Archive · 21 Sep 2026
Delhi ITAT Rejects Tax on ₹34.8 Lakh Cash Balance
The tax department questioned why a taxpayer had ₹34.8 lakh in cash at the end of the year.
The taxpayer said the money came from commission income.
That income had already been written in the books and taxed.
The cash book also showed how the money was built up without a negative balance.
The tribunal said the same money should not be taxed again as unexplained.
It therefore removed the ₹34.8 lakh tax addition.
The tribunal also removed a separate ₹30 lakh addition after the taxpayer provided supporting documents.
The case shows why clear books and records are important when cash is questioned.
The Delhi ITAT deleted a ₹34.8 lakh Section 68 addition for assessment year 2016-17.
The taxpayer had reported ₹34.8 lakh in cash and earned ₹44 lakh in commission income during the year.
About ₹35 lakh of the commission was received in cash, recorded in the books, and offered to tax.
The tribunal found that the cash book showed no negative balance and that the books had not been rejected.
The ITAT also deleted a separate ₹30 lakh creditor addition after documents established the creditor’s identity, creditworthiness, and banking transaction.
- Who
- Ankish Madhan, the Income Tax Department, and the Delhi Income Tax Appellate Tribunal.
- What
- The Delhi ITAT deleted ₹34.8 lakh treated as unexplained money and also removed a separate ₹30 lakh creditor addition.
- When
- The order was passed on 9 September 2026 for assessment year 2016-17.
- Where
- The case was decided by the Delhi Income Tax Appellate Tribunal.
- Why
- The commission income was already recorded and offered to tax, the cash book showed a consistent trail, and supporting evidence was provided for the creditor.
Tax Department’s Position
Taxpayer and Tribunal’s Position
Treatment of cash balance
Tax Department’s Position
The assessing officer treated the ₹34.8 lakh closing cash balance as unexplained money under Section 68, and the first appellate authority upheld the addition.
Taxpayer and Tribunal’s Position
The taxpayer and tribunal said the cash was traceable to commission income already recorded in the books and offered to tax, so it should not be treated as unexplained again.
Reliability of records
Tax Department’s Position
The tax authorities questioned the reported cash balance during assessment.
Taxpayer and Tribunal’s Position
The tribunal relied on the cash book, which showed no negative balance, and noted that the assessing officer had not rejected the books of account.
Creditor transaction
Tax Department’s Position
A separate ₹30 lakh creditor addition was initially made after the creditor was shown under an incorrect name.
Taxpayer and Tribunal’s Position
The tribunal accepted subsequent confirmation, PAN details, income-tax records, and bank statements as evidence of the creditor’s identity, creditworthiness, and banking transaction.
- Cash addition
- ₹34.8 lakh under Section 68
- Commission income
- ₹44 lakh, including approximately ₹35 lakh received in cash
- Closing cash
- ₹34.8 lakh reported as cash in hand on 31 March 2016
- Assessment year
- 2016-17
- Tribunal order date
- 9 September 2026
- Separate creditor addition
- ₹30 lakh, also deleted by the ITAT
- Key records
- Cash book, party details, creditor confirmation, PAN details, income-tax records, and bank statements