SHYAM KRISHNA GUPTA,HALDWANI vs. ASSISTANT COMMISSIONER, HALDWANI

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ITA 227/DDN/2026Status: DisposedITAT Dehradun29 September 2026AY 2017-1811 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found merit in the assessee's argument that the Assessing Officer had considered only the credit side of the bank account and ignored the debit side, specifically the withdrawals totaling Rs. 1,73,10,000/-. The AO also overlooked the opening cash balance of Rs. 42,56,274/- and cash sale proceeds of Rs. 1,08,62,989/-. The Tribunal noted the assessee's submission regarding the reconciliation of bank accounts, opening balance, cash withdrawals, and sales proceeds. Considering these factors and the desire to meet the ends of substantial justice, the Tribunal directed that the addition be restricted to Rs. 25,00,000/-. The remaining addition of Rs. 2,46,20,500/- was directed to be deleted. The issue regarding the applicability of Section 115BBE was not explicitly decided, but the relief granted implies its non-application in its original form.

What were the facts?

The assessee, Shyam Krishna Gupta, engaged in stone grit business, filed a revised return for Assessment Year 2017-18 declaring a total income of Rs. 30,59,410/-. The case was selected for limited scrutiny due to large cash deposits in bank accounts. The Assessing Officer (AO) noted significant cash deposits, including Rs. 76,57,000/- during the demonetization period. The assessee explained the deposits by citing cash sales, realization of debtors, fund rotation against bank loans, and advances received. The AO, however, found the explanation unsatisfactory and made an addition of Rs. 2,76,30,500/- under Section 69A read with Section 115BBE of the Income Tax Act, 1961. The CIT(A)/NFAC upheld this addition. The assessee filed an appeal before the ITAT, seeking condonation of a 175-day delay, which was granted.

What were the issues?

1. Whether the authorities below erred by adding all cash receipts on the credit side of the bank account without considering withdrawals, contrary to accounting principles and justice? (Assessee's contention: The AO ignored the debit side of the bank account, including withdrawals of Rs. 1,73,10,000/-, and opening balance of Rs. 53,27,345/-. The assessee argued that credits in a bank statement are not automatically income and cited a Supreme Court judgment. The revenue relied on the orders of the lower authorities, arguing the appeal was devoid of merit and should be dismissed. 2. Whether the addition of Rs. 2,71,20,500/- under Section 69A is wrong and unjustified as it is fully covered by bank withdrawals? (Assessee's contention: The addition is arbitrary and unjustified. The revenue did not present specific arguments on this point, relying on the lower authorities' findings. 3. Whether Section 115BBE was wrongly invoked for AY 2017-18? (Assessee's contention: Section 115BBE was not applicable for AY 2017-18. The revenue did not present specific arguments on this point, relying on the lower authorities' findings.)

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 250,Section 143(2),Section 142(1),Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DEHRADUN BENCH, DEHRADUN

Before: Shri Raj Kumar Chauhan & Shri Sanjay Awasthi

For Appellant: Adv. &
Hearing: 24.07.2026Pronounced: 29.09.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN Before Shri Raj Kumar Chauhan, Judicial Member & Shri Sanjay Awasthi, Accountant Member ITA No. 227/DDN/2026 : Asstt. Year : 2017-18 Shyam Krishna Gupta, Vs ACIT, Nainital Road, Ambika Vihar, Circle-2(1)(1), Haldwani, Uttarakhand-263139 Haldwani-263139 (APPELLANT) (RESPONDENT) PAN No. BKQPG5139K Assessee by: Sh. K. K. Juneja, Adv. & Sh. Jirupati Juneja, Adv. Revenue by: Sh. Deepak Chaudhary, JCIT Date of Hearing: 24.07.2026 Date of Pronouncement: 29.09.2026

ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal of the assessee is directed against the order dated 13.08.2025 of ld. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the appeal of the assessee was dismissed and addition made of Rs.2,71,20,500/- u/s 69A of the Act vide assessment order dated 17.12.2019 was confirmed.

2.

The assessee has filed an application seeking condonation of delay of 175 days in filing the present appeal. The contents of the application are reproduced as under:

2 ITA No. 227/DDN/2026 Shyam Krishna Gupta

3 ITA No. 227/DDN/2026 Shyam Krishna Gupta

3.

We have considered the contents of the condonation application and the submissions made by the ld. AR. We find that the assessee has satisfactorily explained the reasons for

4 ITA No. 227/DDN/2026 Shyam Krishna Gupta the delay. In view of the principles laid down by the Hon'ble Supreme Court in Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC), wherein it has been held that a liberal approach should be adopted while considering applications for condonation of delay to substantial justice, we are satisfied that the assessee has shown sufficient cause. Accordingly, the delay of 175 days in filing the instant appeal is condoned in the larger interest of justice, and the appeal is admitted for adjudication on merits.

4.

Facts in brief as culled out from the orders of the authorities below are that the assessee is engaged in stone grit businessand also having salary income from M/s Raj Laxmi Stone Crusher Pvt. Ltd. as well as income from other sources and has electronically filed return of income for A.Y.2017-18 on 04.08.2017 declaring total income of Rs.18,99,500/- .Subsequently, the original return was revisedon 01.02.2018 declaring total income of Rs.30,59,410/-. However, the case was selected for limited security through CASS by issuing notice 143(2) of the Act dated 09.08.2018. Notice u/s 142(1) of the Act was also issued on various dates started from 05.07.2019 to 14.12.2019. In response to the above notices, the assessee filed written submissions through e-proceedings on ITBA Module. The limited scrutiny assessment was specified for “large cash deposit in bank account during the year”

5 ITA No. 227/DDN/2026 Shyam Krishna Gupta because the assessee has deposited cash in his bank accounts

as enumerated in para 4 of the assessment order, extracted below as under:

N ame o f Ba nk Ac cou nt Amou nt o f A mou n t of Amou nt o f Tot al c as h Ban k N umb e r c ash depo si t du rin g c ash de pos it c as h depo si t dep os i t pr e -dem onet iz at i o n du ring du ring du ri ng FY pe rio d d em o net iza ti o n p os t 201 6 - 17 pe ri od dem o netiz at io n pe rio d Ban k o f 0 96 70 500 0 0 01 5 9 1,8 7,3 7 ,5 0 0 7 6, 5 7 ,0 0 0 2,6 0,0 0 0 2,6 6 ,54 , 5 00 Ba rod a Ban k o f 0 96 70 100 0 1 75 4 1 9,6 6,0 0 0 1 0, 0 0 0 - 9,7 6 ,00 0 Ba rod a To t al 1,9 7,0 3, 500 76, 6 7, 000 2,6 0,0 0 0 2,7 6,3 0, 5 0 0 c as h de pos i t

5.

During the assessment proceedings, the assessee explained the bank deposits as detailed in Para 4.2 of the

assessment order and it was observed by the AO that the cash

sales of Rs.14,29,123/- was made from 01.08.2016 to 31.12.2016 out of which sales during the period 01.11.2016 to

08.11.2016 is Rs.1,66,460/- and Nil sales thereafter and sundry debtor balance on 08.11.2016 was Rs.13,01,728/-. Accordingly a show notice was issued on 05.12.2016 asking

further details regarding the cash deposits in the bank account. Further, reminder notice was issued on 03.10.2019 no response

was filed and one more opportunity was given vide notice dated 17.10.2019 by raising additional query vide letter dated

05.09.2019and the assessee has furnished written submissions on 23.10.2019. The assessee has given the details of month- wise cash sales and cash deposits from 01.04.2015 to

31.03.2016 and similarly month-wise cash sales and cash

6 ITA No. 227/DDN/2026 Shyam Krishna Gupta deposits from 01.04.2016 to 31.07.2017. The assessee has submitted that the difference was due to inadvertent mistake in filing of particulates by the concerned personand even the figures of sundry debtors, inventories and creditors have not been reported at the time of filing of the ITR for A.Y. 2016-17, therefore, the additional details for reporting income u/s 44AD of the Act have not been correctly filed and left blank showing nil figures for cash. It was further submitted that the said mistake was unintentional and for that reason to correct the said mistake the assessee has filed profit and loss account and balance sheet as on 31.03.2016 and 31.03.2017 along with income computation statement for A.Y. 2016-17 as documentary evidence in support of his contention.

6.

After considering the submissions of the assessee, the ld. AO concluded that that assessee could not explain the cash deposited during the demonetization period i.e. Rs.75,75,000/- in bank account maintained with Bank of Baroda, Haldwani and Rs.82,000/- in another account in the same bank aggregating the total sum Rs.76,57,000/-. It is further observed that the assessee failed to explain the source of the total cash deposit of Rs.1,99,63,500/- which included pre-demonetization amount of Rs.1,97,03,500/- plus post-demonetization amount of Rs.2,50,000/-. Accordingly, the Assessing officer made the addition of cash amount of Rs2,76,30,500/- which included

7 ITA No. 227/DDN/2026 Shyam Krishna Gupta Rs.76,57,000/- during demonization period and cash deposited amount of Rs.1,94,50,500/- during pre and post demonization period. The above amount has been added u/s 69 of the Act r.w.s. 115BBE of the Act.

7.

Aggrieved by the assessment order, the assessee filed appeal before the ld. CIT(A)who has dismissed the same and upheld the addition so made in the assessment order.

8.

Aggrieved by the impugned order, the assessee is in appeal and has raised the following grounds of appeal: “1. That in facts and circumstances of the case, authorities below has added all the cash receipts of the credit side of the bank account without taking the withdrawals of the bank the same is against the principal of accountancy and justice. 2. That in facts and circumstances of the case, that the addition of Rs.2,71,20,500/- as made u/s 69A is wrong and incorrect as it is fully covered from the withdraws from tire bank, therefore, it is arbitrary and unjustified. 3. That in facts and circumstances of tire case, that during the year appellant has declared the sales to the tune of Rs.1,08,62,985/- as shown in the revised return filed u/s 44AD and the return has been duly accepted by the AO. 4. That in facts and circumstances of the case, the deposit in the bank was made out of sale proceeds, realisation of debtors, rotation of fund against bank loan and advances received. 5. That in facts and circumstances of the case, the appellant has filed Profit & Loss Account and Balance Sheet for the year under assessment and previous year which has been accepted as no addition has been made from the same, ignoring the same is unwarranted’ and unfair'. 6. That in facts and circumstances of the case, the ITO has wrongly provoked the section 115BBE when all the deposits are duly explainable. 7. That in facts and circumstances of the case, tire addition of Rs.2,71,20,500/-may kindly be deleted as made by the AC, Circle, Haldwani.”

8 ITA No. 227/DDN/2026 Shyam Krishna Gupta 9. We have heard the ld. AR and the ld. DR. The ld. AR also made the following arguments:

i) Since, the assessee is dealing in stone brick & sand and crusher business, located at a village around 10 km away from Haldwani, having no banking facilities, therefore the appellant used to withdraw cash and keep the same to fulfill the bank norms and thereafter he deposited/re-deposited the said amount along with sale proceeds to the bank. The Assessing Officer has totally ignored the various facts while adding the credit side of the bank, deeming it as an income of the assessee in violation of law laid down (2024) 206 TAXLOCK.COM(IT) 075 (SC) wherein it has been held that the credits of the bank statement are not income of the assessee ii) The Assessing Officer has only taken the credit side of the bank account and has totally ignored the debit side of the bank account wherein the appellant has withdrawn sum of Rs. 1,73,10,000/- of the said cash withdrawn alongwith the sale consideration was deposited in the bank. iii) The Assessing Officer has not given the credit of the opening balance as shown in the balance sheet of Rs.53,27,345/- which is mentioned at para 7 of the assessment order. The AO has adopted the opening

9 ITA No. 227/DDN/2026 Shyam Krishna Gupta cash only Rs.5,00,000/- on surmises and presumption,

while ignoring the departmental cash verification report

as find mentioned in the Assessment Order showing

opening cash balance of Rs. 42,56,274/-. The summary

of the opening cash balance, cash withdrawal from the

bank and cash sale proceeds in the concerned year has

been explained as under:

“Rs.42,56,274/- as opening cash balance Rs.1,73,10,000/- cash withdrawal from the bank Rs.1,08,62,989/- cash sale proceeds as shown and accepted. Rs.3,24,29,263/- Total;balance available for deposit in bank.” The final result as per bank account comes as under: S.No. Particular Total Withdrawals 1. Bank of Baroda 159 1,83,87,000/- 2. Bank of Baroda 17541 4,79,000/- Total 1,88,66,000/- 4. Opening Balance as per cash transaction 42,56,274/- Verification Report against shown by the assessee Rs.53,27,345/- 5. Sales as per VAT return 1,01,18,445/- Purchase fr om Subhash Stone Industry Private Limited Rs.39,61,761 + Purchase from others Rs.41,05,119 = Rs.80,66,880/- All through banking channel, No cash. Sold as per VAT return for Rs .1,01,18,445/- Total 3,32,40,719/- Difference between above total is Rs . 7,44,544/- which is on account of sale shown in VAT return Rs.1,01,18,445/- and income tax return Rs. 1,08,62,989/-

iv) Section 115BBE has been wrongly invoked by the

Assessing Officer, since the said provision was not

applicable for A.Y. 2017-18.

10 ITA No. 227/DDN/2026 Shyam Krishna Gupta v) Lastly, it was argued that in order to do substantial justice, a lenient view may be taken and an addition of Rs.25,00,000/- may only be sustained for doing complete justice to the assessee and the said submissions have been made without prejudice to the rights and contention of the assessee as submitted earlier. 10. The ld. DR, on the other hand, has submitted that the appeal is devoid on merit and while relying upon the order of the lower authorities had submitted that the appeal be dismissed and addition has been rightly sustained by the ld. CIT(A).

11.

We have considered the rival submissions and examined the record. As submitted during the arguments by the assessee, we find force in those arguments wherein the Assessing Officer has only taken the credit side of the bank account and has totally ignored the debit side of the bank account and has totally ignored the withdrawal of a sum of Rs.1,73,10,000/- by the assessee during the concerned year. The ld. AO has further ignored the opening cash balance of Rs. 42,56,274/- along with cash sale proceeds of Rs.1,08,62,989/- during his argument. We have noticed at page 7 of the written submissions, the final result as per bank account has been submitted by the assessee, extracted below as under:

11 ITA No. 227/DDN/2026 Shyam Krishna Gupta S.No. Particular Total Withdrawals 1. Bank of Baroda 159 1,83,87,000/- 2. Bank of Baroda 17541 4,79,000/- Total 1,88,66,000/- 4. Opening Balance as per cash transaction 42,56,274/- Verification Report a gainst shown by the assessee Rs.53,27,345/- 5. Sales as per VAT return 1,01,18,445/- Purchase from Subhash Stone Industry Private Limited Rs.39,61,761 + Purchase from others Rs.41,05,119 = Rs.80,66,880/- All through banking channel, No cas h. Sold as per VAT return for Rs .1,01,18,445/- Total 3,32,40,719/- Difference between above total is Rs. 7,44,544/- which is on account of sale shown in VAT return Rs.1,01,18,445/- and income tax return Rs. 1,08,62,989/-

12.

In view of this aforesaid factual matrix, we are of the

opinion that ends of justice would be met if the addition is

restricted to Rs. 25,00,000/- as submitted by the ld. AR of

assessee. Accordingly, considering the facts and circumstances

of the case and in order to meet the ends of substantial justice,

we direct that the addition of Rs.25,00,000/- be sustained and

the remaining addition of Rs.2,46,20,500/- be deleted.

13.

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

in above terms.

Order Pronounced in the Open Court on 29/09/2026.

Sd/- Sd/- (Sanjay Awasthi) (Raj Kumar Chauhan) Accountant Member Judicial Member Dated: 29/09/2026 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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