KODIYALAM FLORICULTURE PRIVATE LIMITED ,BENGALURU vs. INCOME TAX OFFICER, WARD-4(1)(2), BENGALURU

Against the assessment order assessee preferred an appeal before the learned CIT – A wherein the appeal of the assessee was disposed of by an order dated 3 June 2025 during the course of appellate proceedings the assessee was granted relief of ₹ 15,000 and the balance amount of ₹ 3,450,000 was confirmed. Thus, the addition to the extent of ₹ 3,465,000 was reduced to Rs. 34,50,000/–. The assessee is aggrieved with that and is in appeal before us.

The learned authorised representative submitted that source of cash deposit made in the bank account during demonetisation period pertain to the advances from customers. He further referred to the page number 6 of the appellate order where there are four parties from whom the assessee has received cash advances of ₹ 3,450,000 which was deposited in the bank account. Further sum of ₹ 550,000 was refunded are adjusted by sale during the year and further ₹ 29 lakhs out of the above advances of ₹ 3,450,000/– is outstanding at the end of the year. The assessee has filed the confirmation before the learned assessing officer of the above for suppliers. Therefore, it was submitted that the disclosure was also made in the annual accounts of the assessee in note number 23. The above amount has subsequently been reversed by booking the sales and offering the income to the profit and loss account on sale of flowers. Therefore, the above sum could not be held to be an unaccounted income of the assessee which would have been added to the total income of the assessee under section 69A of the act. Assessee also referred to the paper book filed before us containing 102 pages

The learned departmental representative vehemently supported the orders of the learned lower authorities and submitted that in the confirmation submitted by the assessee there is no mention of any permanent account number of these parties and therefore the addition has been made correctly under section 69A of the act.

We have carefully considered the rival contentions and perused the orders of the learned lower authorities. The simple issue involved in this appeal is that assessee has received advances in cash from four buyers. The total cash was received of ₹ 3,465,000. Out of the above sum of ₹ 3,465,000/-, ₹ 1,065,000 were deposited in Axis bank account and sum of ₹ 24 lakhs was deposited in IDBI bank account of the assessee. To support the case of the assessee the assessee submitted the copies of the Ledger account of the flower buyers confirming the cash payment for the purchase of flowers from the company. Subsequently the sales have also been made to these parties. The learned assessing officer disbelieved the same and made an addition to the total income of the assessee of ₹ 3,465,000 which was reduced by the learned CIT – A to ₹ 3,450,000. We find that the above amount has been received in cash, the parties who paid the above cash to the assessee confirmed the same, and subsequently the sale has been recorded in the books of accounts of the assessee against the above cash received, there could not have been any addition under section 69A of the act. The complete details with respect to the name, address of the parties who paid the cash is available and submitted before the learned assessing officer. Subsequent sale is also not denied. No inquiries a been made by the learned assessing officer by issuing notice under section 133 (6) of the act to the buyers. Therefore, in absence of any enquiry, no addition could have been made without rejecting the explanation of the assessee. In view of this the addition made by the learned lower authorities deserves to be deleted. Accordingly, we direct the learned assessing officer to delete the addition of ₹ 3,450,000/–.

In the result, the appeal by the assessee is allowed.