MANMOHAN SINGH,PITHORAGARH vs. INCOME TAX OFFICER, PITHORAGARH

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ITA 261/DDN/2025Status: DisposedITAT Dehradun05 June 2026AY 2027-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal deleted the addition on account of cash deposits, finding it to be part of sales and thus double-counted. However, it upheld the estimation of income but reduced the profit rate from 8% to 4% on the estimated turnover.

What were the facts?

The assessee, who did not file a return of income, made significant cash deposits during demonetization. The Assessing Officer (AO) made additions on account of unexplained cash deposits and estimated income based on sales. The assessee provided additional evidence to the CIT(A) but failed to respond to notices during remand proceedings.

What were the issues?

Whether cash deposits during demonetization are unexplained income when sales are also estimated. Whether the profit rate applied to estimated turnover is reasonable and if Section 115BBE is applicable.

Which sections of the Income-tax Act were involved?

Section 69A,Section 144,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DEHRADUN BENCH “SMC’’ : DEHRADUN

Before: SH. YOGESH KUMAR US & SH. MANISH AGARWAL

Hearing: 12/03/2026Pronounced: 05/06/2026

IN THE INCOME TAX APPELLATE TRIBUNAL (DEHRADUN BENCH “SMC’’ : DEHRADUN)

BEFORE SH. YOGESH KUMAR US, JUDICIAL MEMBER AND SH. MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 261/DDN/2025 (AY 2017-18) MANMOHAN SINGH, Vs. INCOME TAX OFFICER, H.NO. 12, ALAMIYAGAON O/O THE ITO, THAL DIDIHAT PITHORAGARH, PITHORAGARH WARD NO. (2)(3)(4), UTTARAKHAND, PITHORAGARH PITHORAGARH, UTTARAKHAND-262552 UTTARAKHAND-262552 (PAN: GSYPS6287P) (APPELLANT) (RESPONDENT)

Appellant by Sh. S. Bhavesh Chandra Bhatt, Adv. Respondent by Sh. Amar Pal Singh, Sr. DR Date of hearing: 12/03/2026 Date of Pronouncement: 05/06/2026

ORDER PER MANISH AGARWAL, AM : This appeal filed by the Assessee is directed against the order of the National Faceless Appeal Centre (NFAC), [hereinafter referred to as “CIT(A)”] dated 20.11.2024 arising out the order of the Assessing Officer dated 31.12.2019 passed u/s. 144 of the Income Tax Act, 1961 (hereinafter referred as Act) for the assessment year 2017-18. 1

2.

All the grounds of appeal are with respect to addition of Rs. 25,01,770/- comprising of the addition on account of cash deposits made during demonetization period of Rs. 17,34,770/- and estimation of income at Rs. 13,60,000/- by applying profit rate of @8% on the total sales estimated at Rs. 1,70,00,000/-. All the grounds are inter-related, hence, are being decided together for the sake of convenience.

3.

At the threshold, it is noted that there is delay of 314 days in filing the appeal. After hearing both the parties and perusing the records, we are of the considered view that reasonable cause has been attributed to the assessee in fling the belated this appeal, hence, the delay in dispute is hereby condoned and appeal is admitted accordingly.

4.

Heard both the parties and perused the material available on record. It is observed that assessee has not filed his return of income under appeal, however, he has made the deposits in the bank accounts of more than Rs. 1.50 crore which includes cash deposits during demonetization period of Rs. 17,34,770/- . It is further observed that the AO gave the credit of Rs. 5,93,000/- to the assessee as genuine receipts of his business made during the demonetization period on 17.11.2016 and made the addition of Rs. 11,41,770/- as unexplained money u/s. 69A of the Act. The assessee before the Ld. CIT(A) made the additional evidences in support of the claim as no submissions were made before 2

the AO which includes the source of cash by claiming as the assessee is a retailer and sell fruits and vegetables. The assessee filed details of purchase and sales, and other documents as additional evidences. CIT(A) sent all the details filed by the assessee to the AO and sought remand report. However, before the AO in the remand proceedings, the assessee again failed to respond any of the notices, therefore, the CIT(A) has confirmed the addition. On careful consideration of the facts, it is observed that AO has applied the profit rate on the turnover estimated and simultaneously made the addition on account of cash deposits during the demonetization period. Once the deposits are taken as the part of the sales, no separate addition is required to be made on account of cash deposits treating it as unexplained. Thus, we delete the addition made on account of cash deposits in the bank. However, with respect to the estimation of income, no effective argument put-forth by the assessee with respect to the estimation of the turnover of Rs. 1,70,00,000/-. It appears that the profit rate @8% is on higher side, thus looking to the entirety of the facts, we hereby uphold the profit rate @4% to the total turnover estimated at Rs. 1,70,00,000/-. Accordingly, the AO is directed to recomputed the income.

5.

So far as assessee’s argument of application of section 115 BBE of the Act is concerned, Hon’ble Madras High Court in SMILE Microfinance

Ltd. vs. ACIT in WP(MD) no. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue against the department that the law applies to the transaction on or after 01.04.2017 only. Thus, AO is directed not to invoke section 115BBE of the Act.

6.

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

Order pronounced in the Open Court on 05.06.2026.

Sd/- Sd/-

(YOGESH KUMAR US) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER

SR Bhatnagar Date: 05.06.2026 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT DELHI

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