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Facts
The assessee, a gas agency, made cash deposits of Rs. 2,17,17,000/- during demonetisation. The Assessing Officer added this amount under Section 68 due to insufficient response and lack of evidence for cash sales, an addition upheld by the CIT(A) due to sales register discrepancies.
Held
The Tribunal noted the assessee's poor representation before lower authorities. It set aside the impugned order and remanded the matter to the AO to re-verify cash receipts against vouchers, compare deposits during demonetisation versus other periods, and ascertain if cash receipts were part of business turnover for gross profit calculation.
Key Issues
Whether cash deposits during demonetisation were adequately explained as business turnover; proper verification of cash sales with supporting vouchers.
Sections Cited
250, 68, 142(1), 144(1)(b)
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Siddhartha Maiti, 138/3/4, Benaras Road, West Bengal - 711106 [PAN: AIQPM3014N] ……..…...…………….... Appellant vs. Assistant Commissioner of Income Tax, Circle 47, Kolkata, 3, Govt. Place, West Bengal - 700001 ................................ Respondent Appearances by: Assessee represented by : P.K. Singh, AR Department represented by : Kapil Mandal, Addl. CIT, SR. DR Date of concluding the hearing : 20.08.2025 Date of pronouncing the order : 26.08.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
The ITAT Registry has reported a delay of 187 days in the filing of this appeal. The assessee has filed an affidavit seeking condonation of the said delay as under:
“SHEWETH: (1). That the impugned Order dated 19.10.2023 passed by the Ld. Commissioner of Income Tax-(Appeals) u/s 250 of Income Tax Act, 1961 for Assessment Year 2017-18 was served on the email ID of the assessee on 19.10.2023 whereby the assessee was communicated about the partial allowance of the appeal. (2). That the appeal has been filed electronically on the portal of the Hon'ble Tribunal on 22.06.2024 i.e. after an apparent delay of 188 days after the statutory period of 60 days from the date of receipt of the order. (3). Your petitioner humbly submits that he is not legally aware of the online taxation processes and procedures. So, he entrusted an income tax practitioner to look after this case and take appropriate steps as and when necessary: in point of fact, upon instructions of and under authority of the appellant, 'user id' Siddhartha Maiti and password had been created by his Income Tax Practitioner and 'email id' of the firm of the Income Tax Practitioner had been given for electronic correspondence with Income Tax Authority. (4). That your petitioner states that he was not at all aware of the fact that the filing before the Hon'ble Tribunal was not done, and that he came to know about it only on 14.06.2024 and immediately upon being aware of this fact, your petitioner engaged another Chartered Accountant to prepare and file the Appeal against the said order. (5). Accordingly, the Appeal was prepared within 6 days from 14.06.2024 to 22.06.2024 and filed on 22.06.2024. (6). Due to communication gap between the Appellant and his previous Income Tax Practitioner for the reasons not attributable to the Appellant, the Appeal would not file duly within the statutory period of 60 days from 19.10.2023. (7). That in view of the forgoing reasons, it is necessary for the ends of justice to condone the delay of 188 days in filling of the Appeal. (8). That the Appellant has been advised that he has fair chances of getting relief in the appeal if the case is heard on merits. (9). That in any event the Appellant submits that an opportunity should be given to the Appellant and the appeal should be heard on merits. (10). Unless the Order as prayed for is made, your petitioner shall suffer irreparable loss and prejudice. (11). That the petition made is bonafide and for the end of justice. Hence, it is prayed that Your Honours be graciously pleased to condone the delay of 188 days in filing of the Appeal, the Appeal be admitted/registered, and ordered to be heard on merits and/or such further and/or other orders be passed as may be deemed fit and proper. And our petitioner, as is duty bound, shall ever pray.” 1.1 Considering the reasons given for the said delay, the same is condoned and this appeal is admitted for adjudication.
This appeal arises from order dated 19.10.2023, passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi.
2.1 In this case, the Ld.AO attempted several times to elicit response from the assessee but was only partially successful. Thereafter, the Ld. AO proceeded to add an amount of Rs. 2,17,17,000/- u/s 68 of the Act. This amount represented cash deposited in the bank account during the 2.2 The assessee approached the Ld. CIT(A) against this order of Ld. AO, where also he could not succeed on the basis of following findings:
During the course of appellate proceedings, the appellant has submitted that he is authorised distributor of INDANE gas. The appellant further submitted that as per Govt. Notification No.S.O. 3480(E) dated 8-11-2016, the payment for purchase of LPG gas cylinders was allowed in cash. I find that in response to the notices issued by the AO, the appellant had filed the reply with cash book, sales register, input register, output register and cash deposit details before the AO but the same was not accepted by the AO on the ground that the details of FY 2014-15 & 2015-16 were not furnished and in the sale register for FY 2016- 17, the entries were made without mentioning the voucher number and as such the authenticity of the sales register was in doubt. Further, the details of qualitative stock was not mentioned in column No. 35(a) of the audit report in Form 3CD. Therefore AO concluded that the appellant failed intentionally to file complete details as per notice u/s 142(1) which indicates that appellant is doing something wrong. Therefore the AO completed the assessment on best judgment on the basis of material evidences gathered during the assessment proceedings as per provisions of section 144(1)(b) since appellant failed to respond the notice u/s 142(1) of the IT Act. I find from the submission filed by the appellant during appellate proceedings that the appellant has not controverted the discrepancies pointed out by the AO in the sale register, with supporting evidences. Thus I find that even though, the appellant was allowed to accept the SBN against the sale of LPG cylinders, the appellant has not proved the genuineness of sales made during demonetization period with supporting evidences. Therefore the addition made by the AO is confirmed.
Before us, the Ld. AR argued with the help of a paper book running into 218 pages, through which it was attempted to be demonstrated that the assessee runs a Gas Agency and the impugned amount was fully justified on the basis of books of accounts and any other material. It was submitted that while the cash book was presented but it is possible that details of vouchers may not have been presented since the assessee could not make a proper presentation of facts before the Ld. AO. The Ld. AR assailed the action of Ld. CIT(A) in simply following the finding of the Ld. AO and totally disregarding the facts presented before him. The Ld. AR submitted that the impugned amount was duly shown as part of the turnover of business which has not been doubted as such by the Ld. AO.
3.1 The Ld. DR relied on the orders of authorities below and stated that considering the non-responsiveness of the assessee before the Ld. AO, the
We have carefully considered the rival submissions and have gone through the entire set of documents before us, including the orders of authorities below. We find that due to a less than enthusiastic representation before the authorities below, it has resulted in a situation where in the absence of vouchers indicating sales, an adverse view has been taken by the authorities below. The documents filed before us mention the voucher numbers against each cash entry. The Ld. AR fairly mentioned that it is possible that the actual vouchers may not have been produced before the Ld. AO. Accordingly, we set aside the impugned order and remand this matter back to the file of Ld. AO for examining as under:
(a) Verifying the cash receipts on the basis of vouchers on test check basis.
(b) Comparing the deposits in cash between the demonetisation period and rest of the year, to arrive at a conclusion regarding the nature of business and the cash receipts thereon.
(c) To verify clearly whether the cash receipts are part of the turnover of business and the same have been duly accounted for the purposes of gross profit calculation.
In result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 26.08.2025