SUJIT MAZUMDER,GOLAGHAT, ASSAM vs. ITO WARD GOLAGHAT, GOLAGHAT, ASSAM

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ITA 393/GTY/2026Status: DisposedITAT Ranchi16 October 2026AY 2024-20257 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 5,73,983/- as additional business income was acceptable. The AO considered the total turnover as Rs. 1,00,39,426/- and computed net profit at 12.5%, which was accepted by both parties as turnover. The assessee's plea to offer only 8% on the difference was rejected as he had already declared 12.5% income under Section 44AD on a portion of the turnover. The Tribunal noted that the assessee did not declare closing cash in hand for the previous year and provided no documentary evidence for the opening cash balance. Regarding the Rs. 14,05,000/- cash deposit, the Tribunal found that these deposits were out of the assessee's income and were utilized for payments like EMIs and electricity bills. Therefore, telescoping benefit should be given. The issue was remitted to the AO to determine the availability of funds after considering the cash flow statement, with the direction that the assessee would not get any benefit of the opening cash balance. If the AO finds any shortfall, the addition would be restricted to that extent. The assessee was directed to provide a correct cash flow statement.

What were the facts?

The assessee, Sujit Mazumder, filed his return of income for Assessment Year 2024-25, declaring a total income of Rs. 6,87,551/-. The case was selected for scrutiny to verify the genuineness of high cash deposits as business receipts. During assessment, the Assessing Officer (AO) noted that the assessee's declared turnover was Rs. 54,47,560/-, but cash deposits in bank accounts totaled Rs. 1,00,39,426/-. The AO considered the entire Rs. 1,00,39,426/- as turnover and calculated net profit at 12.5%, resulting in an addition of Rs. 5,73,983/- as additional business income. Additionally, Rs. 14,05,000/- deposited in bank accounts was treated as unexplained income under Section 69A. The total income was assessed at Rs. 26,66,533/-. The Commissioner of Income Tax (Appeals) dismissed the assessee's appeal.

What were the issues?

1. Whether the addition of Rs. 5,73,983/- on account of additional business income is erroneous in law and on facts, considering the assessee's claim of opening cash balance and offering 12.5% income under Section 44AD? - Assessee's Contention: The assessee argued that the authorities below erred in making the addition. He claimed an opening cash balance of Rs. 18,21,600/- which was reconciled, and that the entire cash balance was accounted for. He also sought telescoping benefit and offered 8% income on the difference. - Revenue's Contention: The revenue relied on the lower authorities' orders, stating that the assessee himself offered 12.5% income on his turnover. Therefore, the AO correctly adopted 12.5% on the remaining cash deposits. For the Rs. 14,05,000/- cash deposit, the assessee could not explain the source, thus the addition should be confirmed. 2. Whether the addition of Rs. 14,05,000/- on account of unexplained cash deposit in savings bank accounts is erroneous in law and on facts? - Assessee's Contention: The assessee argued for telescoping benefit for the Rs. 14,05,000/- cash deposit and stated that these deposits were out of his income and used for EMI and electricity bills. He claimed the entire cash balance was reconciled. - Revenue's Contention: The revenue argued that the assessee could not explain the source of these deposits, and therefore, the addition should be confirmed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 250,Section 139(1),Section 44AB,Section 44AD,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI

For Appellant: Shri Raj Kumar, FCA
For Respondent: Shri Santosh Kmar Karnani, Addl. CIT
Hearing: 03.09.2026Pronounced: 16.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI (VIRTUAL HEARING AT KOLKATA) SHRI LAXMI PARASAD SAHU, ACCOUNTANT MEMBER SHRI YOGESH KUMAR US, JUDICIAL MEMBER

ITA No. 393/GTY/2026 Assessment Year : 2024-25

Sujit Mazumder, Vs. ITO, Ward Golaghat, Rly. Station Road Bet Mahal, Golaghat, Assam Golaghat, Assam - 785621 [PAN: AKKPM6446N]

APPELLANT RESPONDENT

Assessee by : Shri Raj Kumar, FCA Revenue by : Shri Santosh Kmar Karnani, Addl. CIT

Date of hearing : 03.09.2026 Date of Pronouncement : 16.10.2026

O R D E R PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

This is an appeal filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appel Centre (NFAC), Delhi dated 15.06.2026, DIN & Order No. ITBA/NFAC/S/250/2026-27/108708405 (1) on the following grounds of appeal:

2 ITA No. 393/GTY/2026 Sujit Mazumder “1. For that on the facts and in the circumstances of the case, the Order dated 29.10.2025 passed by the National Faceless Assessment Centre (NFAC) u/s 143(3) r.w.s. 144B of The Income Tax Act, 1961 assessing the appellant’s total income at Rs. 26,66,533/- and raising a demand of Rs. 14,30,720/- is ultra virus, disputed, arbitrary, erroneous, beyond jurisdiction and bad in law. 2. Against the order passed by NFAC, the appellant filed an appeal in form 35 on 28.11.2025 to the CIT (Appeals), National Faceless Assessment Centre. The Commissioner of Income Tax (Appeals), Income Tax Department passed its order dated 15.06.2026 under section 250 of the Income Tax Act, 1961 by dismissing the appeal of the appellant and the appeal order passed by the CIT(Appeal) is disputed, arbitrary, erroneous and bad in law. 3. The NFAC as well as the CIT (Appeals) while passing the order dated 29.10.2025 and 15.06.2026 respectively has erred in law as well as facts in making an addition of Rs. 5,73,983/- to the total income of the appellant on account of additional business income. 4. The NFAC as well as the CIT (Appeals) while passing the order dated 29.10.2025 and 15.06.2026 respectively has erred in law as well as facts in making an addition of Rs. 14,05,000/- to the total income of the appellant on account of unexplained money as cash deposit in savings bank account. 5. For that the Appellant craves leave to amend, add or delete any of the above grounds at any time before the final hearing of the Appeal.” 2. Briefly stated the facts of the case are that the assessee filed return of income in ITR-4 on 31.07.2024 u/s 139(1) declaring total income of Rs. 6,87,551/- declaring income from business and profession and income from other sources. The return was processed u/s 143(1)(a). Later on the case was selected for scrutiny through CASS on the reasons that to verify the high cash deposit genuineness of cash deposit as business receipt to be verified. Accordingly, notice u/s 143(2) of the Act dated 24.06.2025 was issued to the assessee and other notice were issued also time to time. The assessee furnished part reply, the assessee was asked to explain the source of cash deposit and various other information as called form the assessee. The assessee furnished

3 ITA No. 393/GTY/2026 Sujit Mazumder reply explaining the source of income for the financial year 2023-24 was from wholesale and retailer sale of food packet items viz. Chips, Chana, Biscuits, Confectionary, Stationery items etc. and income from other sources being interest on bank deposits and submitted that the turnover from business has never exceeded the limit as specified in the income tax Act for audit of accounts u/s 44AB of the At. Hence the assessee is not in position to furnish Form No. 3CB & 3CD, audited financial statement, cash flow statement. Being a Petty Business Trader with limited turnover was considered as business income u/s 44AD of the Act, hence proper books of accounts are not maintained and he further submit that the source of cash deposit at point No. 5, cash deposit of Rs. 94,58,000/- and Rs. 12,79,000/- for the financial year 2023-24 in the bank account is out of cash sale proceed of Rs. 54,47,560/- opening cash balance as on 01.04.2023 to Rs. 18,21,607.61/- and cash generated during the year and copy of statement of balance was produced which was enclosed in Annexure- ‘C’. During the course of assessment proceeding, the AO further noted that while filing return for the financial year 31.03.2023. There was no any cash balance shown by the assessee in the ITR. The opening cash is approximately 20% cash balance of turnover of the assessee which was not accepted since the assessee while filing the return of income it was not shown. He himself offered to 12.5% as business income. Accordingly, the AO considered the total turnover of Rs. 1,00,39,426/-

4 ITA No. 393/GTY/2026 Sujit Mazumder and calculated the net profit @ 12.5% which comes to 12,54,928/- and assessee had already declared his return income of Rs. 6,80,945/-. Accordingly, the difference of Rs. 5,73,983/- was treated as additional business income. Further, it was found that the assessee deposited cash in Punjab National Bank, Canara Bank account of Rs. 17,29,000/- and Rs. 1,26,000 totalling to Rs. 14,05,000/- as assessee noted in para No. 3.4.2 that these bank accounts were used for making payment of EMI of housing loan, electricity bill etc as the assessee not able to justify the source of cash deposit. Accordingly, total cash deposit of Rs14,05,000/- was treated as unexplained income as per section 69A of the Act. Accordingly, total income was assessed at Rs. 26,66,533/-.

3.

Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A). The detailed written submission also made. The Ld. CIT(A) after considering the entire submission, dismissed the appeal of the assessee.

4.

Aggrieved from the order of Ld. CIT(A), the assessee is in appeal before the ITAT. The Ld. Counsel reiterated the submission made before the lower authorities and submitted that the difference amount of excess cash deposited into bank account. He offered for 8% of the income and for Rs. 14,05,000/- cash deposit to Punja National Bank and Canara Bank. He stated the telescope benefit may be given to the assessee.

5 ITA No. 393/GTY/2026 Sujit Mazumder 5. He has also filed a written submission at page number 4 which is placed on record and strongly submitted that the assessee had opening cash balance of Rs. 18,21,600/- and entire cash balance were reconciled, therefore, both the authorities below have not justified to make addition.

6.

On the other hand, the Ld. DR relied on the order of lower authorities and submitted that the assessee himself has offered 12.5% income on his turnover in the return of income filed by the assessee. Therefore, on rest amount of cash deposits which were not declared as part of the turnover in the return of income on which 12.5% income correctly adopted by the AO and further in respect of Rs. 14,05,000/- cash deposited into bank account, the assessee could not explain the source of cash deposit, therefore, the addition should be confirmed.

7.

Considering the rival submissions and perusing the entire material available on record and order of authorities below. We noted that the dispute is regarding business income computed by the AO on excess cash deposited over and above the declared turnover declaring in the return income and revenue has not accepted the opening cash balance as stated by the assessee of Rs. 18,21,600/- since in this case the assessee did not mention the closing cash in hand on 31.03.2023 in his return of income with the income tax department and no any documentary evidence produced by the assessee. The assessee is having loan and paying EMI.I f he had huge cash balance he could have

6 ITA No. 393/GTY/2026 Sujit Mazumder paid to the loan taken . Therefore, it cannot be accepted. here the difference of turnover as completed by the AO on which 12.5% of net income has been computed since the assessee has already declared 12.5% income u/s 44AD of the Act on the turnover of Rs. 54,47,560/- and the assessee deposited cash in account number 39542610000391 of Rs. 1,00,39,426/- is considered as turnover by the AO and assessee counsel was also at the time of arguments accepting as turnover and he agreed for offering 8% income on the difference of turnover, since the assessee has already declared 12.5% income on 54,47,560/-, therefore, on difference amount the plea of the assessee for offering 8% income cannot be accepted here in the case on hand both the parties have accepted it as turnover, therefore, 12.5% of the income is computed by the AO is hereby accepted and the plea of the assessee is not accepted. We further noted that the AO has added 1405000/- towards cash deposit in bank account and treated income u/s 69A of the Act. However, these deposits are out of income of the assessee and assessee earned total income of Rs. 12,54,928/-. The assessee has utilised for payment of EMI, electricity bill etc. from his bank account. Accordingly, the telescoping benefit to be s given to the assessee after considering the CASH FLOW filed by the assessee. The assessee is directed to file CASH FLOW statement before the JAO considering the income of rs. 12,54,928/- and assessee will not get any benefit of opening cash balance , since we have not accepted the opening cash balance of the assessee. Accordingly, we are remitting this issue to the JAO for

7 ITA No. 393/GTY/2026 Sujit Mazumder determining the availability to rebut the addition made u/s 69A regarding cash deposited in bank account. If JAO finds any shortfall the addition has to be restricted to that extent. Assessee is directed to provide correct CASH FLOW statement.

8.

In the result, appeal of the assessee is partly allowed for statistical purpose.

Sd/- Sd/- (YOGESH KUMAR US) (Laxmi Prasad Sahu) Judicial Member Accountant Member Dated: 16.10.2026 AK, Sr. P.S. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR)

//True copy// By order

Deputy Registrar, Kolkata Benches

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