KING ESCALATORS AND ELEVATORS PRIVATE LIMITED,BENGALURU vs. INCOME TAX OFFICER, WARD - 4(1)(2), BENGALURU

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ITA 2390/BANG/2026Status: DisposedITAT Bangalore25 August 20268 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the delay, finding sufficient cause. Regarding the addition, the Tribunal held that the assessee provided sufficient customer-wise details and supporting documents for the cash deposits, and the Revenue failed to conduct independent inquiries to disprove the explanation.

What were the facts?

The assessee filed an appeal with a delay of 62 days due to a defunct email ID. The appeal concerns an addition made by the AO under Section 69A for cash deposits during demonetisation, which was confirmed by the CIT(A).

What were the issues?

Whether the cash deposits made by the assessee during the demonetisation period were unexplained money. Whether the delay in filing the appeal should be condoned.

Which sections of the Income-tax Act were involved?

Section 69A,Section 133A,Section 250,Section 234B,Section 234D,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

PER SHRI WASEEM AHMED, ACCOUNTANT MEMBER: This appeal is filed by the Assessee against the order of Ld. CIT-A passed under section 250 of the Act vide DIN: ITBA/APL/M/250/2025-26/1084249274(1) dated 01- Jan-2026 for the Assessment Year 2017-18.

2.

There is a delay of 62 days in filing the present appeal before us. The assessee has filed an affidavit explaining the reasons for the delay. It is stated that the assessee- company had created its own website and official email ID for business purposes. After the Covid-19 period, the website subscription was not renewed and the website became defunct. However, the corresponding email ID continued to remain registered on the Income Tax Portal. Though the assessee came to know about the hearing before the Ld. CIT(A) in July 2024 and filed written submissions, the registered email ID was not changed. Consequently, when the order u/s 250 of the Act was passed on 31.12.2025, the assessee did not become aware of the same. Upon coming to know about the order, the assessee filed the present appeal, resulting in a delay of 62 days. These facts have also been affirmed on oath by the Director of the assessee-company.

3.

The Ld. DR opposed the condonation of delay and submitted that the assessee was required to keep its contact details updated and to file the appeal within the prescribed period.

4.

We have considered the explanation of the assessee and the objection of the Ld. DR. We find that the delay is only of 62 days, and the assessee has explained the circumstances leading to the delay through a sworn affidavit. The explanation shows that the delay occurred because the order of the Ld. CIT(A) was communicated to an email ID which had become defunct, and the assessee was not aware of the order in time. Nothing has been brought before us to suggest that the delay was deliberate or that the assessee stood to gain by filing the appeal late. On the contrary, after becoming aware of the order, the assessee approached the Tribunal. In our view, the assessee has shown sufficient cause for the delay. A short delay arising from a bona fide lapse should not prevent the assessee from pursuing its appeal on merits. Accordingly, in the interest of justice and fair-play, we condone the delay of 62 days and admit the appeal for adjudication on merits.

5.

The interconnected issue raised by the assessee through ground Nos. 1 to 5 is that the learned CIT(A) erred in confirming the addition made by the AO by treating the cash deposit as unexplained money u/s 69A of the Act.

6.

The brief facts are that the assessee was subject to a survey u/s 133A of the Act, which was conducted on 17.03.2017 in connection with cash transactions during the demonetisation period. The case was thereafter selected for scrutiny. The AO noticed that the assessee had deposited cash of ₹24,07,000/- in its bank account with Dena Bank during the demonetisation period from 09.11.2016 to 30.12.2016 and called upon the assessee to explain the source of such deposits.

7.

The assessee explained that the cash deposits were made out of cash received from customers towards advances for supply of materials and realisation of earlier credit sales. During the survey, the director could not immediately furnish the details and sought time to obtain the information. Subsequently, the assessee furnished details showing cash received from various customers and claimed that cash of ₹24,08,767 was available as on 08.11.2016. In response to the show-cause notice, the assessee further explained that its customers, including individuals, apartment associations and real estate firms, generally took longer time to clear their dues and that certain customers had also paid advances against orders.

7.1 The AO was not satisfied with the explanation. The AO observed that the invoices furnished did not contain any acknowledgement regarding receipt of advances, mode of payment or dates of cash payments. The AO further noticed that several credit sales were made from March 2016 onwards, whereas the amounts were claimed to have been realised in cash between 01.11.2016 and 08.11.2016, i.e. just before the announcement of demonetisation. According to the AO, the pattern of receiving advances and realisation of old dues in cash immediately before demonetisation did not appear genuine. He therefore treated the explanation as an afterthought and made an addition of ₹18,05,250, being the SBN deposited in the bank account, as unexplained money u/s 69A of the Act read with section 115BBE of the Act.

8.

The aggrieved assessee preferred an appeal before the learned CIT(A).

9.

The Ld. CIT(A) confirmed the addition of ₹18,05,250/- by observing that the assessee claimed the cash deposits to be out of advances received from customers and realisation of earlier credit sales. However, the bills did not contain any entry or acknowledgement showing receipt of such advances or cash payments. Further, the cash was stated to have been received from several parties between 01.11.2016 and 08.11.2016 against bills raised from March 2016 onwards, and the advances were also shown as received on consecutive days during the same week. The Ld. CIT(A), therefore, held that the assessee failed to establish the genuineness and source of the cash deposited during the demonetisation period. Since no satisfactory explanation was furnished even during the appellate proceedings, the Ld. CIT(A) upheld the addition made by the AO and dismissed the grounds of the assessee.

10.

Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.

11.

The learned AR before us filed a paper book running from pages 1 to 130 and submitted that the addition of ₹18,05,250 u/s 69A of the Act was not justified. He submitted that the cash deposited during the demonetisation period was received in the normal course of the assessee's business towards advances from customers and realisation of earlier credit sales. The assessee had furnished details of the customers, nature of transactions, amounts received, invoices and advance receipts to explain the source of cash.

11.1 The Ld. AR further submitted that the books of account of the assessee were duly audited and were not rejected by the AO. The cash receipts and deposits were recorded in the books. Wherever the receipts represented sales, the same were offered to tax, while advances were recorded as liabilities and subsequently recognised as sales on completion of the transactions. Therefore, taxing the same cash deposits again u/s 69A of the Act would result in taxing the same amount twice.

11.2 As regards the AO's objection regarding the delay between raising the invoices and receiving the cash, the Ld. AR submitted that the assessee was a small-scale business dealing with individuals, apartment associations and real estate firms, where customers often took considerable time to clear their dues. Merely because old dues were realised in November 2016 or several customers made payments around the same period could not make genuine business receipts unexplained. It was further pointed out that even during the survey u/s 133A of the Act, no incriminating material was found to show that the cash deposits represented any undisclosed money of the assessee. The Ld. AR accordingly submitted that the addition was based mainly on suspicion without any contrary evidence and prayed that the addition of ₹18,05,250 sustained by the Ld. CIT(A) be deleted.

12.

The Ld. DR, on the other hand, relied upon the orders of the lower authorities and submitted that the assessee failed to satisfactorily establish the genuineness and source of the cash deposited during the demonetisation period. He submitted that the pattern and timing of the alleged cash receipts were doubtful and the supporting documents did not establish actual receipt of cash from the customers. He, therefore, prayed that the addition made by the AO and confirmed by the Ld. CIT(A) be upheld.

13.

We have heard the rival contentions of both the parties and carefully perused the materials available on record. The issue before us is whether the cash deposit of ₹18,05,250 during the demonetisation period could be treated as unexplained money u/s 69A of the Act.

13.1 It is not in dispute that the assessee was carrying on the business of manufacture, sale and servicing of escalators and elevators. During the demonetisation period, the assessee deposited cash of ₹24,07,000 in its bank account. The assessee explained that the cash was received in the normal course of its business, partly towards realisation of earlier credit sales and partly as advances received from customers against supply of materials. The AO, however, did not accept the explanation and treated ₹18,05,250, being the SBN deposited, as unexplained money u/s 69A of the Act. The Ld. CIT(A) confirmed the addition substantially for the same reasons.

13.2 On perusal of the material placed before us, we find that the explanation of the assessee was not a mere general statement. The assessee had furnished the details of the customers from whom cash was received, the nature of the transactions, the amount received from each customer and had also produced the relevant invoices and advance receipts. Thus, the assessee had identified the source from which the cash was claimed to have been received and had placed supporting materials before the Revenue authorities.

13.3 The main reason given by the AO for rejecting the explanation is that the invoices did not contain acknowledgement of receipt of cash or details regarding the mode and dates of payment. The AO also doubted the transactions because certain invoices had been raised several months earlier, whereas the corresponding amounts were claimed to have been realised between 01.11.2016 and 08.11.2016. In our view, these circumstances may justify further verification, but by themselves they cannot establish that the cash receipts were unexplained money of the assessee. The timing of a business receipt may create a doubt, but such doubt has to be supported by further enquiry and evidence before an addition can be made.

13.4 More importantly, once the assessee furnished the list and details of the customers from whom the cash was stated to have been received towards realisation of credit sales and advances against supply, it was open to the AO to verify the explanation directly from those customers. The AO could have issued notices to the concerned parties, called for confirmations or otherwise independently verified whether such customers had actually made the payments claimed by the assessee. However, no such enquiry appears to have been carried out. There is also nothing on record to show that any customer denied having made the payment or that the particulars furnished by the assessee were found to be false. In these circumstances, the explanation supported by customer-wise details could not have been rejected merely because the AO considered the timing or manner of receipt to be unusual.

13.5 We also find force in the submission that the assessee's books of account were duly audited and were not rejected by the AO. The cash receipts in question were recorded in the books of accounts. According to the assessee, amounts representing realisation of credit sales were already part of its business transactions, while advances received from customers were recorded as liabilities and recognised as sales when the corresponding transactions were completed. The Revenue has not brought any material on record to demonstrate that these entries were fictitious or that the books did not reflect the true state of affairs.

13.6 We further note that the assessee explained the delay in collection of its receivables by pointing out the nature of its customer base, consisting of individuals, apartment associations and real estate firms. According to the assessee, such customers often took considerable time to clear their outstanding dues. Therefore, merely because invoices were raised earlier and the amounts were subsequently realised in cash in November 2016 cannot, without any contrary evidence, lead to the conclusion that the receipts were not genuine. It is also relevant that during the survey u/s 133A of the Act, no incriminating material was found showing that the impugned cash represented undisclosed money of the assessee.

13.7 Section 69A of the Act cannot be invoked merely because the AO considers the explanation of the assessee improbable. Where the assessee has explained the source of the money with reference to recorded business transactions and has furnished identifiable details of the persons from whom the money was received, such explanation has to be examined on the basis of evidence. If the Revenue doubts the correctness of those particulars, the doubt must be tested through proper enquiry. In the present case, no independent enquiry was made from the customers and no material has been brought on record to disprove the assessee's explanation.

13.8 Considering the totality of the facts, we are of the view that the addition has been sustained mainly on suspicion arising from the timing of the cash receipts and the absence of acknowledgement on the invoices, without bringing any positive material to establish that the cash represented unexplained money of the assessee. The assessee, on the other hand, has explained the source of the cash with reference to its regular business transactions and furnished customer-wise details and supporting documents. The Revenue has not disproved the same by making enquiry from the concerned customers or any other independent source. Accordingly, we are unable to sustain the addition of ₹18,05,250 made u/s 69A of the Act. We, therefore, set aside the finding of the Ld. CIT(A) on this issue and direct the AO to delete the addition made by him. Hence, the grounds raised by the assessee on this issue are allowed.

13.9 Coming to ground Nos. 6 & 7 of the assessee's appeal, at the outset, we note that the issues raised therein pertain to the levy of interest u/s 234B and 234D of the Act, which are consequential in nature. Hence, no separate adjudication is required, and the same are dismissed as infructuous.

14.

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

Order pronounced in the open court on 25th August, 2026 Sd/- Sd/- KESHAV DUBEY WASEEM AHMED JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore Dated: 25th Aug, 2026 Vms Copy to: KING ESCALATORS AND ELEVATORS PRIVATE LIMITED, NO. 2/1, 2ND FLOOR, VIVEK COMPLEX, 1 UDUPA GARDENS, S M ROAD, JALAHALLI, BENGALURU, BENGALURU-560015, KARNATAKA INCOME TAX OFFICER, WARD - 4(1)(2), BMTC BUILDING KORAMANGALA, 80 2 FEET ROAD, NEAR KHB GAMES VILLAGE, BENGALURU, BENGALURU-560095, KARNATAKA 3 THE PCIT / CIT, 4 THE D.R., ITAT, BANGALORE BENCH 5 GUARD FILE

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