RAJU LAL JAIN,DURG vs. INCOME TAX OFFICER-1(3) BHILAI, BHILAI

The contention made by the Ld. Counsel for the assessee is that the assessee is in the business of trading in readymade garments. The assessee has a shop at Berla, Chhattisgarh and he does retail business regarding purchase and sale of readymade garments. The total cash deposits made by the assessee in the bank account for the year was to the tune of Rs. 56,38,000/- out of which the A.O. added Rs. 20.17 lakhs under section 69A of the Act as unexplained money of the assessee on the ground that those were SBN notes and they were deposited during the demonitisation period.

At the level of CIT(A) the relief was given to the assessee to the tune of Rs. 2,23,000/- and the remaining amount addition of Rs. 17.93 lakhs were

Per contra, Ld. Sr. DR contended that the assessee was not having books of account though he admitted the return was filed under section 44AD of the Act @ 8% of the total yearly sales of the assessee. Once the return was filed under section 44AD of the Act there is no requirements of maintaining the regular books of account. Further, Sr. DR relied on the order of the subordinate authorities.

In this case the addition had been made in the hands of the assessee as unexplained money under section 69A of the Act regarding the cash

On the other hand, the Department had just rested on these submissions of the assessee without verifying or without examining the veracity and genuineness. In spite of having entire machinery with the Department neither the A.O. nor the CIT(A) had verified the contentions of the assessee and had summarily dismissed all these documents submitted by the assessee and had made the addition. It is also not the case of the Department that there is some undisclosed source of income of the assessee from where these cash deposits were made. The Department had also accepted the regular source of business of the assessee as a garment trader and there is no dispute at all. In such scenario the addition made under section 69A of the Act in the hands of the assessee is misplaced arbitrary bad in law. In view thereof, the order of CIT(A) is set-aside and the A.O. is directed to delete the additions providing appeal effect of this order.

In the result, the appeal of the assessee in ITA No. 152/RPR/2026 for A.Y. 2017-18 is allowed.

For A.Y. 2016-17 similar addition under section 69A of the Act had been made in the hands of the assessee. The addition pertains to the difference of the total turnover declared @8% of the sales and the cash deposited of Rs.18,62,500/- in the bank account. The A.O. made the addition to the tune of Rs. 18,40,311/-. At the level of CIT(A) the relief was given to the assessee to the extent of Rs. 8.03 lakhs and the remaining amount addition of Rs. 10.37 lakhs was sustained.

The Ld. Sr. DR referred to Para 3.1 of the Assessment Order wherein the cash balance shown at Rs. 3,98,460/- deposited in the bank account. The Ld. Sr. DR submitted that since books of account were not maintained the same was not verifiable. Secondly, there were no confirmations from the debtors regarding the repayment of the loans and payment to the assessee. Thirdly, regarding the agricultural income the land belonged in the name of the daughter of the assessee, therefore, the amount from agriculture was questionable by the Department.

In rebuttal to the argument of the Sr. DR the Ld. Counsel for the assessee brought to the notice of the Bench at Page 31 & 32 of the Paper Book the list of the debtors from whom the money was received and the entire details were submitted before the Department. Secondly, even at Page 33 of the Paper Book the month-wise sale details and cash receipts from debtors have been placed before the Department. The Sr. DR contented that these were never submitted before the A.O. However, the said documents as annexed in the Paper Book have been submitted before the CIT(A) and he had called for a remand report also from the A.O. on these documents as submitted by the Ld. A.R. which is, therefore, well explained before the Revenue Authorities.

The addition under section 69A has been made by the Department solely on the difference of turnover and the cash deposits that were made. The A.O. had judged the amount of turnover vis-à-vis the cash deposits made. Since the cash deposits were more as compared to the turnover shown, therefore, the addition were made by the A.O. However, the documents put forth before the CIT(A) for which the remand report was called for consists of the lists of the debtors and the amount received from them, the month-wise sale details. It was also submitted by the Ld. Counsel that in the line of business of garment trading the debtors are essentially persons who has a regular interaction or transactions with the assessee and

In the result, the appeal of the assessee in ITA No. 151/RPR/2026 for A.Y. 2016-17 is allowed.

In the combined result, both appeals of the assessee are allowed.