HARISHCHANDRASINH PRATAPSINH PARMAR,PANCHMAHAL vs. INCOME TAX OFFICER WARD 1, GODHRA, WARD GODHRA

Your appellant craves leave to add, alter, and/or amend all or any of the grounds before the final hearing of the appeal.”

The brief facts of the case are that the assessee, a petrol pump operator, filed his return of income declaring income of Rs. 94,360/-. The case was selected for limited scrutiny to examine substantial cash deposits made during the financial year, particularly during the demonetization period. During the assessment proceedings, the Assessing Officer noted that the assessee had deposited aggregate cash of Rs. 3,50,68,750/- in various bank accounts, out of which only Rs. 1,43,12,000/- was accepted by the Assessing Officer as having been explained by the assessee based on details filed. The Assessing Officer was of the view that in the absence of explanations regarding the source of cash, identity of persons from whom cash was allegedly received, or books of account supporting the deposits, the assessee had failed to discharge the onus cast on him under Sections 68 and 69A of the Act. The Assessing Officer held that since the assessee had not produced any books of account or evidence to justify the substantial cash deposits, the unexplained portion amounting to Rs. 2,07,56,750/- was liable to be treated as unexplained money under section 69A of the Act and the same was added to the total income of the assessee. The Assessing Officer also observed that the assessee had not co-operated during the proceedings and had suppressed material facts relating to cash transactions. Accordingly, the assessment was completed under Section 143(3) by assessing total income at Rs. 2,08,51,110/- and initiating penalty proceedings under Sections 270A and 272A(1)(d) of the Act.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

We have heard the rival contentions and perused the material on record. In view of the above facts and after examining the documentary evidence placed before us, we are of the considered view that the assessee had produced complete details of stock, quantitative records of petrol and diesel, purchase invoices issued by oil companies, VAT-wise sales registers, stock valuation statements, daily cash sales, and corresponding bank transaction details. These records in our view demonstrate that the assessee was regularly purchasing petrol and diesel, maintaining day-to- day stock registers, effecting sales, and depositing the resultant cash collections into the bank accounts. The bank transaction statements also match the pattern of daily business collections, showing that the cash deposited in the bank accounts was relatable to regular business receipts. The purchase registers and VAT statements demonstrate substantial purchases of petrol and diesel running into several crores during the year, Harishchandrasinh Pratapsinh Parmar vs. ITO Asst.Year –2017-18 - 5– which is consistent with the sales turnover declared. The sales summary shows both cash and credit sales, along with applicable VAT, and the total turnover corresponds with the bank deposits when viewed in the context of the assessee’s business model. The stock details, including purchase of diesel and of petrol, together with sales thereof, establish the quantitative movement of stock and confirm that the assessee’s day-to-day business operations generated significant cash inflow. When such inflow is viewed along with the bank deposit records, it satisfactorily explains the source of cash deposits. Once the assessee has furnished complete stock records, sales registers, VAT returns, purchase invoices, stock valuation statements, and bank statements, all of which are internally consistent and corroborative, the presumption under Section 69A of the Act no longer survives. The documentary evidence in our view discharges the assessee’s burden of proving the nature and source of the cash deposits. There is no basis to hold that the deposits represented unexplained money when they are directly attributable to accounted business receipts arising from declared sales. We therefore find merit in the submissions of the ld. counsel for the assessee that the cash deposits are part of the regular turnover of the petrol pump business and that the same have been duly recorded in the books of account.

Accordingly, in the light of these facts and in view of the material placed before us substantiating the assessee’s business operations and explaining the source of cash deposits, we hold that the addition made under Section 69A of the Act is unsustainable. The appeal of the assessee is therefore allowed and the addition of Rs.2,07,56,750/- sustained by the CIT(Appeals) is deleted.

In the result, the appeal filed by the assessee is allowed. This Order pronounced in Open Court on 10/12/2025