When Mr Rakesh Kumar from Rohini, Delhi, who owns a flourishing retail service of pharmaceuticals and medications, transferred Rs 2.47 crore money in his own savings account, he had no concept that it would activate a tax notification for inexplicable money from the earnings tax department. Kumar transferred the money in his 3 cost savings bank accounts at Oriental Bank of Commerce.

Kumar attempted his finest to make the Income Tax Department comprehend that the money deposits were from sales at his pharmaceutical store, and were appropriately represented in his books. He likewise sent the audited balance sheet, VAT (value-added tax) returns, and sample sales billings.

Check out: Property manager transferred Rs 14.96 lakh money throughout demonetisation, got tax notification: ITAT Bangalore grants relief

The Income Tax Assessing Officer (AO) turned down Kumar’s description, observing that the costs revealed in the earnings and loss account were not shown as matching bank debits and that income and reward had actually supposedly not been paid frequently. The Commissioner of Appeals (CIT A) validated the AO’s action and turned down Kumar’s description; therefore, Kumar submitted an appeal before the Income Tax Appellate Tribunal (ITAT) Delhi.

After a long legal battle, Kumar lastly won the case in the ITAT Delhi on July 7, 2026. Chartered Accountant Naman Singla had actually represented him before the ITAT Delhi. Case no.: 2746/Del/2026.

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How did Kumar win the case?

Chartered Accountant Ashish Niraj, Partner, A S N & & Company, stated to ET Wealth Online that at the time of examination of demonetisation duration money deals, earnings tax authorities were viewing each money deal with suspicious view and onus was on taxpayer to develop its genuity.

Niraj states that in Kumar’s casehe had actually provided total bank declarations, VAT returns and total financials with needed supporting files. All of these proof were not turned down by AO and CIT (A) so ITAT Delhi accepted the books of accounts and proofs sent by Kumar.

Niraj states that the ITAT Delhi tax tribunal was pleased with files provided by Kumar and thought that he has the ability to show money withdrawals, individual cost savings and personals cost savings of member of the family transferred, for this reason appeal was enabled.

Niraj states: “This judgement gives learning that even if you have done cash transactions in crores, if supporting documents are properly kept, negative assessment can be challenged and won.”

Also read: Fruit seller deposited large amount of cash in bank, got income tax notice of unexplained income; won case in ITAT Bangalore for this reason

ITAT Delhi discussion

Income Tax Dept could not counter the evidence

The ITAT Delhi tax tribunal observed that Kumar has submitted his financial statement, balance sheet, profit & loss account statement, bank statements, and VAT returns, as well as his sample bills, to prove that the cash sales are out of the stock and this is the same cash deposited by him in his bank account.

The ITAT Delhi observed that neither the AO nor the CIT (A) could find any defect in the evidence and documents submitted by Kumar, and neither of the authorities has rejected his books of accounts under Section 145.

Thus, the ITAT Delhi ruled that the cash deposited by Kumar is directly co-relatable to the cash sales made during the demonetisation period, as he is engaged in the retail business of pharmaceuticals and medicines.

Also read: Rs 25 lakh cash deposited in bank, income tax officer sends notice for unexplained cash u/s 69; Taxpayer wins case in ITAT Bangalore, here’s why

Cash withdrawal also stands explained

The ITAT Delhi observed that the cash withdrawals made from Kumar’s bank account stood as explained, as these withdrawals were made from his family savings, and Kumar proved them via his account statement also.

The ITAT Delhi observed that the family members had savings of Rs 72 lakh and Kumar himself had saved Rs 2.46 lakh, and these facts are proved via Kumar’s statement as well as documents submitted by his family members. For example: Kumar’s brother’s wife had saved Rs 15 lakh, and that is reflected in her submitted ITR copy.

Source: ITAT Delhi submissions

ITAT Delhi observed that the CIT (A) merely dismissed and declined Kumar’s description with no sound factor.

ITAT Delhi order

The ITAT Delhi stated that Kumar has actually shown the money withdrawals, his individual cost savings, and the individual cost savings of his relative with the assistance of the checking account declarations. The ITAT Delhi likewise stated that the AO, in his remand report, has actually not negated any of these files, and proof is unaccounted for. Even CIT (A) might not negate the proof submitted by Kumar.

The ITAT Delhi ruled: “We kept in mind that the description sent by the assessee (Kumar) together with proof relating to the schedule of money suffices to show the assessee’s claim, and we discover no imperfection in the exact same.”

Therefore, Kumar won the case.