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Facts
The assessee, Hansraj Jain, faced an addition of Rs. 34,49,310 under Section 68 for an unexplained cash deposit in Yes Bank, initially recorded by the AO as 5.11.2016, when available cash on hand was insufficient. The CIT(A) upheld the addition due to unverified sources of funds. The assessee contended the actual deposit date was 15.11.2016, by which time, with sales and a gift from his mother, he had sufficient cash on hand.
Held
The Tribunal found discrepancies in the deposit date and noted that the AO and CIT(A) did not adequately verify the additional evidence provided by the assessee, such as cash books, bank statements, sales details, and a gift. The issue was restored to the AO to verify the genuineness of sales and the source of funds, including the gift, and pass a fresh order.
Key Issues
Whether a cash deposit of Rs. 34,49,310 constituted an unexplained cash credit under Section 68, and the verification of the actual deposit date and the adequacy of cash on hand from declared sources.
Sections Cited
143(3), 68, 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDARARAJAN K.
Per Prashant Maharishi, Vice President
This appeal is filed by Hansraj Jain (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the National Faceless Appeal Centre, Delhi (NFAC) [ld. CIT(A)] dated 16.6.2025 wherein the appeal filed by the assessee against the assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [the Act] dated 6.12.2019 by the ITO, Ward 2(2)(2), Bengaluru was dismissed.
The assessee is aggrieved and has preferred this appeal before us. The only grievance of the assessee is that addition of Rs.34,49,310 was confirmed u/s. 68 of the Act.
The brief facts of the case show that assessee is an individual, carrying on business of Arihant Designer, filed his return of income on 3.11.2017 at a total income of Rs.18,87,030. The return was picked up for scrutiny by issue of notice u/s. 143(2) of the Act. On perusal of the cash book, it was seen that assessee has a cash balance as on 4.11.2016 of Rs.32,60,415 and a contra entry was made by Yes Bank of Rs.34,49,310. Therefore in absence of sufficient cash on hand cash has been withdrawn. The AO noted that cash has been received on 5.11.2016 from 3 parties totalling to Rs.5,22,758, opening balance of cash was a negative balance of Rs.2,08,395 and therefore considering the receipts & payments on 5.11.2016, the balance as on 10.11.2016 is only Rs.2,,85,926. The AO extracted the cash book from 3.8.2016 to 5.2.2017. He noted that from the bank statement of Yes Bank it is found that assessee has deposited a sum of Rs.34,49,310 on 5.11.2016 in cash, whereas the cash on hand was only Rs.2,85,926. Therefore cash deposit by the assessee of Rs.34,49,310 is treated as unexplained credit and brought to taxation by assessment order passed u/s. 143(3) of the Act on 6.12.2019.
The assessee challenged the same before the ld. CIT(A). The ld. CIT(A) after considering the explanation of the assessee found that assessee has furnished the cash book and VAT return and stated that these evidence could not have been filed at the time of assessment proceedings The ld. CIT(A) rejected the additional evidence stating that these were already filed before the AO. He further held that cash was deposited of Rs.34,49,310 in Yes Bank. But at that time, cash on hand was not available. However, it was explained that the source of cash deposit was from sale of jewellery and realisation of Debtors. He noted that assessee has not furnished the details of name, address & PAN of the seller, who sold the jewellery to the assessee and therefore he confirmed the addition. The assessee is aggrieved with the same and in appeal before us.
The assessee submitted that the amount of deposit made in the Yes Bank is out of sales made by the assessee. It was submitted that assessee is carrying on the business of jewellery on retail and semi- wholesale basis. The accounts were maintained in Tally software. This software is maintained by the Accountant who records the transaction periodically. These transactions are recorded on the basis of primary evidence like sales bills, purchase bills, vouchers, bank statements and bank receipts, etc. The assessee submitted the bank statement which shows that cash of Rs.34,49,310 was deposited in current account of Yes Bank on 15.11.2016. Inadvertently considering the date of deposit as per pay-in slip as 5.11.2017 instead of the actual date of deposit of 15.11.2016, the Accountant entered the date in the Tally software as if the amount was deposited on 5.11.2016. In fact the bank statement shows that there is no such deposit in the bank at all on 5.11.2016. It is further stated that the cash balance as on 14.11.2016 was Rs.37,28,776 and therefore deposit of Rs.34,49,310 was out of available cash balance on hand. The assessee submitted the cash book as well as the bank statement. Therefore it was contended that the addition is made wrongly
The ld. DR submitted that the assessee has deposited cash on 5.11.2016 only and no evidences were produced. Therefore, he relied up on the orders of the ld. Lower authorities.
We have carefully considered the rival contentions and perused the orders of the ld. lower authorities. Before us the assessee has produced the cash book which clearly shows that amount of Rs.34,49,310 is deposited from the cash book as on 15.11.2016. As on 30.11.2016 the assessee was having cash balance of cash on hand of Rs.2,42,779. Further the assessee has also submitted the bank statement of Yes Bank wherein it clearly shows that assessee has deposited cash on 15.11.2016 of the above sum and therefore the bank balance as on that date was Rs.49,73,708. The assessee has submitted the details of monthwise sale, purchase for the whole year along with VAT return. The assessee has also submitted an Affidavit under Rule 46A before the CIT(A) stating that the issue in dispute was the addition of Rs.34,49,310 and to show the assessee submitted cash book, details of month wise sales, purchase, etc. along with cash receipt and VAT
returns. The assessee has also submitted copies of some of the invoices wherein name, address of the parties from whom cash was received, sum deposited in the bank account. Thus we find that deposit of Rs.34,49,310 was not on 05.11.2016, but on 15.11.2016. Therefore the only issue to be seen is whether as on that date, assessee was having adequate cash in hand or not. If the assessee has adequate cash on hand, the addition deserves to be deleted and if the assessee does not have adequate cash on hand or the source of cash in hand is not genuinely proved, the addition deserves to be made. We find that in the cash statement submitted before us that assessee was having opening cash on hand as per cash book on 01.11.2016 of Rs.11,54,767. During that month, there is inflow of Rs.38,38,918 including the opening balance and outflow of Rs.35,96,139 which included the deposit on 15.11.2016 in Yes Bank of Rs.34,49,310. After that, still there is closing balance available of Rs.2,42,779. The amount of cash generated by the assessee is approx. Rs.1.75 lakhs per bill spread out of 15 parties. The assessee has submitted their bills. The assessee has also shown that on 2.11.2016, a gift of Rs.2 lakhs is received from his mother. These need verification by the ld. AO, which was not done by either the ld. AO or the ld. CIT (A).
Therefore, we restore the whole issue back to the file of the ld. AO that if the sales made by the assessee to the above parties is found to be genuine, the assessee was having adequate source for depositing in the bank account of Yes Bank on 15.11.2016 of Rs.34,49,310. The AO may verify the same, if found genuine, the addition deserves to be deleted. The assessee is directed to show the source of funds which may be verified by the ld. AO and then decide the issue afresh.
Accordingly the appeal by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 30th day of December, 2025.