SHREE SATI SAW MILL,SILIGURI vs. ITO, WARD 1(3),, SILIGURI

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ITA 1402/KOL/2025Status: DisposedITAT Kolkata15 September 2025AY 2016-20174 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of ₹1,33,66,960/- made by the AO under Section 69A of the Income-tax Act, 1961, was not justified. The Tribunal noted that the assessee was engaged in business with a significant turnover, and the cash deposits were made into the assessee's bank accounts. The Tribunal observed that the assessee had duly accounted for cash receipts in its cash book, with narrations indicating sales or receipts from sundry debtors. Furthermore, the books of account were audited by a tax auditor, and no adverse inference was drawn. The Tribunal found that both the AO and CIT(A) failed to appreciate that the cash deposits were out of business receipts, which were already reflected in the books of account. The Tribunal reasoned that once cash is treated as sales, making an addition under Section 69A for unexplained money would constitute double taxation, which is not permissible. Therefore, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the additions.

What were the facts?

The assessee, Shree Sati Saw Mill, engaged in the business of a saw mill, is in appeal against the order of the National Faceless Appeal Centre, Delhi (NFAC), dated 16.04.2025, for Assessment Year 2016-17. The case was reopened under Section 147 of the Income-tax Act, 1961, based on information from the insight portal regarding non-filing of returns. The Assessing Officer (AO) observed large cash deposits into the assessee's bank accounts. Following notices under Section 148A(b) and 148, the AO, after examining bank statements and the assessee's submissions including cash book and cash flow statements, treated cash deposits totaling ₹1,33,66,960/- as unexplained money under Section 69A and made an addition to the assessee's income. The CIT(A) affirmed this addition.

What were the issues?

1. Whether the addition of ₹1,33,66,960/- made by the Assessing Officer under Section 69A of the Income-tax Act, 1961, on account of alleged unexplained cash deposits in bank accounts, is justified? Assessee's Contention: The assessee argued that the cash deposits were out of business receipts, specifically sales and receipts from sundry debtors, which were duly accounted for in the books of account. The assessee's books of account were audited by a tax auditor, and no adverse inference was drawn. The assessee contended that treating these cash deposits as unexplained money under Section 69A would amount to double taxation, which is impermissible under the Act. Revenue's Contention: The revenue, through the Assessing Officer and confirmed by the CIT(A), contended that the assessee failed to adequately explain the source of the cash deposits, leading to the addition under Section 69A as unexplained money.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 148A(b),Section 148,Section 133(6),Section 68,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Prakash Agarwal, AR
For Respondent: Shri S.B. Chakraborthy, DR
Hearing: 01.09.2025Pronounced: 15.09.2025

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 16.04.2025 for the AY 2016-17.

2.

The only issue raised by the assessee in the various grounds of appeal is against the confirmation of addition of ₹1,33,66,960/-, by the ld. CIT (A) as made by the ld. AO u/s 69A of the Income-tax Act, 1961 (the Act) in respect of cash deposited during the year.

3.

The facts in brief are that the case of the assessee was selected for scrutiny on the basis of information in the insight portal under the category of RMS -Non filling of return and accordingly, the case of the assessee was reopened u/s 147 of the Income-tax Act, 1961 (the Act). The ld. AO observed on the basis of third-party information that assessee has deposited huge cash into the bank account. The Notice

4.

In the appellate proceedings, the ld. CIT (A) simply affirmed the order of the ld. AO by holding that the assessee has failed to explain the cash deposit and therefore, the ld. AO has rightly made the addition.

6.

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

Order pronounced in the open court on 15.09.2025.

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