, 2025, and section 536(2) continues it for proceedings about tax years before that date, so demonetisation-era assessments are still decided under the 1961 Act. Sections 68 to 69D became sections 102 to 106 of the 2025 Act as a family, and section 115BBE became section 195 of that Act, in which the Finance Act 2026 substituted 30% for 60% in section 195(1)(i). The 1 April 2026 date is the general commencement given by section 1(2)(a) of the Finance Act, 2026 for "sections 2 to 129", inside which the substituting clause falls; the tax year 2026-27 and subsequent tax years limb comes from the Explanatory Memorandum, and the enacted words of the clause itself have not been read. The same Act omitted section 443 of the 2025 Act, the counterpart of the section 271AAC penalty, on the same footing. Neither change reaches a demonetisation-era assessment. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order was read in the Tribunal's own words, from a copy of the Tribunal's order PDF. The Tribunal's own website would not serve the file to an automated reader, so the copy read and linked from this page is a mirror of that PDF rather than the Tribunal's own address for it, and everything quoted here was therefore checked a second time against benches that quote it. The operative holding - that the cash receipts represented the sales, that there was sufficient stock to effect them, that no defect was found in the stock or the sales, and that since the sales had already been admitted as a revenue receipt there was no case for an addition under section 68 or for taxing the same amount under section 115BBE again - appears in the same words in the Jaipur bench's order in ACIT v Mahendra Kumar Agarwal, decided 22 November 2022. The sentence about suspicion, and the sentence that purchases, sales and stock are interlinked and inseparable, appear in the same words in the Delhi bench's order in Fine Gujranwala Jewellers v ITO, decided 27 March 2023, which sets out a long block quotation from this order. Two later benches reproducing the same sentences from independently published copies is the check this library applies before a quotation is printed. The procedural details - I.T.A. No. 253/Viz/2020 with Cross Objection No. 02/Viz/2021, assessment year 2017-18, heard on 30 March 2021 and pronounced on 12 May 2021 by Shri N.K. Choudhry and Shri D.S. Sunder Singh - come from the order's own cause title. One caution about how this order is used. It is quoted as though it holds that recorded cash sales can never be added under section 68. It does not. It holds that these sales could not be added, on facts where the Assessing Officer had accepted the sales and the stock, had not disturbed the closing stock, and where two independent surveys had found no discrepancy in the stock register. The reasoning is an accounting argument, and it works only while those facts hold. A case in which the books are rejected, or in which the stock cannot support the sales claimed, is a different case, and quoting this order without the facts invites the answer that it is distinguishable. The second caution is about the rate. The section 115BBE observation is short and is tied to the firm having no source of income other than the jewellery business. Where the addition has been sustained, the rate is a separate fight, and the authority for it is elsewhere. The order carries two figures for the addition: Rs 4,71,35,500 in the Revenue's grounds of appeal at paragraph 1, and Rs 4,71,31,500 at paragraph 3 as the addition the Assessing Officer made. The Tribunal does not reconcile them. The figure used here is the one described as the addition made. The total deposit is given as Rs 5,72,00,000 and the day's sales as about Rs 4.72 crore, so the balance of the deposit is attributable to advances and to sales on other days, but the copy read does not break that down. The order was read from a mirror of the Tribunal's own PDF, because the Tribunal's website would not serve the file; the quoted sentences were then verified against two later Tribunal orders that reproduce them. The Tribunal's refusal of the section 115BBE charge is expressed in the same sentence as its refusal of the section 68 addition, and is reproduced in that form by a later bench; how far it was argued as a separate ground does not appear from the order. The order gives the timing of the day's bills as 7:50 pm to midnight in one place and 8:15 pm to 11:58 pm in another; the outer bounds of the two are used here. The citation [2021] 189 ITD 608 carried in the heading was taken from a secondary listing and has not been verified against any court document, so cite the order by its appeal number rather than by that reference. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal and the assessee's cross objection were both dismissed, the cross objection having become infructuous once the appeal failed; the order of the Commissioner (Appeals) stood. The Tribunal held that the cash receipts represented the sales, which the assessee had rightly offered for taxation; it went through the trading account and found that there was sufficient stock to effect the sales and no defect in the stock or in the sales; and since the assessee had already admitted the sales as a revenue receipt there was no case for making the addition under section 68 or for taxing the same amount again under section 115BBE. The assessee had explained the source as sales, produced the sale bills and admitted the receipts as revenue. The Assessing Officer had accepted the sales and the stocks and had not disturbed the closing stock, which has a direct nexus with the sales. Both the Deputy Director (Investigation) and the Assessing Officer had surveyed the premises on different dates and independently found no difference in the stock register or the stocks. Purchases, sales and stock are interlinked and inseparable: every purchase increases the stock and every sale decreases it. Suspicion, however strong, should not decide the matter against the assessee without the sales being disproved by tangible evidence.
TaxSphere, “ACIT v Hirapanna Jewellers”, https://taxnotice.vittsphere.com/caselaw/case/acit-v-hirapanna-jewellers-recorded-cash-sales-not-section-68/ (validity last checked 2026-09-23)
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My demonetisation cash deposit was added for the year ended 31 March 2017 and taxed at 60% under section 115BBE. Can that rate reach income of that year?
Additions were made to my book profits in earlier years. Can I use that money to explain a cash credit or an unexplained payment in a later year?
The officer says my explanation for an investment is unsatisfactory, so the money must be my income. Is he obliged to make the addition once he disbelieves me?
The credit the officer has added sits in my own business books. Does the entry being in the business books, by itself, let him tax it as business profit?
