NEW SAHA DYERS AND PROCESSORS,HOWRAH vs. D.C.I.T., CIRCLE - 46(1),, KOLKATA

PDF · subscribers
ITA 2317/KOL/2025Status: DisposedITAT Kolkata27 January 2026AY 2017-201810 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition made by the AO and enhanced by the CIT(A) was unsustainable and liable for deletion. The Tribunal observed that the cash deposits were made from the assessee's cash book and that the deposits were not amounts that had been deposited into the cash book. A perusal of the comparative chart for the three assessment years showed that the cash deposits were substantially consistent. The Tribunal found no indication of manipulation in the accounts, noting that the ledger entries presented by the revenue were from before the demonetization period and similar to entries in earlier and subsequent periods. Since the cash was deposited from the assessee's cash book and no error was found in the cash book or stock book, the addition was deleted. The Tribunal did not adjudicate on the grounds related to technical reasons for the notice issued under Section 143(2) of the Act, as the addition was deleted on merits.

What were the facts?

The assessee, New Saha Dyers And Processors, is in appeal against the order of the National Faceless Appeal Centre, Delhi (CIT(A)) for Assessment Year (AY) 2017-18. The assessee business involves clothing, apparels, dying, and retail sale. During the demonetization period, the assessee deposited ₹1,43,54,500/- in demonetized currency. The Assessing Officer (AO) initially assumed a figure of ₹3,45,00,450/- based on ITS details but made an addition of ₹1,48,53,500/-. The CIT(A) enhanced this addition to ₹3,45,00,450/-. The assessee contended that the cash deposits were from its cash book, supported by the cash book and stock register produced before the AO, and that the cash deposit status was consistent across assessment years. The revenue argued that the ITS figure of ₹3,45,00,450/- was the correct figure, potentially indicating duplication in the AO's assessment, and suggested restoration to the AO for verification.

What were the issues?

1. Whether the addition made by the AO and enhanced by the CIT(A) on account of cash deposits during the demonetization period is sustainable in law, considering the assessee's submission that these deposits were out of its cash book and stock register (Section 68 of the Income Tax Act, 1961)? Assessee's Contention: The assessee argued that the cash deposits were from its cash book, which, along with the stock register, was produced before the AO. They submitted that the cash deposit status was consistent across AYs 2016-17, 2017-18, and 2018-19, and that no error was found in the cash book or stock register. Therefore, the addition and enhancement were unsustainable and liable for deletion. Revenue's Contention: The revenue contended that the figure of ₹3,45,00,450/- from the ITS portal was the correct figure. They suggested that there might have been duplication in the AO's assessment and that the AO might have taken a corrected figure of ₹1,48,53,500/-. The revenue had no objection if the issue was restored to the AO for examination and determination of the correct figure, especially regarding the enhancement by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 68,Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Before: SHRI GEORGE MATHAN, JM & SHRI RAJESH KUMAR, AM

For Appellant: Shri Soumitra Choudhary &
For Respondent: Shri Sandeep Kumar Mehta, DR
Hearing: 27.01.2026Pronounced: 27.01.2026

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi [the learned CIT (A)] (hereinafter referred to as the “Ld. CIT(A)”] in appeal no. ITBA/NFAC/S/250/2025-26/1081218135(1) dated 26.09.2025 for the AY 2017-18.

2.

Shri Soumitra Choudhury and P Sarkar, represented on behalf of the assessee and Shri Sandeep Kumar Mehta, Sr. DR represented on behalf of the revenue.

It was the submission that there was no variation in the cash deposit status for each of the years or for the specified periods. The ld. AR also drew our attention to page nos. 682 and 683 of the Paper Book, which is a copy of the cash book beyond the period of demonetization reads as follows:-

Blank

4.

In reply, the ld. Sr. Departmental Representative submitted that the amount of ₹3,45,00,450/- was the figure shown in the ITS portal. It was the submission that there could have been duplication and the AO might have taken the corrected figure at ₹1,48,53,500/-. It was the submission that this could be verified if at all. It was the further submission by the ld. Sr. DR drew our attention to page no. 294 of the Paper Book, which read as follows:-

Blank

5.

We have considered the rival submissions. A perusal of the ledger of the assessee shows that the date has shown in page no.294 by the ld. AR is 09.09.2016, this is much before the demonetization period. Further, the ledger is similar to the ledger entries of the earlier and subsequent period. This is not being indication that there has been manipulation in the accounts. It is also not the case of the AO that there has been manipulation of the accounts. In case of the AO this is regard to addition made under section 68 of the Act in respect of cash deposited in the bank account of the assessee during the demonetization period. The perusal of the cash book maintained by the assessee shows that the cash has been deposited in the bank of the assessee out of the cash available in the cash book. The deposits are not amounts which has been deposited in the cash book. A perusal of the comparative chart for the three assessment years also clearly shows that the cash deposits are substantially consistent. This being so, as the cash has been deposited by the assessee out of the cash book of the assessee and no error has been found in the said cash book or in the stock book maintained by the assessee, we are of the view that the addition made by the ld. AO and as enhanced by the ld. CIT (A) is unsustainable and the same stands deleted.

7.

In the result, the appeal of the assessee stands allowed.

Order pronounced in the open court on 27.01.2026.

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →