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Facts
The assessee appealed against an addition of Rs. 46,98,000/- made by the Assessing Officer under Section 143(3) for Assessment Year 2017-18, categorised as unexplained cash deposits or bogus sundry debtors. This addition was confirmed by the Ld. Commissioner of Income Tax (Appeals). The assessee contended that the deposits were legitimate, arising from cash withdrawals, tax-paid savings, recovery from sundry debtors, and contra entries, and alleged that supporting documents were ignored by the lower authorities.
Held
The Tribunal observed that both the AO and CIT(A) failed to properly consider the extensive documentation and submissions provided by the assessee. Consequently, the Tribunal set aside the order of the CIT(A) and restored the issue of the Rs. 46,98,000/- addition to the Assessing Officer. The AO was directed to conduct a de novo assessment, giving due consideration to all materials and affording the assessee a reasonable opportunity to be heard.
Key Issues
Whether the addition of Rs. 46,98,000/- as unexplained cash deposits/bogus sundry debtor under Section 68 and 115BBE was justified, and if the lower authorities properly considered the evidence provided by the assessee.
Sections Cited
68, 115BBE, 143(3)
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Income Tax Appellate Tribunal, LUCKNOW BENCH “SMC”, LUCKNOW
Sangeeta Yadav v. DCIT/ACIT-4 Chiraiyabagh, Raebareli Road, Lucknow New, Pratyaksh Utarthia, Lucknow-226025. Kar Bhawan, Lucknow- 226001. PAN:ACPPY8178G (Appellant) (Respondent) Appellant by: Shri Dilip Kumar Singh, FCA Respondent by: Shri Amit Kumar, CIT(DR) O R D E R (A) The present appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC)- Delhi, dated 07.03.2025 for the assessment year 2017-18. The grounds of appeal of the assessee are as under: -
1. Wrongful Addition under Section 68 and 115BBE: The addition of 946,98,000 as unexplained cash deposits is factually and legally incorrect. As a petroleum product retailer, was permitted to accept Specified Bank Notes (SBNs) during the demonetization period. The complete details of the cash deposits are as follows: Rs.25,20,000: Cash withdrawn from ICICI Bank (Account No. 031805004242), Rs.8,00,000: Savings from the Tax-Paid Income, which were accrued from tax-paid income of previous years. Rs.16,78,140: Recovery from sundry debtors, duly substantiated by ledger books and financial records.
2. Computational Errors in Assessment Order: The Assessing Officer (AQ) has incorrectly calculated the total cash recoveries from sundry debtors as Rs.19,62,275, whereas the correct amount should be 741,03,098, This highlights a significant error in the assessment process. 3. incorrect Evaluation of Bank Accounts and Disputed Cash Deposits: Before the demonetization period (01/10/2016 to 02/11/2016), an amount of Rs.725,20,000 was deposited in the Dena Bank account, which was merely a contra entry for cash withdrawn from the ICICI Bank account. This amount was wrongly added as unexplained cash deposits. The ICICI Bank account (Account No. 031805004242) recorded proceeds from credit/debit card swap sales, while funds were transferred from the Dena Bank account to HPCL (supplier of petroleum products) for material purchases. It is evident that the 725,20,000 deposited in the Dena Bank account is unrelated to SBN deposits during the demonetization period and should not be treated Page 2 of 5 as “Other Cash Receipts."” However, this fact and the supporting documents were completely ignored during the assessment and appeal stages, leading to an unjust and improper decision. To substantiate my claim, I submitted the ICICI] Bank account (Account No. 031805004242), Dena Bank A/c 4. Validity of Tax-Paid Savings: I have accumulated tax-paid savings of 78,00,000 from previous years, which is completely legitimate and supported by my earlier Income Tax Returns. My average annual income for previous years was Rs.29,44,847.33 per annum, which makes this cash savings reasonable and logical. However, this fact was entirely ignored during the assessment and appeal stages, resulting in an unjust and improper addition.
5. Recovery from Sundry Debtors: During the period from 01/10/2016 to 31/12/2016, an amount of 716,78, 140 was recovered from sundry debtors, fully substantiated by ledger books and financial records. Despite this, these facts were completely ignored at both the assessment and CIT appeal levels. Shockingly, my appeal was dismissed on the grounds that. “The appellant has not produced any evidence to prove the genuineness of the claim of recovery from sundry debtors of Rs16,78,140." This statement is entirely false and disregards the facts, as submitted all necessary documents to support my claim at both the assessment and CIT appeal levels.
6. Rejection of Submitted Documents: Despite presenting all supporting documents, such as ICICI and Dena Bank account statements, cash book, purchase and sales ledgers, and sundry debtors’ ledgers, the AO failed to consider these crucial documents, leading to an incorrect addition. For the kind consideration of this Hon’ble Tribunal, I am once again submitting all supporting documents, including the ICICI and Dena Bank account statements, cash book, purchase and sales ledgers, and sundry debtors’ and Income Tax Returns for the past three years.
No Evidence of Black Money or Undisclosed Income There is no evidence or indication that any cash amount was received from undisclosed or illegal sources. As a responsible and tax compliant citizen, I clearly state that all transactions during the demonetization period were authentic and transparent.
Prayer In light of the above, I humbly pray to this Hon’ble Tribunal to: Based on the above grounds, I respectfully urge you to set aside the assessment order for A.Y. 2017-18 and provide the necessary relief.” (B) In this case, assessment order dated 20.12.2019 was passed by the Assessing Officer under section 143(3) of Income Tax Act, 1961 (“Act”, for short) whereby the assessee’s total income was determined at Rs.1,12,22,600/- as against the returned income of Rs.65,24,600/-. In the aforesaid assessment order an addition of Rs.46,98,000/- was made by the Assessing Officer on account of bogus sundry debtor by the assessee. The assessee’s appeal against the aforesaid assessment order was Page 3 of 5 dismissed by the Ld. CIT(A) vide impugned appellate order dated 07.03.2025 whereby he confirmed the aforesaid addition of Rs.46,98,000/-. The present appeal has been filed by the assessee in Income Tax Appellate Tribunal (“ITAT”, for short) against the aforesaid impugned appellate order dated 07.03.2025 of the Ld. CIT(A).
(B.1) During the course of appellate proceedings, the written submission was filed from the assessee’s side. The relevant portion of which is reproduced as under: - (B.2) At the time of hearing, the Ld. Authorized Representative for the assessee drew our attention to the aforesaid written submission. In particular, he drew our attention to the fact that the Assessing Officer as well as the Ld. CIT(A) passed their respective orders without giving due consideration to documents filed from the assessee’s side. In this regard, he referred to the following documents which were filed by the assessee: Cash Book, Sales Receipts, Contra Entries in the Bank Account of