DAMANJOT SINGH JUNEJA,JALANDHAR vs. ITO, WARD 2(1), JALANDHAR, JALANDHAR

Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Addl./Joint Commissioner of Income Tax (Appeals)-7, Mumbai, [CIT(A)] dated 09-12-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 19-12-2019. The only grievance of the assessee is confirmation of addition of cash deposit for Rs.3,87,718/- during demonetization period. Having heard rival submissions, the appeal is disposed-off as under.

Upon perusal of assessment order, it could be seen that the assessee is engaged as Airtel DTH distributor. Almost all the sales are in cash. It transpired that the assessee deposited cash of Rs.29,97,410/- during demonetization period out of which Rs.5,32,000/- was deposited in Specified Bank Notes (SBN). The cash balance as per assessee’s cash book as on 08.11.2016 was Rs.1,44,282/-. The benefit of the same was granted by Ld. AO and the remaining deposits in SBNs for Rs.3,87,718/- was added as unexplained income u/s 69A of the Act. Upon further appeal, Ld. CIT(A) confirmed the addition but reduced Gross Profit by Rs.4,032/- as earned by the assessee on purported sales. Aggrieved, the assessee is in further appeal before Tribunal.

It is quite clear that the assessee carries out substantial sales in cash only. The business is the only source of income for the assessee. The assessee deposited sales proceeds in his bank account. However, only a small portion of the same has been added as assessee’s income simply because the same was accepted in first few days of demonetization period. It could be seen that the cash deposits are duly been recorded in the business cash book of the assessee. This being so, the impugned addition could not be sustained. The addition of Rs.3,87,718/- stand deleted. The reduction in Gross Profit as directed by Ld. CIT(A) stand reversed.