INCOME TAX OFFICER, WARD-1(2), ALWAR, ALWAR vs. SATENDRA SINGH NARUKA, JAIPUR

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ITA 678/JPR/2025Status: DisposedITAT Jaipur25 August 2026AY 2018-198 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, finding that the assessee had sufficiently explained the cash deposits with documentary evidence. The cash was regularly transferred to the Sangh, indicating it was not the assessee's personal income.

What were the facts?

The Revenue appealed against the deletion of an addition of Rs. 1,98,68,030/- made by the AO as unexplained money. The assessee had deposited this amount in his bank account, claiming it was from his milk distribution business for Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd.

What were the issues?

Whether cash deposits in the assessee's bank account, claimed to be from a business transaction and regularly transferred to a third party, can be treated as unexplained money under Section 69A.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “A” BENCH, JAIPUR

Before: SMT. ANNAPURNA GUPTA & SHRI KULDIP SINGH

Hearing: 12.08.2026Pronounced: 25.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “A” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.678/JPR/2025 (Assessment Year:2018-19)

ITO Vs. Satendra Singh Naruka Ward 1(2) 55, Gulab Nagar, Near Alwar Sanganer RLY Station Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:EPEPS 9317 M Appellant .. Respondent

Appellant by : Sh. Abhimanyu Singh Yadav, Addl. CIT Respondent by : None

Date of Hearing 12.08.2026 Date of Pronouncement 25.08.2026 O R D E R Per Annapurna Gupta, Accountant Member: The present appeal has been filed by the Revenue, against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”),dated 04.03.2025under

2 ITA No. 678/JPR/2025 Satendra Singh Naruka Section 250 of the Income Tax Act, 1961, (hereinafter referred to “Act”).

2.

The grounds raised by the Revenue read as under:-

1.

Whether on the fact and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.1,98,68,030/- as unexplained money u/s 69A of the I.T. Act, 1961 without appreciating the material facts of the case? 3. The solitary grievance of the Revenue is against the order passed by the Ld. CIT(A) deleting the addition on account of unexplained money u/s 69A of the Act amounting to Rs.1,98,68,030/-.

4.

The facts relating to the issue as noted in para 2 of the order of the Ld. CIT(A) is that the AO was in possession of information that during the impugned year the assessee had made cash deposits of Rs.1,98,68,030/- in his Bank account and had received interest of Rs.33,233/- but had not filed his return of income. Accordingly, the case of the assessee was reopened as per the procedure prescribed in law by passing order u/s 148A(d) of the Act.

5.

During the assessment proceedings, the assessee explained the source of cash deposits as emanating from his business of distribution of milk to Jaipur milk plant. He explained that he had received interest income of Rs.33,233/- from FDR which was given to Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. (JZDUSS) as Bank Guarantee security. The assessee also stated that the entire cash deposits belonged to Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. and wasnot his

3 ITA No. 678/JPR/2025 Satendra Singh Naruka own, and in support of the same filed its computation of income, bank account statement, work contract order, ledger of Jaipur Dairy transfer entry verification, note of business activity and chart showing quantity of milk supply. The AO however rejected the assessee’s contention on the ground that if the cash belonged to Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. then why was the same deposited in his Bank account. Accordingly, he treated the amount of cash deposited in his bank account as unexplained and added the same to the income of the assessee as also the interest income earned by the assessee during the year.

6.

The assessee carried the matter in appeal before the Ld. CIT(A), who after appreciating all the evidences on record held that the AOs finding that the assessee was beneficiary of the money deposited in his bank account and not Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd as contended by the assessee, was incorrect. He noted from the records that the cash deposited in the bank account of the assessee was transferred to Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd regularly on day to day basis. From the evidence filed by the assessee he noted that the cash was deposited in the current account of the assessee, and the cash deposited was immediately transferred on daily basis to Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd and that in the books of accounts and other documents submitted by the assessee no infirmity was found by the AO . Noting the aforesaid facts , the Ld.CIT(A) held that the assessee’s explanation of the cash deposited in his bank

4 ITA No. 678/JPR/2025 Satendra Singh Naruka account emanating from his business of milk distribution was sufficiently explained with documentary evidences and the AOs basis of rejecting assessee’s explanation for the reason that the assessee was the beneficiary of the cash deposited and not Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd was both incorrect on facts and also could not be the sole reason for making addition u/s 69A of the Act. His findings in this regard are contained at para 5 of his order as under:-

……… 5. DECISION:- The facts as available on the record and merit of the case have been considered. The appellant in support of the ground raised submitted that during A.Y. 2018-19, the he was the proprietor of M/S Shanu Enterprises, a milk distribution contractor for Jaipur Zila DugdhUtpadak Sahakari Sangh Ltd. The business involved collecting cash from dairy retailers and depositing it into the firm's current account before transferring it to Jaipur Zila DugdhUtpadak Sahakari Sangh Ltd. The appellant submitted that total cash deposits of Rs. 1,98,68,030 were not his income but were collected on behalf of the milk cooperative. The appellant submitted that he earned a commission of Rs.7,63 ,647 while incurring distribution expenses of Rs.8,23,510, resulting in a loss of Rs.59,863. Additionally, bank interest income of Rs.33,233 was from an FDR given as security. The appellant submitted that since his income was below the taxable limit, there was no obligation to file a return under section 139(1) of the Income Tax Act. During the appellate proceedings the appellant submitted copies of bank statement, letter of intent given by Jaipur Zilla Dugdh Utpadak Sahakari Sangh Ltd, appellant ledger a/c in the books of milk cooperative, his milk supply purchase and commission & expenses details. It was found that these documents were submitted before the A.O. during the assessment proceedings and the A.O. had mentioned these documents in last paragraph of point no. 3.2 in page no. 4 in the assessment order. Hence, these are not new documents. The only reason given by the A.O. in making addition u/s 69A was the cash deposited in the appellant's individual account instead of the milk cooperative's account. The A.O. had not found any discrepancy in the documents filed or the fact that the appellant is engaged in the business of distribution of milk. The

5 ITA No. 678/JPR/2025 Satendra Singh Naruka appellant had shown the work order given by Jaipur Zilla Dugdh Utpadak Sahakari Sangh Ltd. The appellant has also kept an FD as security for Jaipur Zilla Dugdh Utpadak Sahakari Sangh Ltd. the A.O. has not disputed this fact. The account in which the cash was deposited is a current account, which justify that the appellant was involved in business activity. On perusal of the account it was found that cash deposited was transferred to Jaipur Zilla Dugdh Utpadak Sahakari Sangh Ltd, therefore, the appellant cannot be held as the ultimate beneficiary of the money and the fact that cash was transferred to Jaipur Zilla Dugdh Utpadak Sahakari Sangh Ltd regularly on day to day basis strengthen the fact that the appellant was involved in distribution of milk. Hence, it cannot be said that the cash deposited by the appellant is not explained with documentary evidence. The entire reasoning for making addition by the A.O. is based on the fact that cash was deposited in this individual account. This cannot be the sole reason for making addition u/s 69A when the appellant provides all the evidence explaining the source of deposits. I find the reason given by the A.O. for making addition is incorrect and no addition u/s 69A is warranted. The A.O. is directed to delete the addition of Rs. 1,98,68,030/- made u/s 69A. Ground No. 2 & 3 is allowed. ………… 7. Before us, Ld. DR was unable to controvert the fact that the sole basis with the AO for rejecting assessee’s explanation of the cash deposited in his bank account emanating from his business of milk distribution was that the assessee was the beneficiary of the cash deposited in his bank account and not Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd from whom the assessee allegedly purchased milk. He was unable to controvert the factual finding of the Ld. CIT(A) that the aforesaid basis of the AO for rejecting assessee’s explanation was incorrect on facts since the bank account of the assessee revealed maximum transfer of the cash deposit to Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. He was unable to controvert the factual finding of

6 ITA No. 678/JPR/2025 Satendra Singh Naruka ld. CIT(A) that all books of accounts with documentary evidences were produced before the AO evidencing the conduct of assessee’s business of milk trading and in which no infirmity was found by the AO.

8.

Since the Ld. DR was unable to controvert the factual findings of the Ld. CIT(A) that the ultimate beneficiaries of the cash deposited in the Bank account of the assessee was Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd., and no infirmity was found by the AO in the books of accounts of the assessee, both of which evidenced assessee’s explanation of cash deposited in the bank account being from the business of trading in milk, we find no infirmity in the order of the Ld. CIT(A) holding the source of cash deposited in the bank account of the assessee of Rs.1,98,68,030/- be duly explained and deleting the addition made by the AO of the same.

9.

The Ld. DR however argued that the AO had rightly treated the cash deposits as unexplained since as per the assessee’s explanation he had earned commission income by way of selling milk on behalf of Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd, but no TDS had been deducted on the same despite the provisions of deduction of tax atsource being attracted.

10.

We do not find any merit in the argument of the Ld. DR before us. The liability and onus of deducting tax at source lies on the party which makes the payment, which in the facts of the present case is commission paid by Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd.

7 ITA No. 678/JPR/2025 Satendra Singh Naruka The said party may not have deducted TDS for reasons best known to it, but the same has no effect on the nature of the transaction carried out. Merely, because TDS has not been deducted at a particular transaction does not change the character of the transaction which otherwise has been categorically noted from the facts on record to be revealing sufficiently that the assessee was in the business of dealing in trading of milk and the cash deposited in his bank account emanated from the said business, which facts have remained uncontroverted by the Ld. DR.

11.

In the light of the above, we do not find any merit in the appeal filed by the Revenue and accordingly dismiss the grounds raised by the Revenue.

12.

In effect, the appeal of the Revenue is accordingly dismissed.

Order pronounced in the open court on 25.08.2026

Sd/- Sd/- (Kuldip Singh) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 25.08.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT

8 ITA No. 678/JPR/2025 Satendra Singh Naruka 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur

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