ABHISHEK AGRAWAL,GIRIDIH vs. DY. C. I. T., CENTRAL CIRCLE, VARANASI

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI (Through Virtual Hearing) BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.45/VNS/2026 A.Y. 2023-24 Abhishek Agrawal, vs. Dy. Commissioner of Income Tax, Surya, Giridih, Jharkhand Central Circle, Varanasi PAN: BBYPA9729A (Appellant) (Respondent) Assessee by: Sh. O.P. Shukla, & Abadhesh Dubey, Advocates Revenue by: Sh. Koushlendra Tewari, CIT DR Date of hearing: 11.05.2026 Date of pronouncement: 23.07.2026 O R D E R PER BENCH: This is an appeal filed by the assessee against the order of the ld. CIT(A)-3, Lucknow passed under section 250 of the Income Tax Act, 1961 on 15.08.2025, wherein the ld. CIT(A) has dismissed the appeals of the assessee against the order passed by the Assessing Officer under section 143(3) for the assessment year 2023-24 on 28.02.2025. The grounds of appeal are as under:- “1. Because the Ld. Commissioner of (A) was not justified to confirm the addition made by the assessing officer Rs 1.00 Crore which has duly been seized by the department which has duly been carried out by the appellant staff which was collected against sale of goods by the appellant agent which has handover to appellant staff and said cash has duly been entered in the books of the account and also taken in the turnover disclosed Rs 41.00 Crore during the year. 2. Because the Ld. Commissioner of (A) was not justified not to consider the explanation submitted during the hearing of the appeal and only mentioned in the order, in para no. 5.3 that, the appellant has submitted the submissions 1

ITA No. 45/VNS/2026 Abhishek Agrawal were perused and noted that no credible evidence has been submitted to substantial its claim cash found. Though the appellant has already submitted copy of cash books, List of advances, and list of debtors whether the amount of cash Rs 1.00 Crore are duly been reflected in the accounts. But the Ld. CIT(A) without considered and examined the facts of the case has mentioned in the order in para no. 5.4, from 1 to 12 the wrong facts of the case,. Though all the cash book, bank books, List of debtors and advances has duly been submitted before assessing officer as well as Commissioner(A). 3. Because the Ld. Commissioner of (A) was not justified to confirm the invoked the provision of 69A of the income tax Act, by the assessing officer, though the cash has already entered in the books and once the cash has been entered in the books. No any invoked the provision u/s 69A of the income tax Act can be made. The appellant was cited the several judgments in the submission, but only the Ld. CIT(A) has mentioned the said judgment are not relevant in this case. This is the violation of the judicial pronouncement of the Court. 4. Because the Ld. Commissioner of (A) was not justified to uphold the provision of section 115BBE of the income tax Act on the amount of undisclosed income has charged tax. 5. Because, the appellant craves for a right to raise any additional ground during the course of hearing of the case. 6. Because the order passed by the Ld. Assessing officer is erroneous, bad in law and on facts and is liable to be deleted.”

ITA No. 45/VNS/2026 Abhishek Agrawal In view of the fact that the intention of the assessee to file the appeal was quite clear and the delay was only occasioned by the failure on the part of the staff of the counsel, it was prayed that the delay may kindly be condoned and the appeal admitted for adjudication. We have duly considered the matter. We find that since the assessee had deposited the Court fees on 16.08.2025, it was quite clear that he was desirous of filing an appeal against the order of the ld. CIT(A). It is equally clear that the follow up for filing of such appeal is necessarily to be taken by the counsel and therefore, the delay in the filing of the appeal cannot in the circumstances be attributed to the assessee. Considering the case law cited by the assessee and the fact of the assessee having filed the Court fees well in time, we are inclined to accept the condonation petition and admit the appeal of the assessee for consideration on its merits. 3. The facts of the case are that the Department received information from the SHO, GRP, Thana Cantt, Varanasi that two persons named Sh. Subodh Kumar Chaudhary and Sh. Abhishek Kumar Sinha had been intercepted with cash amounting to Rs. 1 Crore on 6.03.2003. On being asked by the GRP, they had stated that the intercepted cash belonged to the assessee. However, they failed to produce any documentary evidence regarding the genuineness of the cash intercepted. Subsequently, a statement of intercepted persons was also recorded under section 131(1A) of the Income Tax Act on 7.03.2023 and a statement was also recorded of the assessee, in which he accepted that intercepted cash amounting to Rs. 1 Crore belonged to him. In the said statement, he also stated that the same was unaccounted. Consequently, a warrant of authorization was issued by the PDIT, (Inv.), Lucknow under section 132A of the Income Tax Act and it was executed on 15.03.2023. The intercepted cash was requisitioned and assessment proceedings initiated in accordance with the guidelines issued 3

ITA No. 45/VNS/2026 Abhishek Agrawal by the CBDT. The Assessing Officer records that as per details available, the assessee is an individual who earned income from trading of Iron, Steel and Cement in his proprietorship concern, which went by the name of Sh. Khatu Shyam Ji Traders. 4. In proceedings before the Assessing Officer, the assessee accepted that the cash of Rs. 1 Crore belonged to him. He submitted that his staff was carrying the cash, which was collection from sale of goods on 6.03.2003, from different parties. This amount had been received from debtors and was being carried to the head office at Dhanbad. It was further submitted that during the course of investigation before the ADIT, the assessee had submitted the list of debtors against collection of funds which had been duly disclosed in the books of account and cash book also. It was submitted that the said cash had been taken into the turnover of Rs. 41,00,57,430/- upon which gross profit of Rs. 1.06% and net profit of .49% had already been disclosed. Hence, it was prayed that the amount should not be considered as undisclosed and unaccounted and it should not be added back separately. The ld. AO was not convinced by the reply of the assessee. He pointed out that the assessee had not furnished any supporting evidence to indicate that the seized cash was sourced from collection made from debtors; the assessee had not furnished its cash book with the submission or the evidence to indicate that the seized cash was part of its books of accounts; the assessee had failed to appreciate that proceeding before the Investigation Wing and assessment proceedings were to separate proceedings and no material had been submitted before the Assessing Officer; the contention that list of debtors had been submitted during investigation proceedings was incorrect as no such list was furnished on 13.03.2023 rather the assessee had claimed that he would furnish the list of debtors but he failed to furnish the same; the fact that the assessee had furnished these submissions before the 4

ITA No. 45/VNS/2026 Abhishek Agrawal Investigation Wing did not absolve him from furnishing the same before the Assessing Officer; the debtors from which assessee claims to have collected the said cash were not open for verification. The Assessing Officer reproduced portions of the assessee’s statement dated 13.03.2023, from which the assessee had admitted that the said cash relates to his business but the same was unaccounted investment. The ld. AO pointed out that the cash had been intercepted on 7.03.2023, but the assessee had not been able to explain it even after a gap of one week. Thus, he concluded that the assessee had failed to explain the source of the cash. However, he reproduced a copy of the submission made by the assessee on 21.02.2025. In the same, the assessee made the same points that it had made in earlier submissions. He further stated that the total advance for customers against sale of goods were Rs. 39,25,633/- and sundry debtors stood at Rs. 10,11,97,056/-. The total cash of Rs. 1 Crore had been received against the sale and was being carried by the collection staff to the head office at Calcutta. It was further submitted that the total sales disclosed by the assessee was Rs. 41,00,57,430/-. Looking to the nature of trade, it was not possible for the assessee to receive all the amounts through banking and some portion was received through cash. Details of advance received and sale of customers and copy of account of sundry debtors was enclosed alongwith this reply to prove that the cash transactions with parties were genuine. It was further submitted that the assessee had made payment of GST on sale amount which had been reflected in the GST return. Accounts of sale had already been submitted earlier and the names of parties mentioned in the sales account was supported by the GST returns GSTR-2A and GSTR- 3B. Copy of GSTR-9 which were the sales disclosed by the assessee on which tax had been paid was also enclosed. It was submitted that the assessee had received sale proceeds from his agent for a month, and after collection of

ITA No. 45/VNS/2026 Abhishek Agrawal amount of Rs. 1 Crore, he had sent his staff to Varanasi to bring the amount to Dhanbad. The said amount of cash had been disclosed in the cash book. Copy of cash book dated 6.03.2023 was enclosed. This cash had been received against the sale of Sariya by the staff of the assessee Sh. Subodh Chaudhary and Sh. Abhishek Sinha, but the said amount had been seized by the Income Tax Department. Since the assessee had taken the entire amount in the cash book and in the sales for the year, therefore, it was not liable to be separately added back. After considering these submissions of the assessee, the Assessing Officer pointed out that the details of advances received against sales from customers did not give any picture regarding the seized cash because the assessee had stated that the seized cash was received from debtors. The details of debtors that had been supplied did not contain their PAN numbers or addresses and there were therefore, not open for verification and in any case the assessee could not confirm as to which debtors from whom the rupees 1 Crore had been received. Finally, the cash book that had been furnished only shows entries for one day i.e. 6.03.2023. It was not the complete cash book. Therefore, the opening and closing cash in hand could not be verified. In the circumstances, the assessee had not been able to explain the cash satisfactorily. He had been found to be owner of Rs. 1 Crore in cash, which in the opinion of the Assessing Officer was not recorded in his books of accounts. He had failed to reconcile the same with his books of accounts and therefore, the ld. AO decided to consider this as unexplained income of the assessee under section 69A of the Act. 5. Aggrieved with the said assessment order, the assessee went before the ld. CIT(A). Before the ld. CIT(A), it was pointed out that the Assessing Officer was not justified in making the addition of Rs. 1 Crore under section 69A without rejecting the books of accounts since the said amount had duly been disclosed in the turnover of the assessee which was Rs. 41 Crores. It 6

ITA No. 45/VNS/2026 Abhishek Agrawal was submitted that no books of accounts had not been inspected by the Income Tax Department at any stage during the investigation. The assessee had submitted a copy of the cash book on the portal as well as a hard copy before the Assessing Officer, wherein the cash of Rs. 1 Crore had duly been shown in the cash book seized by the Income Tax Department. Therefore, there was no question of adding the amount back under section 68 or section 69 of the Income Tax Act and bringing the same to tax under section 115BBE. The ld. CIT(A) considered the submissions of the assessee but he held that the assessee had not furnished its complete cash book with the submission before the AO. It had failed to furnish the evidence that the seized cash was part of its books of accounts. Opening cash in hand and closing cash in hand remained unverifiable. No list of debtors alongwith complete address, PAN, confirmation was submitted either before the Investigation Wing or before the Assessing Officer. Thus, the purported debtors from whom the assessee claimed to have collected the cash were not open for verification. In the absence of any documentary evidence to substantiate the source of cash, the aforesaid claims of the assessee remained a bald statement which was self- serving. Thus, the assessee had failed to substantiate the source of the aforesaid cash either in assessment or appeal proceedings. From the same, the ld. CIT(A) concluded that the cash intercepted had not been satisfactorily explained. He held that section 69A clearly applied in the present case and he accordingly rejected the various grounds of appeal preferred by the assessee and dismissed the appeal thereby confirming the addition. 6. The assessee is aggrieved at this order of the ld. CIT(A) and has accordingly come before us in appeal. Sh. O.P. Shukla, Advocate (hereinafter referred to as the ld. AR arguing on behalf of the assessee submitted that the assessee was engaged in the business of trading in Iron, Steel and had its office situated at Vivekanand Marg at Giridih, Jharkhand. The assessee was 7

ITA No. 45/VNS/2026 Abhishek Agrawal supplying Iron and Steel to sellers both through direct sales from his shop and also through sales via agent. Staff of the assessee Sh. Subodh Kumar Chaudhary and Sh. Abhishek Kumar Sinha had been intercepted on 6.03.2023 by the GRP when they were carrying cash amounting to Rs. 1 Crore. This cash had been collected by the assessee’s agent Murari Ji who had handed over the said amount to the assessee staff. The cash had been collected by the agent against the sale of Iron and Steel to various parties. During interception by the GRP, both the staff had accepted the fact that this cash belonged to the assessee, who was doing the business of Iron and Steel. Subsequently, the statement on oath under section 131(1A) had been recorded on 13.03.2023 of the assessee and the assessee had accepted that the cash belonged to him but had been earned by trading of Chhad and Sariya of his proprietory firm M/s Khatu Shyam Traders. It was submitted that this money of Rs. 1 Crore that had been seized was the money of M/s Khatu Shyam Trader, which had been collected from Varanasi and adjoining areas on account of supply on credit to various parties and that these had been collected by Sh. Murari Ji who looks after day-to-day work of his concern. Thereafter, the Income Tax Department had seized the cash under section 132A of the Income Tax Act and the case of the assessee was centralized to Central Circle, Varanasi. In response to the notice, the assessee had filed return of income disclosing income of Rs. 18,23,880/- with disclosed sale of Rs. 41,57,430.32/- and in this sale, the cash of Rs. 1 Crore which had been intercepted by the GRP had been accounted for. It was submitted that the full compliance had been made alongwith the cash book, bank book, list of advance received against sale, list of debtors, where the cash of Rs. 1 Crore has been recorded as collected by the assessee’s agent, Murari Ji against the sale of Sariya. The copy of the cash book had been duly submitted on 9.02.2025 and also the lists of advances received against sale had also been

ITA No. 45/VNS/2026 Abhishek Agrawal submitted. In this list of advances received, Rs. 1 Crore was being reflected in the debtor’s account, Rs. 1 Crore was reflecting under the head “disputed amount with Income Tax Department”. During the course of investigation before the ADIT, the assessee had submitted the list of debtors against collection of funds which has duly been disclosed in the books of accounts (cash book) also. The said cash had been taken into the turnover and gross profit @1.06% and net profit @.49% had already been declared. Hence it was requested that there was no need to make separate addition on this account. It was further submitted that the assessee had taken advance from parties against sale of goods to various parties and also taken cash against sale of Sariya and was carrying the amount to the head office, Kolkata. The cash was being carried by the collection staff. Furthermore, the assessee had made payment of GST on the sales amount which was duly supported by the GST returns, which had been submitted before the Assessing Officer. In the said sales account, the name of the parties had been mentioned which could also be supported by the submissions made before GST. Tax had been paid by the assessee on sales. Referring to the present case, the ld. AR pointed out that assessee had received amount of sale proceeds amounting to a month from his agent and after collection of this amount, he had sent his staff to Varanasi to bring the amount back to Dhanbad. This amount had been disclosed in the cash book but seized by the Income Tax Department. Since the matter had already been taken into account into the books of accounts, there was no question of making any addition under section 69A. It was submitted that neither had the books of accounts been examined by the AO nor had they been rejected under section 145(3) of the Income Tax Act. Therefore, the provisions of section 68, 69 or 69A of the Act could not be applied. Our attention was invited to Instruction No.03/2017 dated 21.02.2017 wherein the CBDT had stated that before making addition of any

ITA No. 45/VNS/2026 Abhishek Agrawal cash deposit, the Assessing Officer was required to take into consideration the record of the assessee such as the stock register, bank statement, sales tax return, monthly sales summary, possibility of back dating of cash sale or fictitious sales etc., before arriving at a conclusion in this regard. Furthermore, the assessee placed reliance on a catena of various judgments to argue his case that addition was not required to be made, the cases are as under:- i. CIT vs. Kailash Jewellery House, ITA No. 613/2010 (Hon’ble Delhi High Court, order dated 9.04.2010) ii. R.B. Jessaram Fetehchand (Sugar Department) vs. CIT (1969) 75 ITR 33 (Bom) iii. CIT vs. Jaora Flours & Foods (P.) Ltd. (2012) 344 ITR 294 (MP) iv. CIT vs. Vishal Exports Overseas Ltd., Tax Appeal No.2471 of 2009 (Hon’ble Gujarat High Court, order dated 3.07.2012) v. M/s Singhal Exim Private Limited vs. ITO, (ITA No. 6520/DEL/2018) vi. Kanpur Organic Private Limited vs. Dy. CIT (ITA No. 675/LKW/2016-17) vii. CIT vs. Kulwant Rai (2007) 291 ITR 36 (Del) In essence these judgments related to the fact that where the amount had already been disclosed as sale, addition under section 68 and 69 could not be made and furthermore in the case of cash transactions where delivery of goods had been taken against cash payments, it was hardly necessary for the seller to bother about the name and address of the purchaser.

ITA No. 45/VNS/2026 Abhishek Agrawal 7. The ld. AR further submitted that the ld. AO had wrongly stated in his order that the assessee had not submitted that list of debtors, cash book etc., it could be verified from the portal and departmental records that the assessee had submitted the complete statement of advances received against sales from 1st April, 2022 to 31st March, 2023, and the list of sundry debtors from 1st April, 2022 to 31st March, 2023. It was further submitted that section 69A could only be invoked when there was no entry in the books of accounts, but in the assessee’s case, the amounts stood entered in the books against the name of Murari agent and as Rs. 1 Crore, “under dispute amount with the Income Tax Department”. It was submitted that if the AO was not satisfied regarding the said amount, he could have made a variation in the gross profit rate as this was a business transaction against the sale of Sariya but it was not justified to treat the money as unexplained and added back under section 69A. Accordingly, it was prayed that the addition may kindly be deleted. 8. On the other hand, Sh. Koushlendra Tewari, CIT DR (hereinafter referred to as the ld. DR) pointed out that the assessee had not been forthcoming with the explanation for the amount of cash seized. It was all very well to say that the assessee had a certain amount of turnover, but before the seized cash could be said to be arising from debtors or arising out of advances for sales, the assessee had to establish whom did the sale pertain to and when did the sale pertain to. If there are no answer to these questions then the cash was unexplained. Furthermore, the ld. CIT DR pointed out that not much credence could be placed upon the statement of sundry debtors or the advances received against customers reflected in the accounts of 31.03.2023, because all these accounts had been drawn up after the date of seizure, as had the GST returns and therefore, the possibility of them being afterthoughts to explain the cash seized by the Income Tax Department 11

ITA No. 45/VNS/2026 Abhishek Agrawal could not be ruled out. The ld. CIT DR pointed out that in fact the assessee had not submitted any specific explanation with regard to the sundry debtors or the persons from whom advances had been received that could be co-related with the seized cash and therefore he had not discharged his onus. The Assessing Officer was therefore, perfectly justified in making the addition in the hands of the assessee. Accordingly, he prayed that the addition may kindly be confirmed. 9. We have duly considered the facts and circumstances of the case and the arguments advanced by both parties. We note that the persons from whom the cash was apprehended by the GRP were employees of the assessee, who had been sent from Dhanbad and who had received the cash in Varanasi, without being aware of the details thereon. The assessee who subsequently appeared submitted that the cash was on account of sales that had been made of Sariya and Chhad in the district of Varanasi and the neighboring district that had been received from one agent called Murari. However, while the assessee had submitted explanation to show that he was running a business with a turnover of Rs. 41 Crores and that had significant amount of advances from customers and sundry debtors, which would justify the cash collection, he has not been able to pinpoint the specific parties from whom the said collection agent received advances or realized debts. While sales in cash and on credit are not unusual, it is also true that the collection agent would, alongwith the realized cash also present some sort of account to the owner regarding the parties from whom the said amount had been realized and the purpose for which these amounts had been realized. Neither was any such information found during the course of search/requisition, nor has any such specific detail being presented before either the Investigation Wing or the Assessing Officer. We are in agreement with the ld. CIT DR that unless the assessee can demonstrate as to the parties 12

ITA No. 45/VNS/2026 Abhishek Agrawal and sundry debtors from whom the advances were received or debts realized, the furnishing of detailed accounts of the business to explain the seized cash would not actually constitute an explanation. However, we also note the submission of the assessee that the Assessing Officer had not examined the books of accounts and not rejected the books of accounts. Accordingly, we deem it appropriate in the interest of justice to both parties to restore the matter back to the file of the Assessing Officer so that the assessee may present the necessary evidences to the Assessing Officer in the form of book entries and other evidences in its possession, to demonstrate that the said cash of Rs. 1 Crore that was apprehended by the GRP on 6.03.2023 constituted the cash receipts from its business which had been duly accounted for in the regular books of the assessee. The ld. AO may examine the evidences produced and carry out such further enquiries as he deems necessary and thereafter pass a fresh order in accordance with law. As the matter stands restored to the file of the Assessing Officer, the appeal of the assessee is held to be allowed for statistical purpose. 10. In the result, the appeal of the assessee is allowed for statistical purpose. Orders pronounced on 23.07.2026 in the open Court. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23/07/2026 sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR, ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S. 13