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Facts
The assessee, an individual, did not file an income tax return for A.Y. 2019-20. The AO initiated reassessment proceedings under Section 148 and added Rs. 12,21,810 as unexplained money under Section 69A from bank deposits, and Rs. 1,18,820 for credit card payments under Section 69C. The CIT(A) sustained the Section 69A addition but deleted the Section 69C addition. The assessee contended that the bank deposits represented realization of receivables from an old retail liquor business.
Held
The Tribunal found that the assessee's prior engagement in retail liquor business, evidenced by an earlier assessment order, license fee payments, and an audited balance sheet showing Rs. 15 lakhs as receivables, was not disputed. These receivables constituted an explained source for the bank deposits. Therefore, the addition made under Section 69A was directed to be deleted.
Key Issues
Whether bank deposits in the assessee's account, treated as unexplained money under Section 69A, were adequately explained as realizations from receivables of a past retail liquor business.
Sections Cited
139, 148, 144B, 69A, 69C, 147, 143(3), 143(1), 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ SMC ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia
(िनधा�रण वष�/Assessment Year: 2019-20) Shri Gurram Naveen Vs. Income Tax Officer Rajanna Sircilla Ward-2 PAN:BIHPG3983L Karimnagar (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: CA Pavan Kumar Gorti राज� व �ारा/Revenue by:: Shri R Kumaran, Sr. DR सुनवाई की तारीख/Date of hearing: 13/11/2025 घोषणा की तारीख/Pronouncement: 19/11/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by Shri Gurram Naveen (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 20.02.2025 for the A.Y 2019-20.
The assessee has raised the following grounds of appeal:
The brief facts of the case are that the assessee is an individual who had not filed any return of income under section 139 of the Income Tax Act, 1961 (“the Act”). On the basis of certain information, the Learned Assessing Officer (“Ld. AO”) issued notice under section 148 of the Act, dated 31.03.2023 to the assessee. In compliance with the said notice issued under section 148 of the Act, the assessee filed return of income declaring total income of Rs.2,17,310/-, including income of Rs.1,87,714/- declared under section 44AD of the Act. After considering the submissions of the assessee during reassessment proceedings, the Ld. AO found that there was a total deposit of Rs.12,21,810/-, including cash deposit of Rs.10 lakhs, in the SBI account of the assessee during the year under consideration. The Ld. AO added the same under section 69A of the Act, being not convinced with the source of the said deposits. The Ld. AO also added an amount of Rs.1,18,820/- in the absence of supporting documents, on account of credit card payments made by the assessee, under section 69C of the Act. Finally, the Ld. AO
Page 2 of 7 completed the assessment under section 147 read with section 144B of the Act on 28.02.2024, assessing the total income of the assessee at Rs.13,70,226/-.
Aggrieved with the order of the Ld. AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the addition of Rs.1,18,820/- made under section 69C of the Act; however, sustained the addition of Rs.12,21,810/- made by the Ld. AO under section 69A of the Act. Accordingly, the appeal of the assessee was partly allowed.
Aggrieved with the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal. The Learned Authorized Representative (“Ld. AR”) submitted that the sole issue arising out of the grounds of appeal of the assessee is with respect to the addition of Rs.12,21,810/- under section 69A of the Act on account of total credits in the bank accounts of the assessee during the year under consideration. In this regard, the Ld. AR submitted that earlier the assessee was engaged in the business of retail trading of liquor. In support of this contention, the Ld. AR invited our attention to the copy of the assessment order for Assessment Year 2017–18 placed at page nos. 27 to 30 of the paper book and demonstrated that the engagement of the assessee in retail liquor business has been acknowledged by the Ld. AO at the first page of the assessment order. The Ld. AR also invited our attention to the copy of the license fee paid by the assessee for liquor business placed at page nos. 31 to 34 of the paper book, demonstrating that the assessee was indeed engaged in liquor business. Further, the Ld. AR invited our attention to the audited balance sheet of the assessee as on 31.03.2018 placed at page no.
Page 3 of 7 23 of the paper book and demonstrated that the assessee had receivables of Rs.15 lakhs as on 31.03.2018 out of its old liquor business. He submitted that the said balance sheet was also filed before the Ld. CIT(A). However, the Ld. CIT(A) neither considered the existence of liquor business of the assessee in earlier years nor the fact appearing from the audited balance sheet showing receivables of Rs.15 lakhs, and simply concluded that the assessee did not provide any reliable evidence of running a liquor business in earlier years. The Ld. AR submitted that the entire deposits in the bank account during the relevant assessment year were out of realization from receivables outstanding on 31.03.2018 and, therefore, the addition made by the Ld. AO under section 69A of the Act is liable to be deleted. Accordingly, the Ld. AR prayed for deletion of the addition made by the Ld. AO and sustained by the Ld. CIT(A).
Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities. He prayed to uphold the order of the lower authorities.
We have considered the rival submissions and perused the material available on record. We have gone through the assessment order for A.Y. 2017–18 placed at page nos. 27 to 30 of the paper book, the copies of license fee payments placed at page nos. 31 to 34 of the paper book and the audited balance sheet of the assessee as at 31.03.2018 placed at page no. 23 of the paper book. The copy of first page of the assessment order for A.Y. 2017– 18 placed at page no. 27 is reproduced as under:
On perusal of above, we find that the Ld. AO himself has recorded a clear finding acknowledging that the assessee was engaged in the business of retail liquor trading. Further, the license fee documents placed on record also substantiate the existence of such business activity. We have also gone through the audited balance sheet of the assessee as at 31.03.2018 placed at page no. 23 of the paper book, which is to the following effect:
On perusal of the above, it is evident that the assessee had a receivable of Rs.15 lakhs as on 31.03.2018. Neither the Ld. AO nor the Ld. CIT(A) has brought any adverse material on record to dislodge these audited financials or to question the genuineness of such receivables. Once the existence of receivables is established and forms part of the audited balance sheet filed before the authorities, the realization of such receivables in subsequent year(s) constitutes a valid and explained source for deposits in the assessee’s bank account. The authorities below have not disputed the authenticity of the assessment order of A.Y.
Page 6 of 7 2017–18 or the license fee evidencing the liquor business activity. In absence of any adverse finding against the evidence produced by the assessee, the deposits during the year under consideration cannot be treated as unexplained under section 69A of the Act. Accordingly, we hold that the assessee has produced sufficient evidence, including assessment order of A.Y. 2017–18 establishing liquor business, license fee documents and audited balance sheet reflecting receivables of Rs.15 lakhs, all of which clearly demonstrate the availability of explained sources for the bank deposits. Therefore, the addition of Rs.12,21,810/- made by the Ld. AO and sustained by the Ld. CIT(A) under section 69A of the Act is directed to be deleted.
In the result, the appeal of the assessee is allowed.