CHINNUSAMY SAROJA,TIRUCHENGODE vs. ITO, WARD-1,, TIRUCHENGODE

The Assessee raised the following grounds of appeal : “1. The order of the Addl. Commissioner of Income Tax(Appeals) dismissing the appeal is contrary to law, erroneous and unsustainable on the facts of the case.

The Addl. CIT(A) erred in confirming the addition of 19,66,500/-being cash deposits made by assessee in the bank account as unexplained money under sec.69A of the Act.

The Addl. CIT(A) failed to appreciate that the entire cash deposited in the bank account was the realisation of daily collections from the bus operations on two routes and the lorry income collection, which was explained in the survey statement and was not justified in arbitrarily rejecting the valid and Bonafide explanation furnished by the assessee.

The Addl. CIT(A) further failed to appreciate that the income from bus operations is validated by the Trip Sheets found in the Survey u/s.133A on 27.12.2016 and the cash collection during the period and the lorry receipts is validated by the RC books of lorries and hence there was no basis to reject the Bonafide explanation of assessee for the cash deposited in the bank account.

The Addl. CIT(A) further failed to appreciate that the nature of the two businesses entails daily cash collections which is the source for cash deposit in the bank account and hence confirming the addition was wholly unjustified and unsustainable on facts of the case.

The Addl CIT(A) was not justified in confirming the addition u/s.69A on a comparison of the total income of Rs. 8,46,360/- returned u/s.44AD for bus income along with lorry income u/s.44AE and that of the cash deposit of Rs. 19,66,500/- in the bank account by terming it as inadequate and the reasoning lacks in merit and substance.

The Addl. CIT(A) also was not justified in confirming the application of sec. 115BBE of the Act since the source for the cash deposit was only the business income, and in any event, ought to have considered the contentions of assessee regarding the source of cash deposits in the proper perspective and thus deleted the addition.”

Briefly stated facts of the case are that the appellant is in Individual engaged in the business of flying of buses and lorries. The return of income for the Assessment Year 2017-18 was filed on 31.08.2018 disclosing income of Rs.8,46,360/-. During the course of assessment proceedings, the Assessing Officer found that the appellant made cash deposits of Rs.19,66,500/- in specified bank notes during the Demonetization Period in the bank account maintained with Laxmi Vilas Bank. When the appellant was called upon to explain the source of the said cash deposits, it was explained that the said cash deposits were made out of the receipts from lorry transport business. However, the appellant could not furnish trip receipts, route permits for bus transport and copies of vehicle RC’s, therefore, the Assessing Officer drew adverse inference and made addition of Rs.19,66,500/- as unexplained money of the appellant.

Being aggrieved by the above assessment order, the appellant filed appeal before the ld.CIT(A) who vide impugned order confirmed the action of the Assessing Officer by holding that the appellant has failed to explain the source of ash deposits satisfactorily.

Being aggrieved, the appellant is in appeal before us in the present appeal. The ld.Counsel submits that the entire gross turnover shown by the appellant were taxed, therefore, the question of addition on account of cash deposits separately does not arise as the entire cash deposits were made out of business receipts of the appellant.

On the other hand, Ld.Sr.DR opposed the above submissions.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether ld.CIT(A) justified in confirming the addition on cash deposits of Rs.19,66,500/- during the Demonetization Period in the bank account is justified or not! It is the contention of the appellant that it is engaged in the business of lorry transport and the entire deposits were made out of the business receipts of the appellant and the turnover credited to Profit and Loss Account was already assessed to tax. Therefore, the question of separate addition on account of cash deposits does not arise. This contention was taken before the Assessing Officer as well as the ld.CIT(A). However, the lower authorities have not taken into consideration the above submissions and since it requires a verification of facts by the Assessing Officer, the matter is remitted back to the file of Assessing Officer for denovo assessment in accordance with law after affording an opportunity of being heard to the appellant.

In the result, appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open court on 20th May, 2026.