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Facts
The assessee, a commission agent for apple sales, filed a return of income of Rs.10,31,194/-. During scrutiny for large cash deposits post-demonetisation, the AO made additions including Rs.77,80,000/- under Section 69A for cash deposits, Rs.90,006/- for bad debts, and Rs.50,500/- for charity/donation. The CIT(A) upheld these additions, except for a cash discount of Rs.95,622/-.
Held
The Tribunal deleted the addition of Rs.77,80,000/- under Section 69A, finding it to be sales proceeds collected as a commission agent and already offered to tax. The disallowance of bad debts of Rs.90,006/- was also deleted as it was written off in the accounts. However, the disallowance of Rs.50,500/- for charity & donation was remitted back to the AO for fresh verification and adjudication.
Key Issues
Whether cash deposits received as a commission agent for apple sales are taxable under Section 69A; correctness of disallowance of bad debts under Section 36(1)(vii); and validity of disallowance of charity & donation expenses.
Sections Cited
250, 143(2), 142(1), 69A, 36(1)(vii)
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Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
Assessment Year: 2017-18 BK Garden Fresh Pvt. Ltd.……………………………………….……….……Appellant 12, Ramlochan Mullick Street, Kol-700007. [PAN: AAFCB6953P] vs. ITO, Ward-7(1), Kolkata..………………………………….....……...…..…..Respondent Appearances by: Shri N. S. Saini, AR and Satyaki Mondal, CA, appeared on behalf of the appellant. Shri Subrata Aich, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : September 15, 2025 Date of pronouncing the order : November 18, 2025 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee is directed against the order dated 10.02.2025 of the National Faceless Appeal Centre [‘CIT(A)’] passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2017–18.
Brief facts of the case are that the assessee filed return of income declaring total income of Rs.10,31,194/-. The case of the assessee was selected for complete scrutiny specifically on the ground of large cash deposits during demonetisation period. Notices u/s 143(2) and 142(1) along with questionnaire were issued and after considering the submissions and details submitted by the assessee, the Assessing Officer assessed total income at Rs.90,47,322/- after making the following additions:
Aggrieved by the said order, the assessee filed an appeal before the CIT(A) wherein the appeal of the assessee has been partly allowed as the addition in respect of cash discounts of Rs.95,622/- has been deleted but the other additions were confirmed.
Aggrieved and dissatisfied, the assessee is in appeal before us. The ld. AR challenges the additions made u/s 69A on the amount of Rs.77,80,000/- thereby submitting that the Assessing Officer as well as the ld. CIT(A) have rejected the explanation of the assessee that the cash collected was the sale proceeds of apple received by the assessee as a commission agent on behalf of growers of apple of Himachal and Kashmir which was immediately despotised in the bank account and paid to the respective growers through banking channels. The ld. AR submits the commission income earned by the assessee from the transactions was duly reflected in the profit and loss account and the same was offered to tax, hence, the provisions of section 69A will not apply in this case. The ld. AR has cited the following decisions: 1. CIT vs. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194(SC) 2. Shree Sanad Textiles Industries vs. DCIT in (Ahmedabad ITAT) 3. CIT vs. Smt. Harshil Chordia vs. ITO ( 2008) 298 ITR 349 (Rajasthan HC)
4.1 The ld. AR further submits that so far the issue of bad debts of Rs.90,006/- u/s 36(1)(vii) of the Act is concerned, the Assessing Officer BK Garden Fresh Pvt. Ltd disallowed the same on the ground that no convincing evidence was furnished by the assessee company ignoring the documents filed by the assessee such as ledger account of Mohammed Ayub. The ld. AR further submits that the Assessing Officer as well as the ld. CIT(A) erred on the issue of disallowance of Rs.50,500/- under the head ‘charity & donation’ ignoring the documentary evidence filed by the assessee and prayed that the matter be remitted back to the file of the Assessing Officer for fresh consideration after considering the books of account and other supporting documents of the assessee.
Contrary to that, the ld. DR supports the impugned order.
Upon hearing submission of the counsels of the respective parties and perused the material available on record, we find that the assessee has raised three grounds such as addition u/s 69A, disallowance of bad debts and disallowance of Rs.50,500/- under the head ‘charity & donation’. 6.1 Addition u/s 69A of Rs.77,80,000/- - Going over the records, it appears to us that the assessee company is engaged in the business of paying and selling apples as a commission agent on behalf of growers of apple of Himachal and Kashmir and as well as a trader. The purchase cost was paid to the grower after the realisation of the sale proceeds of fruits after the deduction of commission, during which the sale was undertaken as a commission agent. It appears that the sale proceeds were immediately despotised in the bank account from where the payments were made to the growers through banking channels. The ld. AR has filed the following documents before us: 1. Bank statement from 01.04.2016 to 31.03.2017 2. Cash book deposited from 01.11.2016 to 31.12.2016 2. trade receivable till 08.11.2016 6.1.1 It is an admitted position by both the lower authorities that the amount in question was collected on behalf of the grower as a commission agent of apples from Himachal and Kashmir which was immediately deposited in the bank and paid to the respective growers of apples through proper banking channels. It is undisputed fact that the CIT(A) confirmed the action of the Assessing Officer without supporting any documentary evidences submitted by the assessee and both the lower authorities have accepted the fact that the impugned amount of Rs.77,80,000/- was the sale proceeds of apple received by the assessee company as a commission agent on behalf of growers of Apple of Himachal and Kashmir and the said commission income earned from the transactions was duly reflected by the assessee in its Profit & Loss A/c and offered to same for taxation. The ld. AR supported the decision of Hon’ble Supreme Court in the case of CIT vs. Devi Prasad Visghwanath Prasad (supra) wherein it has been held that “it is for the assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed.” The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again.” The Hon’ble Rajasthan High Court in the case of CIT vs. Smt. Harshil Chordia as held as under:
23. So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract Section 69A because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition of Rs.6,98,000 would not arise.
BK Garden Fresh Pvt. Ltd 6.1.2 Going over the discussion and considering the judicial pronouncements, the addition made u/s 69A of the Act of Rs.77,80,000/- is hereby directed to be deleted. 6.2 Disallowance of bad debts of Rs.90,006/- Upon going over the order of the Assessing Officer as well as the ld. CIT(A), we find that the amount has been disallowed on the ground that no convincing evidence has been furnished by the assessee company. It is pertinent to mention here that the assessee has filed a paper-book including the ledger account of Mohammed Ayub in which the assessee claimed bad debts being trade advance paid to the said Mohammed Ayub during the year. The assessee relied on the judgment passed by the apex court in the case of TRF. Ltd. Vs. CIT reported in [2010]323ITR 397SC in which it has been held that after 1-04-89, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Keeping on view of the above judicial pronouncement addition of Rs 90,006/ are deleted. 6.3 Disallowance of Rs.50,500/- under the head Charity & Donation - In respect of Disallowance of Rs.50,000/- under the head Charity & Donation, we find that since the disallowance made by the Assessing Officer on this issue that there was no evidence filed by the assessee and payments were made in cash in excess of prescribed limit. Here in after assessee filed charity and donation ledger and submits that matter be remitted back to the file of AO for fresh verification and adjudication. Keeping in view the submission we are inclined to restore the above issues before the Assessing Officer to pass a fresh order after going over the documents filed by the assessee and after hearing.
Kolkata, the 18th November, 2025.