DCIT, CIRCLE- 19(1), DELHI vs. PASHUPATI ROAD CARRIER PVT. LTD., DELHI
Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI SUDHIR KUMARDCIT, CIRCLE 19(1), vs. PASHUPATI ROAD CARRIER DELHI
PER SUDHIR KUMAR, JM :
This appeal is preferred by the Revenue against the order of National Faceless
Appeal Centre (NFAC), Delhi dated 12.2.2025 for AY 2017-18. Assessment in this case was framed by the DCIT/ACIT, Circle 19(2), Delhi for the assessment year 2017-18. The solitary ground raised by the Revenue reads as under:-
“Whether on the facts of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO of Rs. 1,08,97,000/- u/s. 68
on account of cash deposited during demonetization period without appreciating the findings of the AO as assessee failed to file any 2
reasonable explanation in support of its claim during assessment proceedings.”
The brief facts of the case are that the assessee filed its return of income for the AY 2017-18 on 27.10.2017 declaring total income of Rs. 68,67,070/- under normal provisions and Rs. 65,77,460/- declared under deemed total income under section 115JB of the Act. Further, the case of the assessee has been selected for scrutiny under CASS with reasons “Abnormal increase in cash deposits during demonetization period as compared to pre-demonetization period”. Thereafter, the assessment proceedings has been completed u/s. 143(3) of the Act on 13.12.2019 by determining assessed income of Rs. 1,77,64,070/- after making the addition of Rs. 1,08,97,000/- u/s. 68 of the Act. Against the above, assessee preferred the appeal before the Ld. CIT(A), who vide his order dated 12.2.2025 allowed the appeal of the assessee. Aggrieved, Revenue is in appeal before. 3. Ld. DR relied upon the order of the Assessing Officer and stated that Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 1,08,97,000/- u/s. 68 on account of cash deposited during demonetization period without appreciating the findings of the AO as assessee failed to file any reasonable explanation in support of its claim during assessment proceedings. 4. On the other hand, Ld. AR has relied upon the order of the Ld. CIT(A). 5. We have heard the rival contentions and perused the records. We find that Ld. CIT(A) has dealt the issue in dispute at length by observing as under:- “I have carefully examined the submission of the appellant as reproduced in the precedent paragraph and the facts emanating from the AO’s order. The brief facts of the case are that the ITR for A.Y. 2017-18 was filed on 27.10.2017 at an income of Rs. 68,67,070/- under normal provision and Rs.65,77,460/- under section 115JB. The case was selected for scrutiny and notices u/s143(2)/142(1) were issued from time to time as recorded in the Assessment Order and the details were filed by the appellant. The reason for selecting the case for security under CASS was "abnormal increase in cash deposits during the demonetization period as compare to pre-demonetization period". During the course of assessment proceedings, the bank statements of the appellant were obtained by issuing notices u/s. 133(6) and a total of cash deposited during the period of demonetization was noted at Rs. 1,08,97,000/-. After considering the submission of the appellant, the AO held that the quantum of cash deposit during the demonetization period is not commensurate with nature of business transaction under taken by the appellant company during the rest of the period. Accordingly, the assessment was completed by making an addition of Rs. 1,08,97,000/- u/s. 68 of the Act on account of unexplained cash credits. Aggrieved by the additions, the appellant has filed the appeal. 7.1 Now, countering the arguments of the AO, the appellant has made a detailed written submission which is reproduced above. The appellant is a Pvt. Ltd. Company which is engaged in the business of Transport of Goods via Roads and collecting Freight charges from their customers. The appellant company having wide network of 109 branches and operates on PAN India basis. It is submitted that owing the nature of the business the appellant company has to incur cash transaction for their truck operation through all their branches in PAN India and also to incur cash expenditure on routine basis. The cash payment are required to be made to various small time transport carrier, which are allowed for cash payments up to Rs.35,000/- under the provision of section 40A(3) of the Act. 7.2 Since the core issues involved is of addition made u/s. 68 on account of unexplained cash credits in nature of cash deposit in the bank account, it is imperative to look upon the ratios laid down by the various Hon'ble Courts in respect of unexplained cash credits in the bank account of the assessee. 7.3 The fundamental question involved is that whether or not the AO was justified in making the additions of Rs. 1,08,97,000/- u/s 68 in the hands of the assessee, and the most critical thing to be examined in this regard is explanation of the assessee with respect to these cash deposits. There is no, and there cannot be any, dispute on the fundamental legal position that the onus is on the assessee to prove 'bonafides' or 'genuineness' of the money credited in his bank account. This approach finds support from the scheme of Section 68, which provides that where any cash credit is found in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, such sum may be charged to income tax as the income of that assessee for that previous year. The burden is thus on the assessee to prove the nature and source thereof, to the satisfaction of the Assessing Officer. Everything thus hinges on the explanation given by the assessee and on how acceptable is the explanation so given by the assessee. The next question is as to what the kind of explanation that the assessee is expected to give. 7.4 As noted by Hon’ble Delhi High Court in the context of issuance of share capital and in the case of PCIT Vs Youth Construction Pvt Ltd [(2013)3571TR197 (Del)],"it involves three ingredients, namely, the proof regarding the identity of As noted by Hon'ble Delhi High Court, in the context of issuance of share three applicants, their creditworthiness to 5
purchase the shares and the genuineness of the transaction as a whole".
7.5 That is the approach adopted by Hon'ble Courts above all along. In the case of CIT V. United Commercial and Industrial Co (P.) Ltd [1991]
187 ITR 596 (Cal)], Hon'ble Calcutta High Court has held that under the scheme of Section 68 it was necessary for the assessee to prove prima facie the identity of creditors, the capacity of such creditors and lastly the genuineness of transactions".
7.6 Similarly, in the case of CIT V. Precision Finance (P.) Ltd [1994]
208 ITR 465 (Cal)], it was observed that "it is for the assessee to prove the identity of creditors, their creditworthiness and genuineness of transactions”.
7.7 While examining the issue of genuineness of the transactions entered into by the assessee, it is also important to keep in mind Hon'ble Supreme
Court's observation, in the case of ClT v. Durga Prasad More [(1971) 82
ITR 540 (SC), to the effect that "Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities".
7.8 Similarly, in a later decision in the case of Sumati Dayal v. CIT
[(1995) 214 ITR 801 (SC)], Hon'ble Supreme Court rejected the theory that it is for alleger to prove that the apparent and not real, and observed that, "This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities.....Similarly the observation .. .that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such 6
purchase would be rarely available....n our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably'".
7.9 An addition under Section 68 can be made where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered by him in the opinion of the assessing officer is not found to be satisfactory. That before adverting further, the relevant extract of the aforesaid statutory provision, viz.
Section 68, which reads as under: -
"Cash credits.
68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.
7.10 That a bare perusal of the aforesaid deeming section therein reveals that an addition under the said statutory provision can only be made where any sum is found credited in the books of an assessee maintained for any previous year and the assessee either offers no explanation or the explanation offered is not satisfactory. In the impugned case the admitted fact remains that the large part of the appellant's business turnover receipts and expenses are incurred in cash in all over country ranging from remote rural villages to district level towns/cities. The fact of PAN
India present of appellant through their wide network of 109 branches and a customer base of more than 8000 plus customers has not even disputed by the AO. The complete cash flow chart submitted by the appellant shows that the entire cash was not deposited in a single bank account, as if being available with the appellant at one place, but the cash deposit were made in different bank accounts situated in various part of the country. Similarly, prior to demonetization period the cash withdrawals are seen to have been made from different bank accounts in various cities of country.
7.11
Now, coming to the operating part of the assessment order, the AO has duly recorded a comparative analysis of cash deposits made by the appellant in their bank accounts during the year vis-à-vis the last financial year. The relevant portion which is available on page no. 6 & 7
of the order, for the sake of convenience is reproduced below:
………
Reply filed by the assessee is considered. The cash deposit made by the assessee during the year under consideration for all the account numbers held during the F.Y. 2015-16 and F.Y. 2016-17 as submitted by the assessee is as under:-
Period
Amount (In Rs.)
FY 2015-16
(i)
Total cash deposit in bank from 1.4.2015 to 8.11.2015
4,73,77,530/-
(ii)
Total cash deposit in bank from 1.4.2015 to 8.11.2015
2,26,29,650/-
(iii)
Total cash deposit in bank from 9.11.2015 to 31.12.2015
1,17,62,030/-
Period
Amount (In Rs.)
FY 2016-17
(i)
Total cash deposit in bank F.Y.
2016-17
3,51,66,476/-
(ii) Total cash deposit in bank from 1.4.2016 to 8.11.2016
2,39,16,760/-
(iii)
Total cash deposit in bank from 9.11.2016 to 31.12.2016
1,09,97,000/-
It is found that during pre-domonetization period assessee has deposited the cash of Rs. 2,39,16,776/- and whereas the cash deposited during the demonetization period was Rs. 1,08,97,000/-.
…..
Thus, the total cash deposits in the bank account of the appellant for the period 1st April to 8n November and from 9th November to 31st December in the FY 2015-16 and 2016-17 were almost comparable. In fact, the total cash deposits of Rs. 1,08,97,000/- made in the bank account during the period of demonetization were even less than the total cash deposits of Rs.
1,17,62,030/- made during the same period in FY 2015-16. The main line of argument taken by the AO is that the cash deposit made by the appellant during the demonetization period does not commensurate with the nature of business transaction under taken by the appellant, which is a bit surprising as the fact of appellant being in the business of transport of goods, working through their 109 branches on PAN India basis wherein most of the consignment notes (CN) are issued majorly against cash collections, are not disputed or contradicted by the A0. Even the annual turnover of the appellant completely justifies the quantum of cash in hand which was available as on 08th of November, 2016 with the appellant and 9
the subsequent cash collected as the hiring charges during the period
09/11/2016 to 31/12/2016. The details of cash withdrawals made from different bank accounts at various locations during the 15 days just before the announcement of demonetization on 08.11.2016, which is reproduced above under para no. 6 of this order also justifies the claim of availability of sufficient cash in hand with the appellant company at his various branch offices.
Having considered entire facts of the case, and the case laws cited above, it is apparent that the appellant has explained the source of cash deposit in their bank account satisfactorily by adducing extract of audited books of account and bank account of their Company. All the cash deposited in the bank account at have been duly recorded in the audited books of account as business receipts of the company which inter-alia is included in the receipts shown under profit and loss account. The availability of the cash in hand is duly reflected in the audited balance sheet of the appellant company. On the other hand, the AO had made the addition without bringing any cogent material against the assessee's submissions and accordingly, the AO is directed to the delete the addition made of Rs.
1,08,97,000/- u/s. 68.”
After perusing the aforesaid findings of the Ld. CIT(A), we observed that assessee has explained the source of cash deposit in their bank account satisfactory by adducing extract of audited books of account and bank account of their company. It is further noted that all the cash deposited in the bank account have been duly recorded in the audited books of account as business receipts of the company which inter alia is included in the receipts shown under profit and loss account. The availability of the cash in hand has been duly reflected in the audited balance sheet of the assessee company. In view of above, we find considerable cogency in the findings of the Ld. CIT(A) that AO had made the addition without bringing any cogent material against the assessee’s submissions and accordingly, the AO was rightly directed by the ld. CIT(A) to delete the addition made by him amounting to Rs. 1,08,97,000/- u/s. 68 of the Act. Keeping in view of the aforesaid facts and circumstances, and binding precedents, as aforesaid, we are of the considered view that Ld. CIT(A) has passed a well, reasoned order, which does not need any interference on our part, hence, we uphold the same and accordingly, reject the ground raised by the Revenue. 7. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 20 day of March, 2026. (S. RIFAUR RAHMAN) JUDICIAL MEMBER
Dated : 20.03.2026
SRBHATNAGGAR