DILIP VINAYAKRAO KHANDAL,NAGPUR vs. INCOME TAX OFFICER, WARD 4(4), NAGPUR

PER PAWAN SINGH, JUDICIAL MEMBER:

of Income Tax (Appeals)/ National faceless centre New Delhi, [for short

“CIT(A)”] for assessment year 2018-19. The assessee has raised following

grounds pf appeal;

(1) “That the assessment order passed by the AO, assessment unit Income Tax Department National Faceless Appeal Centre, Delhi under section 147 read with section 144 B of the Income Tax Act is bad in law and wrong on the facts and the ld. CIT(A) erred in confirming the same. (2) That the notice under section 148 and the proceedings thereafter u/s. 147 are bad in law and wrong on facts. (3) That ld. CIT(A) erred in law and on facts in passing the appellate order u/s 250 and dismissing the grounds of appeal without providing a reasonable opportunity of being heard. The action of ld. CIT(A) is illegal and against the principles of natural justice. (4) The ld. CIT(A) erred in law and on facts in confirming the action of AO in making addition of Rs. 1,58,14,249 /- under section 69A holding that the Cash deposit in the bank account is unexplained and that the assessee has not disclosed the income earned during the year. On the facts and circumstances of the case, the source of deposit of cash in the bank Account has been properly explained from the business carried on by the assessee and both the authorities were unjustified in not considering the various facts brought on record. (5) The ld. CIT(A) erred in law and on the facts in confirming the action of AO in charging interest under section 234A and 234B of the Income Tax Act. The interest charged is improper (6) That for any other ground with kind permission of your honour at the time of hearing of appeal.” 2. Rival submissions of both the parties have been heard and record perused.

The ld. Authorised Representative (AR) of the assessee fairly submits that

there is delay of about 129 days in filing appeal before this Tribunal. The

assessee has already filed an application for condonation of delay in the form

of his affidavit. The delay in filing appeal is neither intentional nor deliberate.

The assessee is not much educated person and not well-versed with use of e-

mail. He has not received impugned order from the office of ld CIT(A).

Consequently, the assessee could not realise about passing of the order of ld

CIT(A), immediately. When his counsel received demand notice on 12th

December 2025 for recovery of demand, only than realised that appeal of

assessee has already been dismissed. The assessee immediately approached

the present counsel and filed appeal and file before the Tribunal. The

assessee is really interested in pursuing his case. The assessee is selling the

Milk pouches on small scale as supplier of Dinshaw, local milk brand. The

learned AR of the assessee further submits that keeping in view the principle

of natural justice and the principle of law on limitation that when technical

consideration and cause of substantial justice is pitted against each other, the cause justice may be preferred as has been held in a series of decision by this

combination. Moreover, the delay is not much.

man of limited resources. He is proprietor of Ayushi Dairy, engaged in the

business of distribution of supply of milk pouch and milk Dahi of Dinshaw

Dairy Food Private Limited (Dinshaw) which is local milk brand in and around

Nagpur region. The assessee made sales to various customers in cash. The

assessee is getting commission on sale of milk @ Rs. 10.20 per carat of Milk.

The income earned by assessee was below the taxable limit. Hence, the

assessee has not filed his return of income for the year under consideration.

The assessing officer served notice under Section 148 of Income Tax Act on

29thMarch 2022. In compliance of such notice, the assessee immediately filed

his return of income declaring income of Rs. 2,19,920/-. During assessment,

the assessee explained the details vide his reply uploaded on ITBA portal on

11th November 2022, 24th November 2024, 15 December 2022 and on 30th

January 2023. The assessee furnished complete details which were required

by assessing officer. The acknowledgement of ITBA portal, with copy of such

replies is placed on record. The assessing officer has disregarded the various

evidences and made addition of Rs. 1.58 crore in an arbitrary manner. The

assessee has clearly explained that entire cash deposit in the Bank account

was from the sale proceeds of various milk products. The ld. AR of the

assessee while showing the various entry in the bank pass book explained

that on cash deposits in the bank and it was immediately, either on the day

itself or on the succeeding day Credited/Remitted to Bank account Dinshaw.

And on such transfer/ remittance a meagre amount was left on the account of

assessee. The certificate issued by Dinshaw that the assessee is selling their

milk product was also furnished before assessing officer. The assessee also

furnished copy of licence issued by Municipal Authorities under Shops and

Establishment Act, wherein the nature of his business activities of assessee is

clearly recorded as a distributor of milk. The ledger account of assessee in the

books of Dinshaw Company, was also filed before assessing officer. The

details of bills issued by the said company and the payment received by them

through banking channel are available in the ledger accounts. The deposit in

Union Bank of India was explained that it was sale proceeds of milk. The

details of bank account along with bank statement were furnished. The

assessee explained each and every deposit and withdrawal in the bank. Apart

from bank statement, the assessee also furnished fair type copies of detailed

statement of each and every entry in excel sheets. The assessee clearly

explained that there was total deposit in his bank account is of Rs. 1.61 crore,

which includes entries relating to loan of Rs. 2.00 lakhs. Refund of advance

for plot of Rs. 23,666/- and contra entries of Rs. 19,612/-. The payment of

purchase of milk from Dinshaw is reflected in the bank account. Such detail

was totally disregarded by assessing officer. The assessment for immediately

assessment year i.e. AY 2017-18 was also passed under section 144 on 5th

December 2019. The scrutiny assessment for AY 2017-18 was also carried out

to verify the cash deposit during demonetization, i.e. from the period of 9th

November 2016 to 31st December 2016 in the same bank account. The

assessing officer made inquiry from Dinshaw Dairy Food Private Limited and accepted the business of milk distribution and supply. The gross profit was

determined and expenditure incurred for earning was allowed in such

assessment year. They learned AR of the assessee submits that there is no

dispute about the Business activities undertaken by the assessee. The

assessing officer instead of considering actual and real income from sale of

milk made addition of entire entry in the bank account of assessee. The

statement of Bank account and credit entry therein cannot be the sole basis

for making addition. Once the business activities of the assessee has been

accepted only profit earn in such business is to be text and not the entire

credit in the bank. The credit entry in the bank is not in fact income of

assessee, when the entire amount has already been remitted to the milk

supplier. It was argued that the assessee has good case on validity of

reopening as no addition was made on the issue on which the case was

reopened, rather made other addition, which is not sustainable as per the

decision of Bombay High Court in Jet Airway (P) Limited reported in 331 ITR

236 (Bom). The ld. AR of the assessee prayed for deleting the entire addition

made by assessing officer.

revenue submits that he supports the orders of lower authorities. The

assessee has not produced sufficient evidence as per the finding of the

assessing officer. The assessee failed to explain the credit entry. On the plea f

delay the ld. Sr DR for the revenue submits that the delay is not properly

explained by assessee. The delay may not be condoned and the appeal may

be dismissed on this ground alone.

assessee has furnished al required details before assessing officer, copy of

screen shots of ITBA portal is already placed on record.

through the orders of lower authorities carefully. We have also seen various

documentary evidences placed on record. Firstly, we are considering the plea

of ld. AR of the assessee about condonation of delay in filing appeal. Before

us, the ld. AR of the assessee vehemently argued that the assessee is not

much educated person and not well-versed with use of e-mail and copy of

impugned order from the office of ld. CIT(A) was not received to him in

physical form. He could not realise about passing of the order of ld. CIT(A),

immediately and came to know about the order only when his counsel

received demand notice on 12th December 2025 for recovery of demand. The

assessee immediately approached the present counsel and filed appeal and

file before the Tribunal. Considering the aforesaid facts, we find that the delay

in filing appeal is not intentional or deliberate and the assessee is interested

in pursuing his case on merit, hence, the delay of 129 days in filing appeal is

condoned. Now adverting the merits of the case.

deposit in the bank account by taking view that despite allowing opportunity

the assessee failed to furnish required documents about the source of cash

deposit. The ld. CIT(A) confirmed the action of assessing officer. We find that

before assessing officer the assessee filed copy of Municipal certificate under

Shop and Establishment for running shop in the Municipal area of Nagpur City in the name of Ayushi Dairy, wherein the business of assessee is milk and its

other product is clearly mentioned. The assessee also filed certificate from

Dinshaw Dairy Food Private Limited. We further find that during assessment,

the assessee filed various details vide his reply uploaded on ITBA portal on

11th November 2022, 24th November 2024, 15 December 2022 and on 30th

January 2023. We find that assessee furnished complete details which were

required by assessing officer, the acknowledgement of ITBA portal, is on

record. We find that the assessing officer has disregarded the various

evidences and made addition of Rs. 1.58 crore in an arbitrary manner. Once,

the assessee furnished required details, the assessing officer was duty bound

to examine such details. We find that the assessee has clearly demonstrated

that entire cash deposit in the Bank account was from the sale proceeds of

various milk products. On careful examination of various entries in the bank

pass book, we find that on cash deposits in the bank and it was immediately,

either on the day itself or on the succeeding day credited to Bank account

Dinshaw. And on such transfer/ remittance a meagre amount was left on the

account of assessee. We find that the assessee satisfactorily explained that

deposit in Union Bank of India was sale proceeds of milk. The details of bank

account along with bank statement were furnished. Hence, in absence of

adverse evidence on record, we do not find any justification of making

addition of Rs. 1,58,14,249/- under section 69A. In the result, ground no. 4 of

the appeal is allowed.

the entire addition under section 69A, therefore adjudication on other

grounds of appeal have become academic.

Order was pronounced on 06/05/ 2026 as per Rule 34 of Income Tax

(Appellate Tribunal) Rules-1963.

- S SSs Sd/- V Sd/- KHETTRA MOHAN ROY PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai , Dated: 06/05/2026

Self by author Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file.

By Order

Senior Private Secretary ITAT, Nagpur