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Facts
The Assessing Officer (AO) reopened the assessee's case and made an addition of Rs. 3,57,34,500/- under Section 68 of the Income Tax Act, 1961, treating it as unexplained cash sales/deposits. The assessee had declared a total income of Rs. 12,71,020/-. The Commissioner of Income Tax (Appeals) [CIT(A)] partly allowed the assessee's appeal.
Held
The Tribunal held that the assessee provided all necessary details of turnover, gross profit, net profit rates, and cash deposits from previous years, which were duly verified by the CIT(A). The CIT(A) had rightly observed that the cash receipts of Rs. 4,29,05,391/-, out of which Rs. 3,57,34,500/- was deposited, were from customers.
Key Issues
Whether the CIT(A) erred in deleting the addition by accepting the assessee's explanation for cash deposits without sufficient documentary evidence, and if the CIT(A) erred in admitting evidence without granting the AO an opportunity for rebuttal.
Sections Cited
147, 148, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT “DB” BENCH, SURAT
Before: Dr. BRR Kumar, Hon’ble & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
This is an appeal filed against the order dated 28-03- 2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2017-18.
The grounds of appeal are as under:- “1. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting addition of Rs. 3,57,34,500/- by accepting the explanation given by the assessee with regards to the source of cash deposited in bank account during the FY.2016- 17 supposed to have been received on account of debtors/cash giving or furnishing the documentary evidences to justify the claim was by not considering the fact that the assessee was
I.T.A No.557/Srt/2024 Chirag Pharma Agency, A.Y 2017-18.
allowed sufficient opportunity to explain the source of the amount of cash deposited. 2. On the facts and circumstances of the case and in position of law Ld. CIT(A), NFAC erred in holding that cash amount deposited in bank account pertains to realization of debtors/cash sales of medicines during the course of regular business as the assessee failed to produce cogent evidence. 3. On the facts and in the circumstances of the case and in position of low case Ld.CIT(A) erred in admitting the evidence/documents produced before him without admitting the evidence/documents produced before him without granting opportunity to the Assessing Officer for rebúttal as provided in rule 46A(3) of the Income tax Rules, 1962. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have upheld the order of the AO 5. It is, therefore, prayed to set aside the order of the CIT(A) and restored the order passed by the AO.”
The assessee filed return of income for assessment year 2017-18 on 26-10-2016 declaring total income at Rs. 12,71,020/-. The case of the assessee was reopened u/s. 147 of the Act. The Assessing Officer observed that the assessee is involved in high value transaction worth of Rs. 9,32,89,592/- in his account Kotak Mahindra Bank which was not reflected or declaring in the return of income filed for assessment year 2017-18. The case of the assessee was reopened and statutory notices u/s. 148 of the Act was issued. The assessee filed return of income declaring total income of Rs. 12,71,020/- on 07-04-2021. After taking cognizance of the assessee’s details, the Assessing Officer made addition of Rs. 3,57,34,500/- u/s. 68 of the Act as unexplained cash sales/deposits.
I.T.A No.557/Srt/2024 Chirag Pharma Agency, A.Y 2017-18.
The assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The ld. A.R. at the time of hearing has given the details of cash sales as VAT tax and credit sales with VAT tax for assessment years 2015-16, 2016-17 and 2017-18. The ld. A.R. submitted that the assessee is supplying the medicines in the wholesale basis to the urban and rural areas in medical stores of Vasad district. The collection from such medical stores are in cash, cheque and other digital mode. The turnover of the assessee in the relevant assessment year is of Rs. 16,12,92,242/- and gross profit of Rs. 1,37,68,123/- at the rate of 8.54% which is higher than previous year gross profit @ 8.40% . The assessee has given the details of last three years turnover, creditors and debtors with GP and NP shown in the balance sheet and cash deposited in bank account in the current year as well as the previous years. The said chart is as under:-
The ld. D.R. submitted that the CIT(A) erred in deleting the addition by accepting the explanation given by the assessee with regard to the source of cash deposited in bank account. The assessee has not given the details and has not
I.T.A No.557/Srt/2024 Chirag Pharma Agency, A.Y 2017-18.
furnished documentary evidences to justify its claim. The ld. D.R. relied upon the assessment order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. The assessee has given all the details of turnover of the previous two assessment years as well as the GP and NP rate along with the cash deposited in the bank. The details was categorically taken into account by the CIT(A) and has rightly observed that during the year, the assessee received Rs. 4,29,05,391/- as cash receipts from its customers out of which Rs. 3,57,34,500/- was deposited in the bank account. The assessee has given all the details which was duly verified by the CIT(A) and has rightly deleted the addition. Hence, there is no need to interfere with the findings of the ld. CIT(A).
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 02-04-2026
Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 02/04/2026 TRUE COPY a.k. आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A)
I.T.A No.557/Srt/2024 Chirag Pharma Agency, A.Y 2017-18.
DR, ITAT, Surat 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Surat
Strengthened preparation & delivery of orders in the ITAT 1) Date of dictation 27/02/2026 2) Date on which the typed draft is placed before the 30/02/2026 (6 pages of Dictating Member & Other Member dictation notebook attached)
3) Date on which the approved draft comes to the Sr. /04/2026 P.S./P.S. 4) Date on which the fair order is placed before the /04/2026 Dictating Member for pronouncement 5) Date on which the fair order comes back to the Sr. 02/04/2026 P.S./P.S. 6) Date on which the file goes to the Bench Clerk 02/04/2026 7) Date on which the file goes the Head Clerk 8) Date on which the file goes to the Assistant Registrar for signature on the order 9) Date of Dispatch of the order