DHANPAL,FARIDABAD vs. INCOME TAX OFFICER, NEW DELHI

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ITA 3521/DEL/2026Status: DisposedITAT Delhi11 August 2026AY 2015-166 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that while the assessee's explanation was not fully satisfactory, the Revenue's attempt to disbelieve the entire claim was also not fully justified. Therefore, a lump-sum addition of Rs. 3 lakh was deemed appropriate. The Tribunal also held that Section 115BBE was not applicable as the deposits were from business receipts.

What were the facts?

The assessee made substantial cash deposits of Rs. 82,24,000/- in his bank account during the financial year 2014-15. The assessee claimed these deposits were from fruit and vegetable trading, supported by a cooperative society certificate, but failed to provide purchase/sales invoices. The Assessing Officer treated the entire amount as unexplained money.

What were the issues?

Whether the cash deposits in the bank account represented genuine business receipts and if the addition under Section 69A and the applicability of Section 115BBE were justified. The validity of initiating proceedings under Section 147 and the sufficiency of evidence provided by the assessee were also key issues.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144B,Section 69A,Section 115BBE,Section 44AD,Section 133(6),Section 234A,Section 234B,Section 271(1)(c),Section 271F

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI

For Appellant: Ms. Rajkumari, C.A
For Respondent: Shri Balkishan Gopal, Sr. D.R
Hearing: 11.08.2026Pronounced: 11.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SH. SATBEER SINGH GODARA, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 3521/Del/2026 (Assessment Year : 2015-16) Dhanpal Vs. Income Tax Department, Village Dadsiya, Faridabad Assessment Unit Haryana – 121 002 NFAC, Delhi – 121 001 PAN No. BZDPP 9214 L (APPELLANT) (RESPONDENT) Assessee by Ms. Rajkumari, C.A. Revenue by Shri Balkishan Gopal, Sr. D.R. Date of hearing: 11.08.2026 Date of Pronouncement: 11.08.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals), NFAC, Delhi [‘CIT(A), NFAC’ in short] dated 13.03.2026 arising from the assessment order u/s. 147 r.w.s 144 read with section 144B of the Income-tax Act, 1961 (hereinafter referred to as the ‘Act’) passed by

ITA No. 3521/DEL/2026 [A.Y 2015-16] Dhanpal vs. ITO the AO, Assessment Unit (hereinafter referred to as “AO”) on 16.03.2024 for the Assessment Year 2015-16

2.

The grounds of appeal raised by the assessee are as under : 1. “The NFAC erred in law and on facts in upholding the initiation of proceedings under section 147/148 without satisfying the jurisdictional precondition of "information" suggesting escapement of income chargeable to tax. 2. The NFAC erred in confirming the addition of Rs. 82,24,000/- as unexplained money under section 69A r.w.s. 115BBE. The cash deposits represented genuine business receipts from wholesale trading of fruits and vegetables, fully supported by the certificate of the licensing Co-operative Society confirming turnover of Rs. 68,50,300 after verification of its records. 3. The NFAC grossly erred in holding that section 44AD presumption is inapplicable. Once the Appellant opted for presumptive taxation and declared profit @8% on admitted turnover, the Assessing Officer/NFAC was not justified in treating business receipts as unexplained income under section 69A. The presumption under section 44AD is a complete code for small taxpayers and overrides the need for detailed books/invoices in cash-based trades. 4. The NFAC failed to appreciate that the business is inherently cash- intensive; deposits in the bank account directly correlate with daily sales receipts. The cash flow statement and bank statements filed conclusively establish the nexus. The difference of Rs. 13,73,700 was redeposit of earlier withdrawals for business purposes a common practice in such trades. 5. The NFAC erred in placing undue emphasis on non-production of purchase invoices/registers. Under section 44AD, the Appellant is not required to maintain books of account or prove expenses. The demand for such documents is contrary to the scheme of presumptive taxation. 6. The NEAC erred in not directing cross-verification under section 133(6) with the Co-operative Society despite specific request by the Appellant. This amounts to violation of principles of natural justice and failure to conduct proper enquiry. Once the Appellant discharged the initial onus by producing the Society certificate and cash flow, the onus shifted to the Department.

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ITA No. 3521/DEL/2026 [A.Y 2015-16] Dhanpal vs. ITO

7.

The NFAC's finding that the Society certificate has "minimal evidentiary value" is perverse. A certificate issued by a statutory Co- operative Society after verification of records constitutes reliable secondary evidence, especially when the Department chose not to verify it. 8. The addition is based on surmises and conjectures without any material to show that the deposits were from any undisclosed source. The Assessing Officer/NFAC has not brought any positive evidence on record to disprove the business explanation. 9. The NFAC erred in upholding levy of interest under sections 234A and 234B. Interest is consequential; the same is not leviable once the substantive addition is deleted. 10. The orders of the Assessing Officer and NFAC are bad in law, contrary to facts, and deserve to be quashed/set aside. 11. The Appellant craves leave to add, amend, or alter any of the above grounds before or at the time of hearing. PRAYER In view of the facts and circumstances and grounds raised above, it is most respectfully prayed that the Hon'ble Tribunal may be pleased to: a) Allow the appeal and set aside the order of NFAC dated .03.2026; b) Delete the addition of Rs. 82,24,000 made under section 69A; c) Delete the interest charged under sections 234A and 234B; d) the Assessing Officer to accept the returned income e) Grant any other relief as the Hon'ble Tribunal may deem fit and proper in the interest of justice.” 3. Brief facts of the case are that the assessee is an Individual and had not filed his return of income u/s 139 of the Act. As per the information flagged on INSIGHT portal, the appellant had made

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ITA No. 3521/DEL/2026 [A.Y 2015-16] Dhanpal vs. ITO substantial cash deposits of Rs. 82,24,000/- in his HDFC Bank account and purchased a motor vehicle worth Rs.12,33,596/- during the F.Y 2014-15. Consequently, proceedings u/s 147 were initiated and notice u/s 148 dated 04.04.2022 was issued. During the assessment proceedings, multiple notices u/s 142(1) were issued, calling for details of sources of income, bank accounts, cash flow statements, and supporting evidences. In response, the assessee filed a belated return on 04.09.2023 declaring income of Rs.4,32,820/- and explained the motor car purchase as funded partly by loan, partly by exchange of old vehicle and partly from own funds, which was accepted by the AO. However, with respect to the cash deposits, the assessee claimed that Rs.68,50,300/- represented sales proceeds from fruit and vegetable trading and Rs.13,73,700/- were re-deposits of earlier withdrawals, supported only by a letter from a cooperative society. No purchase or sales invoices, registers, or transportation bills were furnished, nor was the nexus of withdrawals and re-deposits established. The AO held the explanation unsatisfactory and treated Rs.82,24,000/- as unexplained money u/s 69A of the Act. The total income was thus assessed at Rs.86,56,820/- u/s 147 r.w.s 144 read with section 144B. Furthermore, penalty proceedings u/s 271(1)(c) and 271F were initiated separately.

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ITA No. 3521/DEL/2026 [A.Y 2015-16] Dhanpal vs. ITO 4. Being aggrieved with the Assessment order, assessee filed appeal before the ld. CIT(A), who has dismissed the appeal. 5. Now the further aggrieved assessee is in appeal before us. 6. Before us, the ld. counsel for the assessee vehemently submitted that the cash deposits represented genuine business receipts from wholesale trading of fruits and vegetables, fully supported by the certificate of the licensing co-operative society confirming turnover of Rs.68,50,300/- after verification of its records. 7. Per contra, the ld. DR relied on the orders of the authorities below. 8. We have heard the rival submissions and have perused the relevant material on record. In the instant case, we find that the assessee has attempted to prove the entire source of cash deposit as being from cash sales. We also find that 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 Rs. 3 lakh only would be just and proper with a rider that the same

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ITA No. 3521/DEL/2026 [A.Y 2015-16] Dhanpal vs. ITO shall not be treated as a precedent, so as to cover all loopholes. The assessee’s ground on this count is partly allowed. 9. In so far as levy of tax at a higher rate under section 115BBE of the Act is concerned, we find that the cash deposits are made out of business receipt and form part of business turnover. In such facts, the provisions of 115BBE being not applicable, we direct the AO to tax the addition under normal provisions of tax. 10. In the result, appeal of the assessee in ITA No. 3521/Del/2026 is partly allowed. Order pronounced in the open court on 11.08.2026

Sd/- Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 20.08.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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