SANTOSH BHAIRU BHILARE,MUMBAI vs. ASSESSING OFFICER, INCOME TAX DEPARTMENT

The issue involved in the present appeal is in respect of addition made towards deposit of cash amounting to Rs.1,17,71,000/- in the bank account during the demonetization period, by applying provisions of section 69A.

Brief facts of the case are that assessee filed his return of income on 06.02.2018 reporting total income at Rs.3,99,330/-. On the basis of data analytics and information gathered during the phase of online verification under “operation clean money”, department gathered list of assesses who had deposited substantial cash in bank accounts during the demonetization period. Based on this, ld. Assessing Officer noted that assessee had deposited total cash of Rs.1,19,85,000/- in his bank account with Dattatraya Maharaja Kalambe Jaoli Sahakari Bank Ltd. (DMK Jaoli Bank), Maulana Azad Road, Near Round Temple, Mumbai with current bank account No. 002010000002350. Ld. Assessing Officer had issued notice u/s.133(6) to the said bank calling for the bank statement. Assessee was also called for the required information and details in respect of deposit of cash in his aforesaid bank account. Ld. Assessing Officer records in his assessment order that assessee

1. According to the ld. Assessing Officer, assessee has deposited cash in his bank account during the demonetization period, which appears in the bank statement called by him from the bank by issuing notice u/s.133(6) but such cash deposits are not recorded in the books of accounts of the assessee and not offered to tax. He also observed that nature and source of such deposits made in the bank account are not explained by the assesse. He thus, completed the assessment by holding the deposit of cash of Rs.1,17,71,000/- as un-explained money u/s.69A

Before the ld. CIT(A), it was contended that assessee had submitted profit and loss account of the business concern in the name and style of Bhilare Brothers Dairy Farm, of which assessee is the proprietor. Sales reported in the profit and loss account are at Rs.8,91,00,423/-. However, no details in respect of such sales has been furnished including tax audit report, sales register, GST return, sales bill, cash register, list of customers to whom cash sales were made, etc. Ld. CIT(A) thus, observed that assessee has not discharged his primary burden of explaining the source of cash deposits during the demonetization period. He thus, dismissed the appeal of the assessee by observing that assessee is not willing to cooperate with the appellate authority and thus, sustained the addition so made by ld. Assessing Officer. Aggrieved, assessee is in appeal before the Tribunal.

Before us, ld. Counsel for the assessee contended that assessee is a distributor for Amul milk, carrying his business in the proprietary

1. Assessee submitted that as per the procurement policy of Gujarat Cooperative Milk Marketing Federation Ltd (Amul), he is required to make advance payments on a daily basis via bank transfer to purchase milk and other related products. Accordingly, cash generated from day- to-day cash sales is deposited into the bank account, and subsequently transferred to Amul to settle daily purchase invoices. The profit margin in this line of business is nominal, usually ranging between 1% to 1.5%, as the maximum retail price (MRP) of the products already factors in the margins of both wholesalers and retailers. Moreover, he has to incur additional administrative and operational expenses to run the business, further reducing net profits.

2. Assessee contended that net profit from the business, even after considering these sales, is very low of Rs.4,31,695/- and the books are audited which include: a) The ledger account of Amul, evidencing purchases made,

Ld. DR placed on record a written submission reiterating the stance taken by the authorities below. He acknowledged the nature of business but disputed on the inadequate explanation given by the assessee on the source of cash which was deposited in the bank during demonetization period. Detailed written submission has been perused.

We have heard the rival contentions and perused the material placed on record. Fact of the matter is that assessee is carrying on milk distribution business, the cash deposits in the bank account were received from sale of milk and the same has been used to make payment towards purchase of milk to Gujarat Co-operative Milk Marketing Ltd. (GCMM) by way of cheque/demand draft as reflected in the bank statement of the assessee. On the other hand, the learned Departmental Representative supported the order passed by the CIT(A) and placed reliance on the order passed by the AO and the CIT(A). On perusal of the material on record, we find that assessee furnished all the documents as filed before the CIT(A) which support the averments made by him. Cash book and bank statement of the assessee for the relevant financial year and the ledger account of purchases made from GCMM show that assessee had deposited cash from sale of milk in the bank account which was used to make payments for purchase of milk from GCMM.

1. In our view, by furnishing the aforesaid documents/details assessee substantiated the stand taken. However, ld. CIT(A) did not deal with documents/details furnished and failed to either carry out any 6 Santosh Bhairu Bhilare AY 2017-18

2. Notification No. S. O. 3408(E) provided that specified bank notes would continue to be legal tender for purchase of milk at GCMM. Assessee provided explanation about the source and nature of cash deposited in the bank account as cash received from sale of milk in the normal course of business. Accordingly, in the facts and the circumstances of the present case, addition of Rs.1,17,71,000/- made by the ld. AO under s. 69A of the Act is deleted. Grounds raised by the assessee are allowed.

In result, appeal by the assessee is allowed. Order is pronounced in the open court on 28th August, 2025 (Beena Pillai) Accountant Member Dated: 28th August, 2025 MP, Sr.P.S. Copy to :