SUDHIR SHUKLA LEGAL HEIR OF SANJIV KUMAR SHUKLA,GORAKHPUR vs. DC/ACIT-1, GORAKHPUR, GORAKHPUR

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ITA 64/VNS/2025Status: DisposedITAT Varanasi31 August 2026AY 2017-189 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal restored the issue of unexplained cash deposits to the AO for fresh examination of the assessee's books. It directed the AO to consider the documentation for the gift from the father, finding it compelling. However, the addition for capital amount was upheld as the confirmations were found to be meaningless.

What were the facts?

The assessee's appeal was dismissed by the CIT(A) for AY 2017-18, upholding additions made by the AO on account of unexplained cash deposits during demonetization, a gift from the father, and capital additions. The assessee contended that cash deposits were from business sales and the gift was genuine, supported by documentation.

What were the issues?

Whether cash deposits during demonetization were adequately explained by business sales, and whether the gift from the father and capital additions were genuine and supported by evidence.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VARANASI “DB”BENCH, VARANASI

Before: SH. SUDHANSHU SRIVASTAVA & SH. NIKHIL CHOUDHARY

For Appellant: Shri O.P. Shukla, Adv
For Respondent: Shri Deepak Yadav, Sr. DR
Hearing: 05.08.2026Pronounced: 31.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI “DB”BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.64/VNS/2025 A.Y. 2019-20 Sudhir Shukla Legal Heir of vs. DC/ACIT-1, Sanjiv Kumar Shukla, Gorakhpur, Majhauli Compound, Uttar Pradesh-273009. Daudpur, Gorakhpur, Utttar Pradesh-273001. PAN: AJCPS4584Q (Appellant) (Respondent)

Assessee by: Shri O.P. Shukla, Adv. Revenue by: Shri Deepak Yadav, Sr. DR Date of hearing: 05.08.2026 Date of pronouncement: 31.08.2026 O R D E R PER NIKHIL CHOUDHARY, A.M.:

This is an appeal filed by the assessee against the order of the ld. CIT (A) / NFAC dated 29.03.2024, wherein the learned CIT(A) has dismissed the appeal of the assessee against the order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (the Act), for the AY 2017-18 dated 10.12.2019. The grounds of appeal are as under:-

“1. Because the Ld. A O as well as CIT(A) was not justified to pass ex-party assessment without giving proper opportunity being head to the appellant. 2. Because the Ld. A O was not justified to making addition an amount of Rs. 1718000.00 under the head unexplained the money deposited during the

ITA No. 64/VNS/2025 A.Y. 2017-18 Sudhir Shukla Legal Heir of Sanjiv Kumar Shukla demonetization period whether the cash has duly been deposited from the business receipt and cash in hand available in the books. 3. Because the Ld. A O has not justified Rs. 10883242.00 received from his father but has not submitted the documentary proof and has made addition under the head unexplained income U/s 68 of the IT Act. 4. Because the Ld. A O was not justified to make addition an amount of Rs. 1548000.00 under the head capital additions. And added U/s 68 of the Income tax act. 5. Because the appellant craves for a right to raise any additional ground during the course of hearing of the case. 6. Because the order passed by the Ld. Assessing officer is erroneous, bad in law and on facts and is liable to be deleted.”

2.

It is observed that the appeal is delayed by 304 days. A condonation petition has been filed by the legal heir, Shri Sudhir Shukla, that the learned CIT(A) had passed his order on 23.03.2024 but his father had been admitted in Hospital with severe diseases and had ultimately expired on 24.12.2024. Due to his admission in Hospital, he was not aware that the learned CIT(A) had passed the order and it was only later that he came to know that order had been passed by the learned CIT(A) on 29.03.2024. Thereafter, he had contacted his Counsel and filed the said appeal on 31.05.2025. It was prayed that since the delay was on account of grounds of reasonable cause, it may kindly be condoned and the appeal admitted for adjudication. The legal heir has also filed copies of the death certificate and prescriptions of the assessee which show the assessee to be under medical treatment right since February 2024 till his death on 23.12.2024. In the circumstances, we believe that there is sufficient cause to explain the failure of the assessee to respond to the order of the learned CIT(A) with timely appeal before us. Furthermore, we accept the fact that the legal heir would not automatically be aware of the said appeal order unless informed

ITA No. 64/VNS/2025 A.Y. 2017-18 Sudhir Shukla Legal Heir of Sanjiv Kumar Shukla about the same. Accordingly, in view of the peculiar facts of the case, we deem it appropriate to admit the appeal for adjudication on merits.

3.

The facts of the case are that the Assessing Officer (AO) observed that the assessee had made cash deposit of Rs. 21,20,600/- during the demonetization period, of which deposits of Rs. 21,18,0000/- were in old SBN’s. The assessee was issued notice to explain the source of cash deposit. In response, the assessee submitted that the account with the Bank of Baroda, Gorakhpur was Current A/c and day to day sales were deposited in the said Current A/c. The sales were made in cash and were deposited after accumulation for 3 to 4 days. The said sales were verifiable. Accordingly the assessee was asked to furnish the purchase bills and stock register for the AY 2016-17 and AY 2017-18. The AO records that the assessee’s main source of income was from liquor business from where cash sales were made and that during the year total purchases amounting to Rs. 97,65,535/- had been made, while total sale had been made of Rs. 1,21,50,794/-. However, the AO noted that before the demonetization period i.e. on 07.11.2016, the assessee had made a cash deposit of Rs. 1,50,000/-. Keeping in view the trends of cash deposits in the previous months, the AO concluded that the assessee could be having sale of approximately Rs. 2,00,000/ and cash of Rs. 4,00,000/- in hand on 09.11.2016. As he had not furnished the cash book and ledger, the AO assumed that the cash deposit after demonetization period over and above the sum of Rs. 4,00,000/- was unexplained and he added a sum of Rs. 17,18,000/- to the income of the assessee, holding it to be unexplained. Furthermore on perusal of the balance-sheet of the assessee he found that the assessee had claimed a gift from his father amounting to Rs. 1,08,83,242/-. He asked the assessee to furnish evidence of gift from father, 3

ITA No. 64/VNS/2025 A.Y. 2017-18 Sudhir Shukla Legal Heir of Sanjiv Kumar Shukla but in the absence of any compliance he disallowed the purported gift and held it to be unexplained under section 68 of the Act. Furthermore, on perusal of the balance-sheet, the AO noticed capital addition of Rs. 15,48,000/- and he asked the assessee to furnish evidence of the sources of this addition. As the assessee did not make compliance to this the sum of Rs. 15,48,000/- was also added back under section 68 and all these additions were brought to tax under section 115BBE of the Act.

4.

Aggrieved with the said assessment order, the assessee filed an appeal before the learned CIT(A). The learned CIT(A) records that he issued various notices to the assessee for making his submissions and these were responded to. The assessee contended that he had already submitted that the day to day sales were deposited into the two bank accounts. The closing balance as on 08.11.2016 was Rs. 19,24,686/- which was deposited in the Bank. Furthermore the assessee had a sum of Rs. 1,95,314/- with him out of previous drawings which had been deposited back. Therefore, the cash deposit stood proved. The learned CIT(A) held the said response to be vague and accordingly he confirmed the addition made by the AO, because the assessee had not produced the books to substantiate such submission. With regard to the addition of Rs. 1,08,83,242/- being gift from father, the assessee submitted that his father late Ram Kewal Shukla had FDR of Rs. 1,00,00,000 in Bank of Baroda, University Brach, Gorakhpur for which the assessee had been made a nominee and after his father’s death on 19.03.2016, the Branch Manager had issued a Bank Draft of Rs. 1,08,83,243/- on 18.05.2016 and this amount had been credited to his bank account. The details had been submitted to the AO. However, the learned CIT(A) held that his own perusal of the IT Portal, showed that the assessee had not submitted the documentary evidences in this regard and therefore 4

ITA No. 64/VNS/2025 A.Y. 2017-18 Sudhir Shukla Legal Heir of Sanjiv Kumar Shukla he upheld the addition of Rs. 1,08,83,243/- made by the AO. Finally he examined the addition of Rs. 15,48,000/- on account of addition to capital account and the assessee’s submission that it represented an advance from customers desirous of purchasing land in earlier years standing in the assessee’s name. Because of a typographical error this amount had been entered in capital account instead of current liability. The learned CIT(A) held that the documents submitted in support of these so likely advances were only blank papers without any date or seal. From the confirmation letter, the identity, or creditworthiness of these people as also the genuineness of the transactions were not proved. No supporting documents to establish this had been submitted. In the circumstances he held that the AO was right in making the addition of Rs. 15,48,000/- in this regard. Accordingly he confirmed the additions and dismissed the appeal of the assessee.

5.

The assessee is aggrieved at this dismissal of his appeal and has come in appeal through his legal heir. With regard to the addition of Rs. 17,18,000/-, it was submitted that the cash had been deposited against the sale proceeds of Liquor and the cash deposited in the Bank could be verified from day to day sales. A copy of the sale register had been submitted during the course of hearing before the AO and the learned CIT(A). Furthermore the total sale of Liquor made by the assessee was Rs. 1,21,50,793.57. It was submitted that sale of Liquor was mostly in cash and the cash had duly been deposited in bank account on different dates, which could be verified from the sale register. Furthermore the assessee also engaged in truck stand collection receipts which has been collected in cash amounting to Rs. 23,43,680/- and all this cash had duly been deposited in the Bank. Both the Bank A/c had duly been shown in the 5

ITA No. 64/VNS/2025 A.Y. 2017-18 Sudhir Shukla Legal Heir of Sanjiv Kumar Shukla balance-sheet and all the credits found in these Bank Accounts had been taken into receipts of the assessee. Hence, there was no concealment or suppression of any sales or income by the assessee. The addition had been made only on presumption basis and deserved to be deleted. With regard to the amount of Rs. 1,08,83,242/- received from his late father Shri Ram Kewal Shukla, the learned AR drew our attention to page no. 54 of his Paper Book which was a later written by his father to the Branch Manager of Bank of Baroda, University Branch asking that the same should be transferred to his son Shri Sanjiv Kumar Shukla and on page no. 55 was a copy of the banker’s cheque through which the amount had been transferred. It was submitted that a copy of the bank certificate issued by the Branch Manager was also submitted at page no. 45 of the Paper Book. It was further submitted that all this information had duly been submitted before the learned CIT(A) but not considered by him. It was submitted that the deposit was genuine gift and since creditworthiness was proved, the addition made by the AO and confirmed by the learned CIT(A) deserved to be quashed. With regard to the addition of Rs. 15,48,000/- made by the AO and confirmed by the learned CIT(A), the learned AR invited our attention to page no. 30 to 39 which contained the confirmation from various parties. He prayed that since the confirmations had not been rebutted by the AO, therefore, the addition ought not to have been made. Accordingly, he prayed that all these additions may be quashed.

6.

On the other hand, Shri Deepak Yadav, Sr. DR pointed out that it was clear from the order of the AO that none of this information had been furnished before him and infact the learned CIT(A) had refused to admit the additional evidence after noting that claims of the assessee of having submitted such information before the AO, were not true. The learned DR 6

ITA No. 64/VNS/2025 A.Y. 2017-18 Sudhir Shukla Legal Heir of Sanjiv Kumar Shukla pointed out that the assessee had not produced the books of accounts before the AO, from where his claims would be verified. As regards the confirmations furnished, he pointed out that these were meaningless because they neither shed light on the identity of the person nor the creditworthiness of those persons nor even the genuineness of the transactions. Therefore, they could not be relied upon. Furthermore, he argued that the credit of these amounts into the capital account showed that these confirmations were only an afterthought to try and explain the unexplained addition to capital account.

7.

We have duly considered the facts and circumstances of the case. We observe that the AO has not accepted the contention of the assessee that the deposits made in cash during demonetization period were out of the sales only because the books, stock register, etc were not produced before him. The AO has infact made an estimated calculation to determine the amount of unexplained cash deposit. We observe that unless and until the AO can demonstrate by way of rejection of the assessee’s books of accounts that the sales that are recorded do not explain the said cash deposits, it is not open to him to treat the same as unexplained. We acknowledge the fact that he was handicapped on account of failure of the assessee to produce his books. Therefore, we direct the assessee to produce the relevant books of accounts, purchase register, sale register, stock statement, etc along with cash book to demonstrate that the cash deposited during the demonetization period is duly explained out of sales made by him in cash. With regard to the receipt of gift from the assessee’s father, we note that documentation as contained in Paper Book make out a compelling case for accepting the version of the assessee that the assessee received the amount by way of gift from his father. The learned CIT(A) has refused to 7

ITA No. 64/VNS/2025 A.Y. 2017-18 Sudhir Shukla Legal Heir of Sanjiv Kumar Shukla accept these documents only because, in his opinion, they were not submitted before the AO. However, we note that an amount which is otherwise not taxable under the provisions of the Act cannot be made taxable only because the assessee did not submit certain documents during the assessment. Accordingly, we restore this matter to the file of the AO with the direction to the AO to consider this material presented by the assessee and thereafter to determine whether any portion of the gift needs to be brought to tax as unexplained. With regard to the admission of capital amount of Rs. 15,48,000/-, we are in agreement with the learned CIT(A) and the learned DR that the confirmations filed by the assessee are meaningless as they do not throw light on either the identity of the parties or their creditworthiness. Furthermore there is no information forthcoming as to what ultimately happened, whether those advances ultimately led to the actual sale of lands or whether they were refunded by the assessee. We believe the matter requires examination as in greater depth to bring out the truth and therefore we restore this matter back to the file of the AO for detailed enquiry. As all additions stand restored to the file of the AO for fresh consideration of evidences, the grounds of appeal are held to be allowed for statistical purposes.

8.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on 31.08.2026 in the open Court.

Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2026 SK, Sr. PS

ITA No. 64/VNS/2025 A.Y. 2017-18 Sudhir Shukla Legal Heir of Sanjiv Kumar Shukla

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