LORDS TRAVEL PVT LTD,DELHI vs. ACIT, CIRCLE-15(2), DELHI

Briefly stated, the facts of the case are that the assessee is engaged in the business of running a travel agency. Assessee purchases tickets from various airlines and directly from other agents as well. Such tickets in turn are sold to other agents and passengers directly. The assessee electronically filed its return of Income on 28.10.2017 declaring total income of Rs. 31,09,980/-.

During the course of assessment proceedings, the Assessing Officer noticed that during the demonetization period the assessee had deposited a sum of Rs. 31,54,500/- in specified bank notes [SBN]. In response to notice issued requiring the assessee to explain the details and source of cash, the assessee filed requisite details and list of customers who purchased air tickets alongwith cash receipts.

The Assessing Officer noticed several anomalies in the submissions of the assessee and came to the conclusion that the assessee has been unable to explain with supporting documentary evidences that the ITA Nos. 2682 /DEL/2023 & 897/DEL/2024 [A.Ys 2016-17 & 2017-18]

Quoting the provisions of section 68 of the Act, the Assessing Officer held that the sum of Rs. 31,54,500/- represented undisclosed income of the assessee and was deposited during the demonetization period and accordingly taxed the same under the provisions of section 115BBE of the Act at special rate and no deduction in respect of any expenditure or allowance or benefit of set off of any loss will be allowed.

When the aggrieved assessee went in appeal before the ld. CIT(A), the ld. CIT(A) upheld the addition of Rs. 31,54,500/- as the assessee has not met the evidentiary burden required to refute this addition. The assessee is now before us.

At the very outset, the ld. counsel for the assessee submitted that the cash deposits were out of cash sales. It is the say of the ld AR that the Assessing Officer has not pointed out any defect in the account and the Assessing Officer has not rejected the books of account.

Per contra, the ld. DR relied upon the orders of the authorities below. 10. We have heard the foregoing vehement rival contentions and have perused the relevant material on record. We have given thoughtful consideration to the facts of the instant case and the and find some merit in the assessee's argument. The reason extended by the assessee for increased sale cannot be discarded out of hand. The cash deposit out of sale proceeds therefore can be accepted to some extent. In the instant case, we find that the assessee has attempted to prove the entire source of cash deposit during demonetization as cash sales. Although the assessee, prima facie, appears to have discharged its onus of explaining source of cash deposit, it’s contentions to prove the source, hardly deserves to be accepted in entirety especially when the AO found that the assessee was maintaining two sets of receipts and some of the receipts had combined names of customers and some cash sales were to unknown persons. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that cash deposit has been made out of sales, cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the cash deposit, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of ₹ 3,50,000/- only would be just

In the result, appeals of assessee in ITA Nos. 5724/DEL/2024 is partly allowed. Order pronounced in open court on 21.07.2025. [SATBEER SINGH GODARA]