BHARAT G DOSHI,KOLKATA vs. DCIT, CIRCLE 40, , KOLKATA

PDF · subscribers
ITA 1425/KOL/2025Status: DisposedITAT Kolkata28 April 2026AY 2017-20186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the revenue authorities had not considered the case on merits and that the assessee had not been given a proper opportunity to present evidence. Therefore, the matter was remanded back to the Assessing Officer for verification of sales with relevant bills.

What were the facts?

The assessee's income tax return for AY 2017-18 showed a significant increase in cash deposits and sales, particularly during the demonetization period. The Assessing Officer added a substantial portion of these cash sales as unexplained cash credits.

What were the issues?

Whether the addition of cash sales as unexplained cash credits was justified without proper verification and opportunity to the assessee. Whether the assessee provided sufficient evidence for the increase in cash sales during demonetization.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA

Before: Shri Duvvuru RL Reddy, Vice-(KZ)

The present appeal is directed at the instance of assessee against the order of Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 14.05.2025 passed for Assessment Year 2017-2018.

ITA No. 1425/KOL/2025 (A.Y. 2017-2018) Bharat G Doshi

2.

Brief facts of the case are that the assessee is an individual, who filed his return of income for AY 2017-18 on 29.10.2017 declaring total income of Rs.13,49,230/-. The case was selected for scrutiny assessment through CASS and accordingly notice under section 143(2) of the Act was issued and served on the assessee through ITBA. Detailed questionnaire under section 142(1) of the Act was duly served upon the assessee through ITBA. In response to notices, the assessee submitted responses along with necessary documents as requisitioned. The case was selected for scrutiny due to abnormal increase in cash deposits during demonetization period. It is seen that cash deposit increased from Rs.2,35,028 to Rs.37,72,604/- from AY 2016-17 to AY 2017-18. It is also seen that there is huge increase in sales from Rs.5,55,634/- (November, 2015) to Rs.41,26,287,398/- (Nov., 2016). The cash sale of Rs.41,26,287/- was explained by the assessee as the source of cash deposits was of Rs.35,00,000/-. From the record, it is seen that total sales during the month of November, 2016 comprises of 71.7% of the total sales during the year for festive season. The ld. Assessing Officer asked the assessee why show cause notice will not be issued to him and the cash deposit of Rs.35,00,000/- be not taken as undisclosed income and be taxed accordingly. The assessee failed to prove its submission that cash deposited during demonetization period are normal business receipts. However, as the assessee in its books of account had already declared net profit @19.52% of the sales of Rs.35,00,000/-, the sum of Rs.6,83,200/- being net profit on the sales (i.e. 19.52% of Rs.35,00,000/-) is reduced to Rs.28,16,800/- and ld. Assessing Officer added this

ITA No. 1425/KOL/2025 (A.Y. 2017-2018) Bharat G Doshi amount of Rs.28,16,800/- to the total income of the assessee as unexplained cash credits under section 68 of the Income Tax Act, 1961. The assessee had debited an amount of Rs.39,284/- as foreign travelling expenses and the assessee was asked to furnish relevant documents but getting no response from the side of assessee, the ld. Assessing Officer added this amount to the total income of assessee. Finally, ld. Assessing Officer determined the total taxable income of the assessee at Rs.42,05,314/- [i.e. ITR Rs.13,49,230/- + Rs.28,16,800/- (addition made u/s 68) + Rs.39,284/- (as foreign travel expenses). On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals)

3.

The ld. CIT(Appeals) dismissed the appeal of the assessee as the assessee did not furnish any satisfactory explanation for abnormal increase in sales, which indicates introducing unaccounted money during demonetization period. The assessee did not provide any convincing economic rationale for this surge, especially when the month immediately preceding November, 2016 recorded significantly lower sales. Moreover, the source of abnormal increase in cash deposits as cash sales in AY 2015-16 to 2018-19 were Rs.1,11,516/-, Rs.4,97,963/-, Rs.39,56,449/- and Rs.6,65,548/- respectively. It is seen that total cash sales increased from Rs.4,97,963/- (AY 2016-17) to Rs.39,56,449/- (AY 2017-18) which further decreased to Rs.6,65,568/- (AY 2018-19). As the assessee failed to prove his claim that the cash deposited during demonetization period are normal business receipts, a certain part of deposits made in the bank accounts formed part of

ITA No. 1425/KOL/2025 (A.Y. 2017-2018) Bharat G Doshi assessee’s concealed income and ld. CIT(Appeals) confirmed the addition of Rs.30,22,753/- as made by the ld. Assessing Officer.

4.

On being aggrieved, the assessee preferred an appeal before the ITAT. It was the submission of the ld. Counsel for the assessee that both the revenue authorities did not consider the case on merits and simply they have made the addition to the total income of assessee. Therefore, he pleaded to set aside the order of revenue authorities.

5.

On the other hand, ld. Departmental Representative pleaded before the Bench to uphold the order of ld. CIT(Appeals).

6.

I have heard both the sides and perused the material available on record. From the record, I find that for AY 2017-18, out of total turnover of Rs.57,54,334/-, cash sales of Rs.39,56,449/- and cash deposited to bank of Rs.37,72,604/- which is 95% of cash sales. Similarly for AY 2016-17, out of total turnover of Rs.39,96,644/-, total cash sales were Rs.4,97,963/- and cash deposited to the bank of Rs.2,35,028/-, which is 47% of cash sales. Again, for AY 2018-19, out of total turnover of Rs.9,99,898/-, total cash sales of Rs.6,65,548/-, here no cash was deposited in the Bank. As the assessee in his books of account declared net profit @ 19.52% on the sales of Rs.35,00,000/-, the sum of Rs.6,83,200/- being net profit on the above sale amount, (i.e. 19.52% of the Rs.35,00,000/-) is reduced and accordingly a sum of Rs.28,16,800/- was added to the total income of assessee as unexplained cash credits under section 68. The assessee

ITA No. 1425/KOL/2025 (A.Y. 2017-2018) Bharat G Doshi submitted that cash sales were backed by bills and the same were submitted along with stock statement which was verified and has attached a letter dated 11.12.2019 in this regard. Neither the letter nor the bills have been submitted electronically although the assessee has submitted the other submissions online. I also find that the assessment order has been passed u/s.143(3) of the Income Tax Act as the assessee failed to produce any evidence or supporting document in support of the claim. Considering the facts and circumstances of the case, I am inclined to set aside the order passed by the ld. CIT(Appeals) and in order to meet the principle of natural justice, remit the matter back to the file of the ld. Assessing Officer to verify the sales with relevant bills and with a direction to provide one more opportunity of being heard to the assessee. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the ld. Assessing Officer failing which the ld. Assessing Officer shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. Thus, the grounds raised by the assessee are partly allowed for statistical purposes.

7.

In the result, appeal of the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 28/04/2026.

Sd/- (Duvvuru RL Reddy) Vice-President (KZ) Kolkata, the 28th day of April, 2026

ITA No. 1425/KOL/2025 (A.Y. 2017-2018) Bharat G Doshi

Copies to :(1) Bharat G Doshi, C/o. Subash Agarwal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite-213, 2nd Floor, Kolkata-700069 (2) Deputy Commissioner of Income Tax, Circle-40, Kolkata, 3, Government Place (West), Kolkata-700001 (3) CIT(A), NFAC, Delhi; (4) CIT - , Kolkata; (5) The Departmental Representative; (6) Guard File TRUE COPY By order

Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →