DEWAN KUNJLAL KANHAIYA LAL,RANCHI vs. ITO, RANCHI

ITA 9/RAN/2026Status: DisposedITAT Ranchi28 September 2026AY 2017-186 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the additions made by the Assessing Officer and confirmed by the CIT(A) were not sustainable. The Tribunal noted that the AO made additions by simply comparing the difference in bank deposits with the turnover, without rejecting the assessee's books of account. The Tribunal agreed with the assessee that the demonetization period was an abnormal period, and people indeed used retail fuel outlets to exchange demonetized currencies. The assessee had provided explanations for the increase in turnover and claimed that all transactions were made through banking channels. The Tribunal found no reason to sustain the additions made by the AO without rejecting the books of account, reconciling the P&L account, or pointing out specific discrepancies. Therefore, the additions were deleted. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, engaged in the retail trading of automobile fuels and lubricants, is appealing an order from the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2017-18. The Assessing Officer (AO) selected the case for scrutiny due to an abnormal increase in cash deposits during the demonetization period compared to the pre-demonetization period. The assessee deposited ₹1,96,13,000 in its HDFC and Yes Bank accounts. The AO added ₹18,81,256 as unreported business income and ₹32,78,742 as unexplained receipts from undisclosed sources, totaling ₹51,59,998, citing a difference between total bank credits and disclosed turnover. The CIT(A) upheld these additions. The assessee contends that the AO failed to consider cash withdrawals, loans from Vasudha Lohia and Nabya Lohia, and that the demonetization period saw increased sales as people used fuel outlets to dispose of old currency.

What were the issues?

1. Whether the assessment is bad in law and additions are fit to be deleted due to the AO not providing an opportunity to the assessee to explain or reconcile alleged differences, as per Section 143(3) of the Income Tax Act, 1961. 2. Whether the additions of ₹18,81,256 as unreported business income and ₹32,78,742 as unexplained receipts from undisclosed sources under Section 69A of the Act are justified, considering the assessee's explanation of increased sales during demonetization and the inclusion of cash withdrawals and loans in bank deposits. Assessee's Contentions: - The AO erred by considering only total bank credits and not cash withdrawals and loans from Vasudha Lohia and Nabya Lohia, which offset the alleged excess deposits. - The demonetization period was abnormal, with increased sales at fuel outlets as customers used them to dispose of old currency. - The AO did not provide an opportunity to explain differences and made additions without basis. - All purchases were through banking channels, and sales were at government-announced rates. - The AO did not dispute sales and purchase figures or point out any deposit not recorded in books. Revenue's Contentions: - The ld. Sr. DR supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 142(1),Section 133(6),Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI

Before: SHRI RATNESH NANDAN SAHAY & SMT. RAJANI GUDURI

For Appellant: Shri Suresh Saboo, A.R
For Respondent: Shri Sandipan Khan, Sr.DR
Hearing: 02/09/2026Pronounced: 28/09/2026

PER: BENCH

1.

This appeal by the assessee is directed against the order of the National Faceless Appeal Centre, (NFAC), Delhi [in short, the ld. CIT(A)] dated 06/11/2025 for the Assessment Year (AY) 2017-18, wherein the assessee has raised following grounds of appeal:

"

1.

The assessing officer has not given any opportunity at all to the assessee to explain or reconcile the alleged differences. Thus the assessment is bad in law and the additions are fit to be deleted.

2.

That the assessee had furnished numerous details, evidences, statements etc. to the assessing officer. No defect or discrepancy was found therein.

3.

The assessin

The order continues below.

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