Delhi’s Income Tax Appellate Tribunal reportedly accepted a Delhi medicine retailer’s explanation for cash deposits of Rs 2,47,91,057 during the 2016 demonetisation period. The reports say the taxpayer linked the money to pharmacy cash sales and available personal and family cash, supported by business and banking records. The decision turns on the evidence reported in this individual appeal—not on a general exemption for large cash deposits.
What happened in the case
Rakesh Kumar, described by news reports as a Delhi retailer of pharmaceuticals and medicines, deposited a reported Rs 2,47,91,057 into three savings accounts at Oriental Bank of Commerce during financial year 2016–17. The Financial Express reported that the assessment treated the full amount as unexplained under section 68 and applied section 115BBE; those statutory details are based on the report, not an independently reviewed copy of the tribunal order. Financial Express
The Financial Express says Rs 1,64,37,357 of the deposits was explained as cash sales from Kumar’s retail business, with the balance attributed to cash withdrawals and personal and family savings. The Economic Times reports that the tax authorities questioned aspects of the accounts, including the relationship between expenses in the profit-and-loss account and bank debits, and alleged irregular salary or bonus payments. It says the Commissioner of Income Tax (Appeals) upheld the rejection before Kumar appealed to the Delhi ITAT. Economic Times
Why the reported appeal succeeded
The reports describe the tribunal’s focus as whether Kumar had supported the source and availability of the cash with records. He reportedly presented audited financial statements, a balance sheet, a profit-and-loss account, VAT returns, bank statements and sample sales invoices. The reports say the authorities did not identify defects sufficient to displace that evidence and had not rejected the books under section 145. On that account, the ITAT found the explanation supported and allowed the appeal.
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The useful point is evidentiary: a taxpayer’s explanation is stronger when it can be traced through consistent records, from the asserted source of cash to the bank deposit. The reports do not establish that similar documents will resolve another taxpayer’s case or that deposits during demonetisation are automatically accepted.
How the reported sources of cash were documented
| Reported source | Evidence described in reporting |
|---|---|
| Pharmacy cash sales | Financial statements, accounts, VAT returns, bank records and sample sales invoices, as reported by the Economic Times; Rs 1,64,37,357 attributed to sales, as reported by the Financial Express. |
| Personal and family cash availability | The Economic Times reports Kumar’s personal savings of Rs 2.46 lakh and family savings of Rs 72 lakh, with family statements or documents offered. It lists five family amounts: brother’s wife Rs 15 lakh, wife Rs 16 lakh, brother Rs 14 lakh, son Rs 13 lakh and daughter Rs 14 lakh. |
The listed family amounts total Rs 72 lakh. The reports vary in how they describe the savings and withdrawal evidence; the figures and detail above are therefore attributed to the reporting and should not be treated as independently confirmed particulars of the order.
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What the decision does—and does not—establish
- It concerns one taxpayer’s appeal over deposits made during the November 2016 demonetisation period.
- The reported reasoning emphasizes records supporting both business receipts and the availability of personal or family cash, alongside the absence of identified defects sufficient to reject the explanation.
- The Financial Express identifies the appeal as ITA No. 2746/Del/2026 for assessment year 2017–18, and reports that the ITAT deleted a combined addition of Rs 3,31,60,827, consisting of Rs 2,47,91,057 and Rs 83,69,770. That combined figure and the precise operative result have not been independently checked against the order.
- This report is not a safe harbour for cash deposits or a prediction of how another assessment will be decided. A separate case depends on its own records, facts and applicable law.
If you receive a notice about cash deposits
Keep the response tied to the specific deposits and the explanation you can substantiate. Organize bank statements alongside contemporaneous business accounts, sales records, tax filings and any evidence supporting withdrawals or cash held by family members. Reconcile dates and amounts so that the claimed source can be followed into the bank account, and address any specific discrepancy raised by the tax authority rather than relying on a general explanation. Because assessment and appeal issues are fact-specific, consult an Indian chartered accountant or tax advocate about the notice and response deadlines.
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