AMIT DOKWAL,HYDERABAD vs. ITO, WARD-1, ADILABAD

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ITA 2431/HYD/2025Status: DisposedITAT Hyderabad03 July 2026AY 2013-201410 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that once the Assessing Officer accepted the cash deposits as part of the business turnover disclosed by the assessee under section 44AD, no separate addition under section 69A could be made for the same amount, as it would amount to double taxation.

What were the facts?

The assessee did not file a return for AY 2013-14. The AO initiated reassessment and found cash deposits of ₹42,40,000 in the assessee's bank account. The AO treated these deposits as unexplained under section 69A and added them to the income.

What were the issues?

Whether cash deposits accepted as business turnover under section 44AD can also be treated as unexplained money under section 69A, leading to double taxation.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 148,Section 144B,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia

Hearing: 25/06/2026

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad �ी �वजय पाल राव, उपा� य� एवं �ी मधुसूदन साव�डया, लेखा सद� य के सम� । Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 2431/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2013-14) Shri Amit Dokwal Vs. ITO Hyderabad Ward – 1 PAN: AIQPD5655C ADILABAD (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Shri C. Maheshwar Reddy, CA राज� व �ारा/Revenue by: Shri Bala Murali Krishna Korrapati, Sr. AR सुनवाई की तारीख/Date of hearing: 25/06/2026 घोषणा की तारीख/Pronouncement: 03/07/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Shri Amit Dokwal (“the assessee), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 08.12.2025 for the A.Y.2013-14. 2. The assessee has raised the following grounds of appeal:

3.

The brief facts of the case are that the assessee is an individual who had not filed any return of income for Assessment Year 2013-14. On the basis of information available with the Department, the Learned Assessing Officer (“Ld. AO") found that the assessee had deposited cash in his bank account during the year under consideration. Accordingly, reassessment proceedings were initiated in the case of the assessee under section 147 of the Income-tax Act, 1961 (“the Act”) and notice under section 148 dated 30.03.2021 was issued by the Ld. AO to the assessee. During the reassessment proceedings, the Ld. AO observed that the assessee had deposited cash aggregating to ₹42,40,000/- in his bank account during the year under consideration. Being not satisfied with the explanation furnished by the assessee regarding the source of such deposits, the Ld. AO treated the cash deposits of ₹42,40,000/- as unexplained money under section 69A of the Act and added the same to the income of the assessee. Accordingly, the assessment was completed by the Ld. AO under section 147 read with section 144B of the Act vide order dated 17.03.2022 by making an addition of ₹42,40,000/- under section 69A of the Act and assessing the total income of the assessee at ₹54,78,270/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), however, confirmed the addition made by the Ld. AO and dismissed the appeal of the assessee. 5. Aggrieved by the order of the Ld. CIT (A), the assessee is in appeal before the Tribunal. The Learned Authorized Representative (“Ld. AR”) submitted that the

assessee is engaged in the business of trading in agricultural produce. In support of the said contention, he invited our attention to the license issued by the Gram Panchayat in the name of the assessee placed at page nos. 53 to 55 of the paper book. The Ld. AR submitted that during the year under consideration the assessee had undertaken purchase and sale of agricultural produce and the cash deposits aggregating to ₹42,40,000/- represented sale proceeds received in cash from such business activities. Inviting our attention to the computation of income placed at page no. 40 of the paper book, the Ld. AR submitted that the assessee had disclosed the cash deposits of ₹42,40,000/- as business turnover and offered income of ₹3,39,300/- thereon under section 44AD of the Act. The Ld. AR submitted that despite the assessee having already disclosed the said amount as business turnover and offered income thereon, the Ld. AO again treated the same amount as unexplained money under section 69A of the Act, resulting in double taxation of the same receipt. The Ld. AR further submitted that since the assessee had opted for presumptive taxation under section 44AD of the Act, he was not required to maintain books of account or produce purchase and sale bills. In support of this contention, reliance was placed on the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Surinder Pal Anand (192 Taxman 264). It was submitted that under similar circumstances the Hon’ble High Court held that an assessee declaring income under section 44AD of the Act is not obliged to explain each and every cash deposit appearing in the bank account. Accordingly, the Ld. AR prayed that the addition made under section 69A of the Act be deleted.

6.

Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities. He submitted that the assessee merely claimed to be engaged in the business of trading in agricultural produce but failed to substantiate the same by producing any evidence regarding actual purchase and sale transactions. It was contended that the assessee had failed to establish the nexus between the cash deposits and the alleged business activity. The Ld. DR submitted that merely offering income under section 44AD of the Act does not automatically establish that all cash deposits in the bank account represent business receipts. Therefore, according to the Ld. DR, the lower authorities were justified in treating the impugned deposits as unexplained money under section 69A of the Act. 7. We have heard the rival submissions and perused the material available on record including the case law relied upon. The solitary issue involved in the present appeal relates to the addition of ₹42,40,000/- made under section 69A of the Act on account of cash deposits in the bank account of the assessee. We find merit in the contention of the Ld. DR that merely because the assessee has declared income under section 44AD of the Act, he is not absolved from establishing that the receipts deposited in the bank account are relatable to his business activities. Therefore, the contention of the assessee that filing a return under section 44AD of the Act by itself dispenses with the requirement of substantiating the nature of receipts cannot be accepted. We have carefully gone through para no. 8 of the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Surinder Pal Anand

(Supra) relied upon by the assessee, which is to the following effect: “8. Once under the special provision, exemption from maintaining of books of account has been provided and presumptive tax at the rate of 8 per cent of the gross receipt itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts. The stand of the assessee before the Commissioner of Income-tax (Appeals) and the ITAT that the said amount of Rs. 14,95,300 was on account of business receipts had been accepted. Learned counsel for the appellant with reference to any material on record, could not show that the cash deposits amounting to Rs. 14,95,300 were unexplained or undisclosed income of the assessee.” 8. On perusal of the above, we find that the Hon’ble High Court held that where income is declared under section 44AD of the Act, the assessee is not required to explain each individual entry of cash deposit in the bank account, provided such deposits have nexus with the gross receipts of the business. The Hon’ble High Court observed that once the receipts are accepted as business receipts, each individual deposit need not be separately explained. However, in our considered opinion, the aforesaid judgment does not lay down a proposition that an assessee declaring income under section 44AD of the Act is completely relieved from establishing the source of the gross receipts themselves. The Hon’ble High Court has never held that the assessee is not required to justify the business receipts or establish the business activity by producing supporting evidence wherever required. The ratio of the said decision is confined to the proposition that individual cash deposits need not be separately explained once they are found to have nexus with the business receipts.

9.

In the present case, the assessee has placed on record a license issued by the Gram Panchayat authorizing him to engage in agro-based crop products business, placed at page nos. 53 to 55 of the paper book. The English translation of the copy of the license place at page no. 54 of the paper book is reproduced as under:

10.

On perusal of the above, we find that the claim of the assessee regarding engagement in agricultural produce

business cannot be outrightly rejected. At the same time, we agree that the license by itself may not conclusively establish the volume of business transactions undertaken during the relevant year. Be that as it may, we have also gone through para no. 7 of the order of the Ld. AO, which is to the following effect:

11.

On perusal of the above, we find that the Ld. AO has accepted the return of income filed by the assessee wherein the amount of ₹42,40,000/- was disclosed as business turnover and income therefrom was offered by the assessee under section 44AD of the Act. The returned income has not been disturbed by the Ld. AO. Once the Ld. AO has accepted the turnover disclosed by the assessee under section 44AD of the Act, the very same amount could not again be treated as unexplained money under section 69A of the Act. Such an action results in taxing the same receipt twice, firstly as business turnover forming part of the returned income and secondly as unexplained money under section 69A of the Act. It is a settled principle that the same receipt cannot be subjected to tax twice under different provisions of the Act. In the present case, no material has been brought on record by

the Revenue to demonstrate that the impugned cash deposits are over and above the turnover already disclosed by the assessee in the return of income. Therefore, after considering the entirety of facts and circumstances of the case, we are of the considered opinion that once the cash deposits of ₹42,40,000/- have been accepted as forming part of the business turnover disclosed by the assessee under section 44AD of the Act, no separate addition under section 69A of the Act can survive in respect of the very same amount. Accordingly, we direct the Ld. AO to delete the addition of ₹42,40,000/- made under section 69A of the Act.

12.

In the result, the appeal of the assessee is allowed.

Order pronounced in the Open Court on 3rd July, 2026. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, dated 3rd July, 2026. Vinodan/sps Copy to: S.No Addresses 1 Shri Amit Dokwal c/o B. Narsing Rao & Co. LLP, Plot No.554, Room No.92, Jubilee Hills, Hyderabad 500096 2 Income Tax Officer Ward -1 Adilabad 504001 3 Pr. CIT, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File

By Order Digitally signed by TUMMALACHARLA TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.07.03 11:56:33 +05'30'

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