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Facts
During a search operation, the assessee, who had not filed a return, was found to have made significant cash deposits. The Assessing Officer (AO) added Rs. 2,43,07,000/- as unexplained cash credit. This addition was deleted by the CIT(A) in the first round and sustained in the second round after ITAT's directions for further verification.
Held
The Tribunal held that the assessee had provided a comprehensive set of documents, including cash flow statements, SPAs, and bank confirmations, establishing the identity, creditworthiness, and genuineness of the cash transactions. The AO failed to provide contrary evidence and arbitrarily treated similar transactions differently.
Key Issues
Whether the deletion of Rs. 2,43,07,000/- by the CIT(A) as unexplained cash credit under Section 68 was erroneous, given the assessee's submissions and the ITAT's previous directions.
Sections Cited
68, 153A, 143(3), 254, 132, 80C, 271(1)(c)
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Income Tax Appellate Tribunal, AGRA (DB
Before: SHRI M BALAGANESH & SHRI SUNIL KUMAR SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (DB) BENCH, AGRA BEFORE: SHRI M BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 536/Agr/2025 Assessment Year: 2009-10 Aayakar Adhikari, Aayakar Bhawan, Vs. Madhur Mittal, E-323, Sanjay Place, Agra-282002 Kamla Nagar, Agra -282005 PAN : ADCPM2464P (Appellant) (Respondent) Assessee by None Department by Shri Sukesh Kumar Jain, CIT DR Date of hearing 21.01.2026 Date of pronouncement 17.04.2026 ORDER
PER: SUNIL KUMAR SINGH, JM. The appellant revenue has preferred this appeal against the impugned order dated 10.09.2025 passed by ld CIT(A) in appeal No NFAC/2008-09/10236291, wherein ld CIT(A) has deleted the addition of Rs. 2,43,07,000/- made on account of unexplained cash credit u/s. 68 of the Act, vide assessment order dated 17.03.2023 passed u/s. 153A r.w.s
143(3)/254 of the Act. 2. This is second round of litigation. Briefly speaking, the background is the assessee, being an individual did not file any return of income for the year under consideration. A search u/s. 132 of the Act was carried out in
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M/s Triveni Group on 29.09.2010. Assessee was also included in the search. Notice u/s. 153A was issued in response to which the assessee did not file any return. Later on, assessee filed return on 10.12.2012, declaring total income at Rs. 6,240/-. Notice u/s 143(2) of the Act was issued on 28.12.2012. Assessment proceedings u/s. 153A r.w.s 143(3) of the Act were competed on 25.03.2013, determining the income at Rs. 2,44,13,240/-
after making addition of Rs. 2,43,07,000/- on account of unexplained cash deposit in bank beside other addition of Rs. 1,00,000/- on account of disallowance of deduction claimed u/s. 80C of the Act. 3. Assessee preferred appeal before ld CIT(A), who partly allowed
assessee’s appeal by deleting the addition of Rs. 2,43,07,000/- and sustaining the addition of Rs. 1,00,000/- claimed u/s 80C of the Act. 4. Aggrieved, revenue, preferred appeal before the ITAT, New Delhi. The tribunal, vide order dated 26.03.2018, passed in ITA No 5511&5512/Del/2014, set aside the issue of the aforesaid addition to the file of the A.O. with the direction to assessee to show the creditworthiness and genuineness of the said transaction with credible evidence and reasons for travelling such amount of cash from the company to the promoter and parties with whom share purchase agreement was entered. It was further directed by the tribunal that the assessee must also relate the
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cash deposit datewise with the cash received from the parties. After considering the assessee’s reply, ld A.O. passed the assessment order dated 17.03.2023 u/s 153 A r.w.s. 143(3)/254 of the Act, repeating the original addition in this second appeal. 5. Assessee preferred first appeal before ld CIT(A) in this second round of litigation, wherein ld CIT(A) has deleted the impugned addition of Rs. 2,43,07,000/- which was added u/s. 68 of the Act and also quashed the penalty proceedings initiated u/s 271(1)(c) of the Act. However, ld CIT(A) confirmed the disallowance of Rs. 1,00,000/- u/s. 80C of the Act. 6. Aggrieved revenue has filed this appeal on the following grounds:- “1. That the Ld.CIT(A) has erred on facts and in law in deleting the addition of Rs.2,43,07,000 made by the A.O on account of unexplained cash credit u/s 68 of the Income Tax Act without properly appreciating the facts brought on record by the Assessing Officer, hence the order of the Ld.CIT(A) suffers from serious infirmities in appreciation of facts and law resulting in deleting of a validly made addition of Rs.2,43,07,000 u/s 68 of the Act and therefore the same to deserves to be restored. 2. That the Ld.CIT(A) has erred in law and on facts in holding that the assessee had discharged the onus under section 68 merely by producing self generated cash flow statements and unverified confirmations, without establishing actual cash movement date- wise correlation OR independent third party verification. 3. That the Ld.CIT(A) has failed to appreciate that the directions on the Hon’ble ITAT dated 10.08.2022 specifically required the assessee to prove the creditworthiness and genuineness of the alleged cash received with credible evidence and date-wise correlation between the receipts and deposits which the assessee failed to do. The Ld.CIT(A) ignored this mandate and accepted the explanation without such verification. 4. That the Ld.CIT(A) has erred in ignoring the fact that the transactions claimed by the assessee are entirely in cash, unsupported by banking channels which inherently makes the claim unverifiable and doubtful, and the burden of proof under section 68 was not satisfactorily discharged.
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That the Ld.CIT(A) has erred in relying on earlier appellate findings of the Ld.CIT(A)-III, New Delhi, order dated 23.07.2014 which were set-aside by the ITAT for fresh verification, there reliance on such earlier observations is misplaced and contrary to the ITAT(s) binding directions. 6. That the Ld.CIT(A) failed to appreciate that the assessment order was passed after due opportunity and consideration of the material available on record, and the deletion of such a large addition merely on assumption and unsupported explanations is perverse and contrary to evidence 7. …………………………………............”
We have perused the records. None responded for the respondent assessee. Heard ld CIT DR for the appellant revenue. 8. The main point that arises for consideration under appeal is as to whether ld CIT(A) has erred in deleting the addition of Rs. 2,43,07,000/- made on account of unexplained cash credit u/s. 68 of the Act? 9. Ld CIT DR has submitted that assessee failed to prove the genuineness and creditworthiness of the transactions in question before the assessing officer in compliance of the tribunal order. Ld CIT(DR), thus supports the assessment order and prays to allow the appeal. 10. We have gone through the impugned order dated 10.09.2025 passed by ld CIT(A) in the second round of litigation. Paras 5.3 to 5.8 of the impugned order are reproduced as under: “5.3 The Hon’ble Income Tax Appellate Tribunal (ITAT), in its order dated 10.08.2022, directed the appellant to substantiate the creditworthiness and genuineness of the cash transactions amounting to Rs. 2,43,07,000/- with credible evidence, particularly emphasizing the need to correlate the cash deposits date-wise with the cash received by the parties involved. The appellant had submitted a comprehensive set of documents to address these requirements, including: 4 | P a g e
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Cash Flow Statement: A detailed Cash Flow Statement demonstrating the availability of cash, including receipts, payments, and brought-forward balances. The statements records cash received from M/s Triveni Infrastructure Development Co. Ltd (TIDCO), where the appellant is a promoter director, and received as advances against Share Purchase Agreements (SPAs) from M/s Garg Commodities, M/s Mohan Commodities, and M/s Radhika Construction Co. Supporting Documentation: The appellant submitted the copies of SPAs, Pledge Deeds, confirmations from M/s Garg Commodities, M/s Mohan Commodities, and M/s Radhika Construction Co., SPA between TIDCO and BCCL/HT, TIDCO’s shareholding list, pledge details before the Hon’ble High Court of Delhi, TIDCO’s ledger accounts, balance sheet, and confirmation of cash transactions. Bank Book and Confirmations: The appellant also provided a Bank Book and confirmations of cash receipts, correlating the cash deposits with the dates of receipt from the respective parties. 5.4 Moreover, the appellant has fulfilled the requirements under Section 68 by establishing: Identity: The identities of TIDCO (PAN: AACCT3870A), M/s Garg Commodities, M/s Mohan Commodities, and M/s Radhika Construction Co. were disclosed through their PANs, confirmations, and legal documents, which were accepted by the Assessing Officer (AO) in the assessment of TIDCO and other entities. Creditworthiness: The financial statements of TIDCO, including shareholder funds and loan funds, substantiate the creditworthiness of the transactions. These were previously accepted by the Assessing Officer in TIDCO’s assessment, confirming the capacity of TIDCO to advance the sums in question. Genuineness: The transactions are supported by executed SPAs, Pledge Deeds, and other legal documents. The appellant provided date- wise correlation of cash deposits with receipts, as directed by the ITAT. No evidence was presented by the AO to suggest that these transactions were not genuine. 5.5 The AO’ addition of Rs. 2,43,07,000/- as unexplained cash credits under Section 68 is found to be unsustainable for the following reasons: Inconsistent Treatment: The AO accepted the cash withdrawals and investments as per the Cash Flow Statement in the assessment of TIDCO and other entries but arbitrarily rejected the corresponding credit entries in the appellant case. This selective acceptance violates the 5 | P a g e
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principles of double-entry accounting, as the same transactions were treated differently across related assessee. Lack of Contrary Evidence: The AO failed to provide any evidence to disprove the genuineness of the transactions, relying solely on vague assertions of “no plausible evidence” and non-satisfaction with the appellant’s submissions. This does not meet the legal threshold for sustaining an addition under Section 68 of the Act. Compliance with ITAT Directions: The appellant complied with the ITAT’s directions by submitting credible evidence, including date-wise cash flow details and supporting documents, which the AO failed to adequately consider. 5.6 The judicial rulings cited by the appellant, including CIT v. Steller Investment Ltd., CIT v. Suresh Chand Mittal, CIT v. Simit P. Sheth, CIT v. Nipun Builders & Developers Pvt. Ltd., Jai Shree Radheyshyam Enterprises v. CIT, and CIT v. Oasis Hospitalities Pvt. Ltd., consistently hold that once the assessee discharges the initial burden of proof under Section 68 by establishing identity, creditworthiness, and genuineness, the onus shifts to the Assessing Officer to provide evidence to the contrary. 5.7 Furthermore, the prior ruling by Ld. CIT(A)-III, New Delhi, in the appellant’s own case on 23.07.2014, which deleted the same addition of Rs. 2,43,07,000/-, supports the appellant’s contention. The AO’s repetition of the addition in the order dated 17.03.2023, despite the ITAT’s directions and the appellant’s comprehensive submissions, is arbitrary and inconsistent with the principles of natural justice. 5.8 Therefore, the addition of Rs. 2,43,07,000/- under Section 68 of the Act is hereby deleted in full.”
We notice that the assessee submitted before the first appellate authority that ld A.O. ignored the evidence related to the cash available with the assessee according to the cash flow statement which included the cash receipts, cash payments and brought forward balances. Ld CIT(A) in his speaking and well reasoned order, found that the assessee submitted a comprehensive set of documents to address all the questions raised by the revenue. Sufficient cash was found to be available as per cash flow 6 | P a g e
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statement. The confirmation of cash transactions was also proved. Bank Book and confirmations of cash receipts correlated the cash deposit with the dates of receipts from the respective parties. The identity, creditworthiness and genuineness of the said transactions were found established before the ld CIT(A). We do not find any error of fact or law in the impugned order. The aforesaid point is accordingly determined in negative against the revenue and in favour of the assessee. The revenue’s appeal is liable to be dismissed. 12. In the result, the revenue’s appeal is dismissed. Order pronounced on - 17.04.2026 Sd/- Sd/- (M BALAGANESH) (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 17.04.2026 *Aamir Siddiqui, PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra
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