ACIT, RANGE-I, LUCKNOW vs. SHRI ABHISHEK KUMAR GARG, LUCKNOW

ITA 451/LKW/2020Status: DisposedITAT Lucknow30 September 2026AY 2017-1825 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the additions made by the AO and sustained by the CIT(A) were not maintainable. The Tribunal noted that the AO primarily relied on perceived variations in trends between assessment years, which at best could raise suspicion but not constitute sufficient reason to deem cash sales prior to demonetization as bogus. The Tribunal referred to a coordinate bench decision in M/s Motor Fab Sales Pvt. Ltd. vs. The DCIT/ACIT, which held that if no defects are found in purchases or stocks, sales made from those stocks cannot be disbelieved, and consequently, cash deposits from such sales cannot be treated as unexplained. The Tribunal further noted that the CIT(A) had satisfied himself that the AO had not found any mistakes in the assessee's accounts justifying the addition and that increased sales had not declined post-demonetization. Regarding the 'Rehan' business, the Tribunal found that the CIT(A) was satisfied that the business existed and that advances were recoverable. The Tribunal concluded that once the assessee showed advances as recovered, this could not be disbelieved solely for failure to file details of some parties. Therefore, the additions sustained by the CIT(A) were deleted, and the orders to the extent of additions deleted by the CIT(A) were sustained.

What were the facts?

The assessee, Sh. Abhishek Kumar Garg, filed his return for AY 2017-18 declaring an income of Rs. 35,77,660/-. The Assessing Officer (AO) noted significant cash deposits totaling Rs. 2,19,40,000/- in the assessee's bank accounts during the demonetization period. The AO observed a substantial jump in sales, particularly in the pre-demonetization period (1.10.2016 to 8.11.2016), attributing it to manipulated books of account and bogus sales to explain cash accumulation. The AO made additions of Rs. 20,00,000/- and Rs. 5,00,000/- on account of unexplained cash deposits. The assessee contended that the cash was accumulated from trading receipts and 'Rehan' business. The CIT(A) partly allowed the assessee's appeal, deleting some additions but sustaining others. Both the assessee and the Revenue have appealed to the ITAT.

What were the issues?

1. Whether the CIT(A) erred in law and on facts in upholding an addition of INR 20,00,000/- being cash deposited in Indusind Bank as unexplained under section 69A of the Income Tax Act, 1961 (Assessee's ground 1 & 3, 4, 5). The assessee argued that books of account were maintained, audited, and examined without defects, and purchases and sales were accepted by authorities. The Revenue argued that the CIT(A) erred in deleting the addition of Rs. 1,93,01,532/- on account of cash deposits during demonetization due to the assessee's failure to prove genuineness of cash credit transactions under section 68 of the Act (Revenue's ground 1 & 2). 2. Whether the CIT(A) erred in law and on facts in upholding an addition of INR 5,00,000/- relating to "Rehaan Business" being cash deposited in Bank of India as unexplained under section 69A of the Act (Assessee's ground 2 & 3, 4, 5). The assessee argued that the addition was unwarranted as books of account were accepted. The Revenue argued that the CIT(A) erred in deleting additions made by the AO on account of unexplained cash deposits during demonetization due to sales credited to books unsupported by past trends.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3),Section 133(6),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW ‘B’ BENCH, LUCKNOW

Before: SH. KUL BHARAT & SH. NIKHIL CHOUDHARY

For Respondent: Smt. Pratibha Singh, Addl CIT DR
Hearing: 14.07.2026Pronounced: 30.09.2026

PER NIKHIL CHOUDHARY, A.M.: These two appeals have been filed by the Assessee and the Revenue respectively against the orders of the ld. CIT(A) dated 17.09.2020, wherein the ld. CIT(A) has partly allowed the appeals of the assessee against the orders passed by the ld. Assessing Officer for the assessment year 2017-18 under section 143(3) of the Income Tax Act, 1961 on 29.12.2019. The grounds of appeal in the two cases are as under: - Sh. Abhishek Kumar Garg A.Y. 2017-18 “01. Because the

The order continues below.

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