ADJ AGRI INTERNATIONAL LLP,RAJKOT vs. THE INCOME TAX OFFICER, WARD-1(1)(1), RAJKOT, RAJKOT

ITA 1198/RJT/2026Status: DisposedITAT Rajkot21 October 2026AY 2018-198 pages
AI SummaryAllowed

What were the facts?

The assessee, ADJ Agri International LLP, is in appeal against the order of the National Faceless Appeal Centre (NFAC)/CIT(A) for Assessment Year 2018-19. The appeal arises from an assessment order passed by the Assessing Officer (AO) under Section 147 of the Income Tax Act, 1961. The AO made an addition of Rs. 20,25,800/- under Section 69A, treating cash deposits in bank accounts as unexplained money. The assessee's case was reopened based on information regarding cash deposits aggregating to Rs. 20,25,800/- and cash withdrawals of Rs. 1,00,67,000/- from bank accounts during the financial year 2017-18. The assessee contended that these deposits were re-deposits of cash earlier withdrawn from the same or related bank accounts and were also out of sale of agricultural commodities.

What did the Tribunal hold?

The Tribunal held that Section 69A applies when an assessee is found to be the owner of money not recorded in books, and no satisfactory explanation is provided for its nature and source. The Tribunal noted that the assessee is engaged in agricultural commodity trading, where cash transactions are common. The assessee had explained the cash deposits of Rs. 20,25,800/- as sourced from business receipts and earlier cash withdrawals. Crucially, cash withdrawals aggregating to Rs. 1,00,67,000/- were made during the relevant period, which substantially exceeded the impugned deposits. The Tribunal found that the assessee had furnished bank statements and cash-flow details demonstrating the availability and source of cash. Citing the Ahmedabad Bench decision in Gaurav Harshadbhai Chokshi v. ITO, the Tribunal held that an addition under Section 69A cannot be sustained merely on cash deposits if the assessee establishes, through bank statements and cash-flow records, that the deposits represent earlier withdrawals or disclosed business receipts. Therefore, the addition of Rs. 20,25,800/- was deleted.

What were the issues?

1. Whether the addition of Rs. 20,25,800/- made by the Assessing Officer under Section 69A of the Income Tax Act, 1961, treating cash deposits as unexplained money, is justified, when the assessee claims these are re-deposits of earlier cash withdrawals and out of business receipts from agricultural commodity trading? Assessee's Contention: The assessee argued that the addition is unjustified given the large volume of total deposits (Rs. 10,41,83,162/-) treated as genuine by the AO. The cash deposits of Rs. 20,25,800/- were explained as re-deposits of cash earlier withdrawn from bank accounts (Rs. 1,00,67,000/-) and also from sale of agricultural commodities, a business where cash transactions are prevalent. The assessee relied on the fact that cash withdrawals substantially exceeded the deposits in question. Revenue's Contention: The Revenue, through the Ld. DR, primarily reiterated the stand taken by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 148,Section 133(6),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Brijesh Parekh, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 05/10/2026Pronounced: 21/10/2026

Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2018-19, is directed against the order under section-250 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the National Faceless Appeal Centre (NAC) Delhi/Commissioner of Income-tax (Appeals) [in short ‘NFAC/Ld.CIT(A)’], dated 11.08.2026, which in turn arises out of an assessment order passed by the Assessing Officer u/s 147 of the Act, dated 03.03.2026

The order continues below.

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