HRADESH KUMAR,KASGANJ vs. INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE

ITA 330/AGR/2026Status: DisposedITAT Dehradun28 September 2026AY 2022-2312 pages
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What were the facts?

The assessee, Hradesh Kumar, filed his return of income for AY 2022-23 declaring Rs. 4,15,676. His case was selected for scrutiny due to large cash deposits compared to returned income. The Assessing Officer (AO) noted cash deposits of Rs. 8,41,61,500 in the assessee's Punjab National Bank account. The assessee explained he was a bank mitra and the account was a settlement account for PNB customers. The AO, not receiving satisfactory details and documentary evidence, issued a show cause notice proposing an addition of Rs. 8,41,615 (1% of total cash deposits) as business income. The assessee reiterated his submissions. The AO observed discrepancies, including cash withdrawals exceeding the daily limit of Rs. 10,000, and deemed the transactions to pertain to the assessee, making the addition. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee's appeal, confirming the AO's addition.

What did the Tribunal hold?

The Tribunal noted that the assessee did not fully explain the source of cash deposits and the reasons for withdrawals exceeding Rs. 10,000. The CIT(A) had also noted the assessee's admission of maintaining some cash as capital investment for smooth business functioning, without quantifying it or explaining its source. Therefore, the assessee's submission that no addition should be made was not tenable. However, the Tribunal found merit in the assessee's submission seeking the application of the peak credit theory. To provide another opportunity, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for applying the peak credit in respect of the cash deposits. The Tribunal clarified that the assessed total income should not exceed Rs. 8,41,615, which was the assessed total income by the AO. All grounds of appeal were allowed for statistical purposes.

What were the issues?

1. Whether the addition of Rs. 8,41,615, representing 1% of total cash deposits, as business income is sustainable in law, considering the assessee's role as a bank mitra and the nature of the transactions, and whether the AO and CIT(A) erred in not rejecting the books of account before making such an estimation? (Section 143(3) r.w.s. 144B, Section 250 of the Income Tax Act, 1961) Assessee's contentions: The cash deposits represent third-party funds handled in a fiduciary capacity and do not constitute the assessee's income. The addition is arbitrary, ad hoc, and without legal or factual basis. The assessee has offered his entire commission income to tax, supported by TDS under Section 194H. The authorities below failed to establish a nexus between cash deposits and undisclosed income. The addition was made without rejecting books of account, making it bad in law. Independent inquiry from the bank was not conducted. The addition results in double taxation. The principles of natural justice were violated. Revenue's contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 144B,Section 194H,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA(SMC

Before: SUNIL KUMAR SINGHBRAJESH KUMAR SINGH

For Appellant: Shri Anubhav Goyal, CA
Hearing: 20.07.2026Pronounced: 28.09.2026

PER:BRAJESH KUMAR SINGH, A.M.

This appeal is directed against the impugned order dated 11.02.2026 passed in appeal No NFAC/2021-22/10335022 by the NFAC (hereinafter referred to as the Commissioner of Income Tax), u/s. 250 of the Income Tax

ITA 330/Agr/2026

Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2022-23, wherein ld. CIT (A) has dismissed assessee’s appeal.

2.

Brief facts of the case: The assessee filed its Return of income for AY.2022-23 on 29.06.2022, declaring total income of Rs.4,15,676. Further, the case was selected for complete scrutiny under CASS for the below mentioned reason:

"Large cash deposits compared to returned income (N

The order continues below.

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