Goldman Tapes Pvt. Ltd. v. ACIT

Case snapshot

Sections / provisions: 69A

Questions before the Court / Tribunal

• Demonetisation SBN deposits recorded as business receipts: The reported ruling accepts cash deposited during demonetisation as recorded business receipts and deletes the section 69A addition. The primary order should be used for the exact acceptance dates and legal treatment of specified bank notes.

Material facts and background

Briefly stated the facts of the case are that on the basis of AIMS

data in respect of cash deposits of Specified Bank Notes (SBNs) made by the assessee in its bank accounts, the AO issued notice u/s 142(1) of the Act on 15/12/2017. Pursuant to the notices, the assessee filed its return of income. 4.1.

During the course of scrutiny assessment proceedings, the AO

asked the assessee to explain the source of cash deposit in the bank account with Bassein Catholic Co-op. Bank Ltd. and ICICI Bank Ltd. The assessee filed detailed reply explaining that it has received SBNs on account of realization from the existing debtors during the demonetization period. The assessee was asked to furnish the details with names and full address of the debtors who have deposited these SBNs. The details were furnished by the assessee as acknowledged by the AO in his assessment order at para 10.1 sub para (i.) of his order. 5.

Though the assessee has successfully explained the source of cash

deposited in the bank accounts but the AO was of the firm belief that the assessee cannot accept the demonetized currency from 09/11/2016 onwards as the same were not a legal tender with certain exceptions as notified in the gazette notification of Ministry of Finance bearing No. 2653 dated 08/11/2016 for any mandatory transactions and accordingly made the addition of Rs. 51.70 Lakhs.

The assessee carried the matter before the ld. CIT(A) but without

Appellant / assessee submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Revenue / respondent submissions

a legal tender for the assessee then the same was also not legal tender for the banks but the banks have accepted the deposit. Therefore, we do not find any merit in the accusation of the AO. Though the decision of the SMC Bench of ITAT Chennai (supra) is in favour of the revenue bu the same author sitting in Division Bench in the case of TamilNadu State Marketing Corporation Ltd. vs. ACIT (supra) has decided the impugned issue in favour of the assessee. The relevant findings read as under:“The ld. counsel for the assessee relied on para 9 of the decision, which reads as under:"10. We have also perused the decision of A. Govindarajulu Mudaliar v. CIT, on which reliance is placed by learned counsel for the Revenue. We, however, fail to understand how the above decision helps the Revenue in the instant case. In that case, certain amounts appeared in the account books of a firm of which the assessee was a partner as credits for him. The assessee was asked for an explanation as to how he came to possess this amount. His explanation in regard to the source of this amount in part was not accepted. It was in that context that the Supreme Court observed that where an assessee fails to...

Court / Tribunal analysis and reasoning

a legal tender for the assessee then the same was also not legal tender for the banks but the banks have accepted the deposit. Therefore, we do not find any merit in the accusation of the AO. Though the decision of the SMC Bench of ITAT Chennai (supra) is in favour of the revenue bu the same author sitting in Division Bench in the case of TamilNadu State Marketing Corporation Ltd. vs. ACIT (supra) has decided the impugned issue in favour of the assessee. The relevant findings read as under:“The ld. counsel for the assessee relied on para 9 of the decision, which reads as under:"10. We have also perused the decision of A. Govindarajulu Mudaliar v. CIT, on which reliance is placed by learned counsel for the Revenue. We, however, fail to understand how the above decision helps the Revenue in the instant case. In that case, certain amounts appeared in the account books of a firm of which the assessee was a partner as credits for him. The assessee was asked for an explanation as to how he came to possess this amount. His explanation in regard to the source of this amount in part was not accepted. It was in that context that the Supreme Court observed that where an assessee fails to...

5 1,04,000 to his income for his failure to furnish detailed particulars of the receipt of such notes each of the 200 notes of Rs. 1,000 denomination tendered by him for encashment, is not in accordance with law." This judgment was referred by the ld. counsel for meeting the argument made by ld. Senior DR that the demonetized currency received by assessee in the present case is not out of sale proceeds of liquor. We have gone through the scheme and noted that the Specified Bank Notes (cessation of liabilities) Ordinance 2016 (subsequently this was passed as an Act), was towards cessation of liability of RBI in respect of SBNs with effect from 31.12.2016. The Government of India vide Gazette of India Notification dated 8.11.2016 notified that the SBNs of Rs.500 and Rs.1,000 notes is not a legal tender w.e.f. 9.11.2016. We noted that even the Revenue admitted that the Government has not declared the SBNs as an illegal tender and even possessing of SBNs was not an offence till 31.12.2016. Between the period from 9.11.2016 to 31.12.2016, all the public, who were holding such SBNs were permitted to exchange such holdings against valid currency notes but the scheme itself does not...

6 before us that the observation of the AO that branch wise details of deposits made in SBNs was not available is not correct for the reason that the complete details of deposits of SBNs account-wise, branch-wise was submitted before the AO as well as before the CIT and also before us. 8.4 We have gone through the notifications issued by the RBI and Government of India, to deal with specified bank notes. The only premise of the Revenue is mainly on the issue of notification issued by the RBI to deal with the specified bank notes and argument is that the assessee is not one of the eligible person to accept or to deal with specified bank notes and thus, even if assessee furnish necessary evidence, the assessee cannot accept specified bank notes after demonetization and the explanation offered by the assessee cannot be accepted. No doubt specified bank notes of Rs. 500 & Rs. 1000 have been withdrawn from circulation from 09.11.2016 onwards. The Government of India and RBI has issued various notifications and SOP to deal with specified bank notes. Further, the RBI allowed certain category of persons to accept and to deal with specified bank notes up to 31.12.2016. Further, the...

7 issued by RBI or demonetization scheme announced by Government of India on 08.11.2016 will not entitle the Revenue to make addition u/s.69 or 69A of the Act. Because, the mandate of the provisions of Section 69 & 69A of the Act, i.e., unexplained investments and unexplained money etc., may be deemed to be the income of the assessee for the financial year relevant to assessment year concerned, in which the assessee is found to be the owner of such money, bullion, jewellery or valuable article or unexplained expenditure, if, the such expenditure or such money etc., are not recorded in the books of accounts, if any, maintained by assessee for any source of income and the assessee offers no explanation about the nature and source of such expenditure or acquisition of such money, etc., or the explanation offered by him, in the opinion of AO is not satisfactory. For violation of any RBI notification, etc., can have any civil or criminal liability and can be dealt with under any other provision of law by the concerned authority but for the purpose of bringing the amount under Income-tax, the provisions are very clear i.e., 69 & 69A of the Act. In our considered view, to bring any...

Operative decision and relief

The assessee’s appeal was allowed. The Assessing Officer was directed to delete the impugned addition. The order was pronounced on 17 June 2025.

The operative paragraphs follow the Division Bench decision quoted in the order after finding parity of facts. The discussion concerns demonetisation-period deposits explained through ordinary business receipts, books and cash records.

Read the tribunal order: PDF pages 6–7

Authorities and precedents appearing in the judgment

• Raju Ravichandran vs. ITO
• Marketing Corporation Ltd. vs. ACIT in ITA No. 431/Chny/2023
• Marketing Corporation Ltd. vs. ACIT (supra) has decided the impugned
• We have also perused the decision of A. Govindarajulu Mudaliar v. CIT

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Demonetisation SBN deposits recorded as business receipts. The operative result is classified as Assessee appeal allowed; impugned addition directed to be deleted. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Demonetisation SBN deposits recorded as business receipts. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Build a transaction-level evidence file: confirmations, bank trail, invoices, ledger, tax/GST records and counter-party material rather than relying on a generic explanation.
• Where the addition depends on a third-party statement or investigation report, record the request for the relied material and cross-examination at the earliest stage.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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