CHANDRA KANTA YADAV,JAIPUR vs. ITO WARD-1(2), BIKANER

ITA 163/JPR/2026Status: DisposedITAT Indore06 October 2026AY 2018-1915 pages
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What did the Tribunal hold?

The Tribunal decided on the following issues: 1. Regarding the addition of Rs. 4,31,985/- (Issue 1), the Tribunal noted that the assessee claimed the cash deposit was partly from a gift of Rs. 6,50,000/- from her daughter-in-law, supported by an affidavit. However, the CIT(A) observed that the assessee did not produce a cash book or ledger to corroborate this specific amount and treated it as unexplained under Section 69A. The Tribunal, after hearing arguments, did not explicitly rule on this ground in the provided excerpt, but the initial grounds of appeal suggest it was contested. The judgment excerpt does not contain the final decision on this specific ground. 2. Regarding the disallowance of commission expenses of Rs. 20,88,033/- (Issue 2), the Tribunal found merit in the assessee's contention. The assessee had provided invoices reflecting retailer and distributor commissions, along with affidavits from some retailers. The Tribunal held that the AO and CIT(A) did not point out any infirmity in the explanation or documents filed and failed to provide reasons for deeming the evidence insufficient. The Tribunal concluded that the genuineness of the commission expenses was duly established and set aside the order of the CIT(A), directing the AO to allow the claim. The ratio is that when documentary evidence and affidavits are provided to substantiate business expenses, and no specific infirmities are pointed out by the revenue, such claims should be allowed. 3. Regarding the disallowance of salary expenses of Rs. 11,58,106/- (Issue 3), the Tribunal found that while the assessee's business volume suggested the need for employees, and affidavits of some employees were filed, other crucial evidence like salary registers, vouchers, or payment proofs were not submitted. The Tribunal considered it just and reasonable to allow salary expenses to the tune of Rs. 5,00,000/-, confirming the disallowance of the balance claim of Rs. 6,58,106/-. The ratio is that while some substantiation can be accepted, complete disallowance is not warranted if partial evidence exists, but the claim must be reasonably quantified based on the evidence provided. The Tribunal expressly left undecided the grounds related to the initiation of penalty proceedings (Ground 6) and the overall computation of total income (Ground 5) as they depend on the outcome of the other grounds.

What were the facts?

The assessee, Chandra Kanta Yadav, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year not specified. The assessee initially did not file a return. Information from the Insight portal indicated cash deposits of Rs. 4,24,94,980/- and commission income of Rs. 31,53,306/-. The case was reopened under Section 148, and the assessee filed a return declaring NIL income, claiming a loss of Rs. 2,55,353/-. The Assessing Officer (AO) accepted the explanation for cash deposits related to business but added Rs. 4,31,985/- as unexplained, as it exceeded the declared turnover of Rs. 2,08,15,505/-. The AO also disallowed commission expenses of Rs. 20,88,033/- and salary expenses of Rs. 11,58,106/- for lack of evidence. The total income was assessed at Rs. 34,22,771/-. The CIT(A) confirmed the AO's additions. The assessee appealed to the ITAT.

What were the issues?

1. Whether the addition of Rs. 4,31,985/- made by the AO and confirmed by the CIT(A) treating cash deposits in the bank account as unexplained money under Section 69A of the Income Tax Act, 1961, is correct? 2. Whether the addition of Rs. 20,88,033/- made by the AO and confirmed by the CIT(A) by disallowing commission expenses is correct? 3. Whether the addition of Rs. 11,58,106/- made by the AO and confirmed by the CIT(A) by disallowing salary expenses is correct? Assessee's Contentions: For Issue 1: The cash deposit of Rs. 4,31,985/- emanated from a gift of Rs. 6,50,000/- received in cash from the assessee's daughter-in-law, which was duly substantiated with an affidavit. The AO and CIT(A) ignored this explanation. For Issue 2: The commission expenses were incurred as a distributor for telecom companies and for passing on retailer commissions. Invoices and affidavits of retailers were filed, establishing the genuineness of the claim. The AO and CIT(A) erred in disallowing the claim without pointing out infirmities in the evidence. For Issue 3: The assessee, with a turnover of approximately Rs. 2 crores, required employees. Affidavits of certain employees were furnished, substantiating the salary expenses. The disallowance was arbitrary. Revenue's Contentions: For Issue 1: The CIT(A) found that the assessee failed to produce a cash book or ledger to demonstrate the source of the balance amount of Rs. 4,31,985/-, making the addition under Section 69A justified. For Issue 2: No confirmations, PAN details, addresses, or payment proofs for commission expenses were furnished, making the claim unverifiable. For Issue 3: The assessee failed to provide salary registers, vouchers, payment proofs, or TDS details, and only submitted affidavits, which were insufficient.

Which sections of the Income-tax Act were involved?

Section 69A,Section 250,Section 148,Section 270A,Section 271B,Section 271AAC(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

For Appellant: CA &, Ms. Apeksha Kalra, Adv
For Respondent: Ms. Aarti Rawat, JCIT
Hearing: 14.07.2026Pronounced: 06.10.2026

The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”), dated 14.11.2025 u/s 250 of the Income Tax Act, 1961, (hereinafter referred to as “the Act”).

2.

Briefly stated the assessee had not originally filed its return of income for the impugned year. There was information available in the Insight portal of the Department that the assessee had entered into financial transactions during the impugned year, being cash deposited

P a g e | 2 Chandra Kanta Yadav in its bank account in Andhra Bank amounting to Rs.4,24,94,980/- and the assessee having received commission income of Rs.31,53,306/- from various parties being Vodafone m-pesa

The order continues below.

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