KRISHNA KUMAR KABRA,VARANASI vs. INCOME TAX OFFICER, WARD 2(2), VARANASI

PER ANADEE NATH MISSHRA:A.M.

(A) This appeal has been filed by the assessee against the impugned appellate order of learned CIT(A)/National Faceless Appeal Centre (NFAC), Delhi vide order dated 15.12.2024 for the AY 2017-18. The assessee has raised the following grounds of appeal: “1. Because the learned CIT(A), NFC has erred in not allowing the petition u/s154 and clarifying his own order which only sought clarification of the finding arrived at by the CIT(A) in the original appellate order dated 07/08/2020.

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(B) In this case, assessment order dated 06.12.2019 was passed by the Assessing Officer under section 144 of the Income Tax Act, 1961 (the Act) whereby the assessee’s total income was determined at Rs. 14,30,630/- as against the returned income of Rs. 4,63,630/-. In the aforesaid assessment order an addition of Rs. 8,19,000/- was made on account of cash deposited by the assessee in the Bank. A further addition of Rs. 1,48,000/- was made on account of gift claimed to have been received by the assessee. The assessee’s appeal against the assessment order was partly allowed by the learned CIT(A) vide impugned appellate order dated 07.08.2020. The relevant part of the aforesaid order dated 07.08.2020 of the learned CIT(A) is reproduced as under: “Decision: Appellant's case was selected for scrutiny on the reason of "Cash deposit during demonetisation period." Appellant has deposited Rs. 12,20,000/- in Punjab National Bank. A/c no. 464000021000997. Appellant filed in response to the notice issued u/s 142(1) by AO all the final accounts showing an income of Rs. 4,63,630/- from a total turnover of Rs. 42,32,382/- showing a GP of Rs. 5,69,462/- and net profit of Rs. 4,45,332/- from the Proprietorship business of M/s Krishna Enterprises doing trading of Banaras Fabric and educational books. Appellant did not submit any return of income for this year either u/s 139 or in response to S. 142(1) issued by AO.

AO asked the appellant to prove the source of cash deposited in the bank account. Appellant submitted before AO that the cash amount deposited is from the same business and a gift of Rs. 1,48,000/-. AO on the basis of cash

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book and other details submitted by appellant analysed the month wise cash sales and cash deposits/withdrawn in bank from 01.04.2016 to 08.11.2016 vis- a-vis month wise cash sales and cash deposits/withdrawn in bank from 01.04.2015 to 08.11.2015 and reached a conclusion that appellant from 01- 11-2016 till 08-11-2016 has shown a cash sale of Rs. 9,19,000/- but in the corresponding time in last year appellant showed sale of only Rs. 72,000/-. AO has admitted that the appellant did file sales ledger, purchase ledger, expenses ledger, the copy of cash book for the period of demonetization, the bank statements as required by AO, online through e-proceedings but failed to submit any bill/vouchers relating purchases and sales. AO also gave a finding that appellant did not produce vouchers for verification during the assessment proceedings and without rejecting the books of accounts u/s 145(3) of the Income Tax Act, 1961 made addition u/s 69A of IT Act. AO also added the gift received from the brother as appellant could not furnish any evidence in this regard.

Appellant's submission is that the assessee is a small businessman who was dealing in banarasi fabrics and had started the business of educational books w.e.f. October, 2016. Due to good turnover of educational books in the month of October and November, 2016 there were cash flow of about Rs. 15 lakhs till 8th Nov., 2016. The assessee deposited Rs. 9,19,000/- in old currency notes after demonetization which were actually and evidently out of cash generated from business turnover. AO has mentioned that the sale last year from 1st to 8th Nov., 2015 was only Rs. 72,000/- and hence presumed the sale during corresponding period this year at Rs. 1 lakh only and thus, determined Rs. 8,19,000/- as explained deposits. He has totally overlooked the facts that last year there was no business of educational books and cash sales for last 2 months were also there to show the existence of cash funds. The assessee had received Rs 1,48,000/- from his real brother Lalit Kumar kabra which has been disbelieved and added u/s. 69A. Proper documentary evidences establishing the flow of money from real brother have been overlooked.

Appellant has submitted before AO that cash deposited pertains to normal course of her business in bank account out of total turnover of Rs. 42,32,382/- made during the whole year in his proprietorship concern. AO has not rejected the books of accounts. Details asked for were produced by appellant online. AO has made the addition by estimating the sales for the year under consideration purely on conjecture and without bringing any material on record. The increase in cash sale is because of the fact that, new business activity was introduced during the year which also AO has accepted. AO

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ignored these vital facts and presumed that growth of cash sales is without any basis.

I have gone through the facts and the written submissions filed along with the details enclosed therewith by the AR of the appellant. Appellant has submitted the copy of bank account in the name of Krishna Enterprises, sale & purchase details in evidence to his business activities It is true that the appellant is at liberty to deposit any amount of cash in his bank account as he thinks fit for running his business. It is only after the announcement of demonetization on 08.11.2016 it became mandatory on the part of the appellant to deposit the excess cash held in hand. It is also not disputed by AO that the appellant is doing business activity. It is trite law now that AO cannot make any assessment on guess work without reference to any evidence or material. It is evident that the AO is conjecturing while making the said addition by reducing cash in hand from Rs. 9,19,000/- to Rs. 1,00,000/-.

AO's calculation of the final available cash-in-hand of Rs. 1,00,000/- for accepting part of the total cash deposited as genuine and not believing the balance cash-in-hand as genuine is a matter of pure guess work. Without commenting on the veracity of the claim of the appellant, it is a fact that the appellant did furnish comparative detail of cash sales/ cash deposits for financial year 2015-16 and 2016-17 and submitted details of purchase, sale for the year under consideration along with the stock register and cash book. No discrepancies were pointed out by AO in those books of accounts or in the details filed. Once, AO has accepted the availability of physical stock on all the dates when sales are being made then how can cash generated out of such sales in the above months on those dates, be held as unexplained. It is therefore clear that appellant explained the availability of cash with the sale of existing available stock proving the factum of sales resulting into the availability of cash that was deposited into the bank accounts.'

AO has taxed this amount u/s 69A which can be invoked only if the assessee is found to be owner of any money, bullion, jewellery or other valuable article and such money etc. that is not recorded in the books of account, if any, maintained by the assessee for any source of income, which in this case is not so all the transactions are recorded in the regular books of accounts, and once the first limb is not satisfied then the question of the assessee offering any explanation about the nature and source of acquisition of such money, etc. or the reaching the satisfaction level by AO does not arise. The appellant has properly recorded such cash in the books of accounts maintained by the

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appellant. Therefore, the provisions of section 69A r.w.s. 115BBE cannot be invoked in the case of the appellant.

However, it is also true that appellant has not filed any return of income for the year under consideration. As per uploaded details of final accounts, P&L account on ITBA module it is clear that appellant earned Rs. Rs. 4,45,332/-. Since this amount is taxable as per appellant's own admission and whereas AO has made the addition of Rs. 8,19,000/- on account of cash deposit. Hence it will meet the end of justice if the addition is restricted to Rs. 4,45,332/- aş computed by appellant. AO is directed to tax the same as per law.

With regards to the addition of Rs. 1,48,000/- on account of Gift received from the brother Shri Lalit Kabra, appellant has submitted the confirmation from the brother, his bank account statement and his income tax particulars, thereby shifting the onus u/s 68 of IT Act. Shri Lalit kabra has returned income of Rs. 2,99,827/- doe AY 2017-18. In view of the. same the addition made is deleted.

These grounds are partly allowed. Appeal is partly allowed.”

(C) The Assessing Officer gave effect to aforesaid order dated 07.08.2020 of the learned CIT(A), vide order dated 19.02.2021 whereby the relief allowed by the learned CIT(A) in the aforesaid order dated 07.08.2020 was taken as Rs. 5,21,668/-. Vide rectification application dated 08.07.2021, the assessee requested the Assessing Officer to rectify the aforesaid order dated 19.02.2021, contending that the additions made in the assessment order were fully deleted by the learned CIT(A) and that only the income disclosed by the assessee himself was liable to be taxed. However, the Assessing Officer did not carry out the rectification requested by the assessee. Separately, the assessee addressed an application for rectification to the learned CIT(A) requesting the learned CIT(A) to issue a Corrigendum to the aforesaid appellate order dated 07.08.2020 of the learned CIT(A) for clarifying the

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issue. The aforesaid application addressed to the learned CIT(A) is reproduced below for the ease of reference:

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(D) However, vide impugned order dated 15.12.2024, the learned CIT(A) held that there was no mistake apparent in the order of learned CIT(A) and no interference was called for in the order of learned CIT(A). The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 15.12.2024 of the learned CIT(A). In the course of appellate proceedings in the Income Tax Appellate Tribunal, a Paper Book containing following particulars was filed from the assessee’s side:

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(E) At the time of hearing, the learned Counsel for the assessee took the Bench through the contents of the aforesaid Paper Book. He further contended that the learned CIT(A) erred in not issuing clarification as requested by the assessee vide aforesaid application for rectification addressed to the learned CIT(A). He requested that the learned CIT(A) should be directed to issue clarification as sought for by the appellant/assessee vide aforesaid application for rectification, addressed to the learned CIT(A). The learned Departmental Representative for the Revenue expressed no objection to this.

(F) Both sides have been heard. Materials on record have been perused. In the impugned appellate order dated 15.12.2024, the learned CIT(A) has disposed off of the assessee’s application for rectification, observing that there was no mistake apparent in the order of the learned CIT(A) and no interference was called for in the order of the learned CIT(A). However, what the assessee had requested in the application under section 154 of the Act was to issue clarification regarding the earlier order of the learned CIT(A). The assessee did not ask for any interference in the earlier order of the learned CIT(A). The assessee also did not request the learned CIT(A) to grant any fresh relief or to revise his earlier order. The request of the assessee was limited to issue of Corrigendum clarifying the quantum of relief granted by the learned CIT(A) in the earlier order. The learned CIT(A) has failed to issue such clarification/corrigendum. In view of the foregoing, the learned CIT(A)

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is directed to issue necessary Corrigendum/Clarification as requested by the assessee in application for rectification addressed to the learned CIT(A).

(F) All grounds of appeal are treated as disposed off, in accordance with the aforesaid directions. For statistical purposes, the appeal is partly allowed.

This order is deemed to be pronounced on 20/07/2026 in accordance with Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.

Sd/- (ANADEE NATH MISSHRA) Accountant Member Date: 20/07/2026 SK, Sr.PS

Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., 5. CIT(A)

Senior Private Secretary Income Tax Appellate Tribunal Lucknow