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Facts
The assessee deposited Rs. 28,00,000/- cash in their bank account during the financial year 2012-13. The Assessing Officer (AO) treated this as an unexplained investment under Section 69 and made an addition. This addition was confirmed by the CIT(A) despite the assessee claiming the cash was from liquor sales reflected in audited books.
Held
The Tribunal noted that while complete documentation was not provided, the assessee's auditors had verified the books of account and concluded the cash deposits were from regular business. Therefore, the Tribunal allowed 50% of the cash deposit, i.e., Rs. 14 lacs, as arising from liquor business.
Key Issues
Whether the cash deposit of Rs. 28,00,000/- was an unexplained investment or arose from liquor sales reflected in audited books, and if the assessment proceedings were validly conducted.
Sections Cited
69, 147, 148, 250, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘SMC’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
आदेश/Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 09.06.2025 passed by the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi
Grounds of appeal, as raised by the Assessee are reproduced as under:
956-Chd-2025 2
1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A), NFAC in Appeal No. NFAC/2012- 13/10238134 has erred in passing order dtd 09.06.2025 in contravention of provisions of S. 250 of the Income Tax Act, 1961 (hereinafter referred to as "Act").
2. That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in upholding the action of Ld. AO of initiating, continuing and then concluding the impugned assessment u/s 148 r.w.s. 147 and hence the impugned assessment order deserves to be quashed.
3. That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in confirming the addition made by the Ld. AO of Rs. 28,00,000/- u/s 69 as an unexplained investment on account of cash deposit in bank.
That on facts, circumstances and legal position of the case, the order passed by Ld. AO and then by Worthy CIT(A) u/s 250 deserves to be quashed since the same has been passed without affording reasonable opportunity of being heard to the appellant.
5. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
956-Chd-2025 3
Brief facts of the case as per the order of the Ld. CIT(A) are as under: -
1. The appellant is an individual. The assessee had deposited cash of Rs. 28,00,000/- in his bank account during financial year 2012-13 relevant to A.Y. 2013-14. Therefore, the AO had made one of the additions of Rs. 28,00,000/- on account of unexplained investment U/s 69 of the Act, vide assessment order passed u/s 144 dated 31.03.2016 which was confirmed by the Ld. CIT(A). Thereafter, the appeal travelled to the ITAT. The ITAT restored the matter to the file of the AO. Re-assessment was completed u/s 144 making following additions:-
1. Sr No Description Amount of of the the addition. Addition Addition as Rs. 1 undisclosed 28,00,000/- income
Aggrieved by the assessment order passed by the AO, the appellant filed an appeal
956-Chd-2025 4 before the CIT(A) who confirmed the addition made by the Assessing Officer.
4. During proceedings before us, ld. Counsel for the Assessee submitted that despite the fact that this case was earlier remanded back to the Assessing Officer for passing a de novo order for the addition of Rs. 28 lacs as undisclosed income but in the fresh assessment order passed by the Assessing Officer, the same addition has been repeated by the Assessing Officer and it has been confirmed by the CIT(A). Accordingly, the ld. Counsel requested that since the cash deposits made by the Assessee are from Assessee’s liquor sales and they are reflected in the audited books of account, therefore, the same should be accepted.
Per contra, the ld. DR relied on the order of the Ld. CIT(A) on this issue, which reads as under:-
1. “During appellate proceedings, the appellant has contended that the source of cash deposits is out liquor sales which are reflected in the regular audited books of accounts. The appellant further submitted that the books of 956-Chd-2025 5 accounts could not be produced before AO during assessment since the computerized books of accounts got corrupted. The appellant further contended that the audited balance sheet, profit and loss account, bank statement, cash sale statement and confirmation of loan given was submitted before the AO but AO the ignored the same and made the addition. I have considered the facts of the case and submission of the appellant carefully. I find that the appellant is relying on audit report only but failed to submit the audited books of accounts and supporting purchase and sale bills before AO during assessment proceedings as well as during appellate proceedings. Further AO noted from the submission of the appellant that till 26/02/2013, the appellant used to deposit particular cash in bank account on daily basis. However the amount of cash deposited of Rs.28 lacs on 11/03/2013 was found inconsistent with the earlier cash deposits. Further it is noticed from the bank account that on the next day i.e. 12/03/2013, the same amount of Rs.28 lacks was transferred to Gurjent Singh as hand loan. Though the appellant has produced the confirmation for loan given, I find that the appellant has failed to prove his contention that the cash deposited of Rs.28 lacks on 11/03/2013 is out of regular cash as per the books of accounts. However I find that the appellant has emphasized only on audited profit and loss account and balance sheet but failed to produce the books of accounts, sales bills, and purchase bills to substantiate his
956-Chd-2025 6 claim. Therefore, the contention of the appellant is not found tenable. The facts of the case laws relied upon by the appellant are not identical to the facts of the present case. Hence, the same are not applicable to the appellant. In view of the above observations, the addition made by the AO is confirmed and grounds of appeal raised by the appellant are dismissed.”
1. 1. 1. 6. We have considered the findings given by the Assessing Officer in the assessment order and by the Ld. CIT(A) in the appellate order. We have also considered the arguments made by the ld. Counsel of the Assessee that the said cash deposits are very much reflected in the regular audited books of account. At the same time, we have considered the arguments of the Ld. DR that apart from the audited books of account, no other details have been filed in support of the cash deposits of Rs. 28 lacs. After going through all the documents and details filed by the ld. Counsel for the Assessee, we are of this opinion that although complete set of details and documents proving the genuineness of cash deposits arising out of the liquor business have not been produced before lower authorities but there is no denying the fact that the 956-Chd-2025 7 auditors of the Assessee have verified books of account and given their findings that such cash deposits are out of regular cash as per books of account. Therefore, keeping in view the scenario in the totality and in the fitness of things, we allow 50% of the cash deposit i.e. Rs. 14 lacs as cash arising out of liquor business. Accordingly, the Assessee gets benefit of Rs. 14 lacs on this issue.
Since we have given our findings on merit, therefore, we are no adjudicating other grounds of appeal raised by the Assessee before the Tribunal.
In the result, Assessee’s appeal stands partly allowed.