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Facts
During demonetization, the assessee deposited ₹26,60,000/- into bank accounts, claiming it as cash in hand from her business of purchase and sale of building materials, for which she filed returns under Section 44AD. The Assessing Officer treated parts of these deposits (₹7.00 and ₹19,60,000/-) as unexplained monies, and the CIT(A) confirmed this addition.
Held
The Tribunal noted that the assessee failed to produce evidence for her business activity and turnover, or GST returns. In the interest of justice, the Tribunal restored the matter to the Assessing Officer for readjudication, directing the AO to verify the assessee's business claim through an Inspector and provide an adequate opportunity of being heard.
Key Issues
Whether cash deposits made during demonetization, claimed as business proceeds under Section 44AD, can be treated as unexplained monies when the assessee fails to substantiate her business activities and turnover.
Sections Cited
Section 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri V.K. Jalan, A.R. Department represented by Shri Khub Chand Pandya, Sr. DR Date of hearing 20/08/2025 Date of pronouncement 20/08/2025 O R D E R PER: BENCH 1. This is an appeal filed by the assessee against the order of the learned CIT(A), NFAC, Delhi in Appeal No. CIT(A), Ranchi/10182/2019-20 dated 28/02/2024 for the A.Y. 2017-18.
Shri V.K. Jalan, ld. A.R. is represented on behalf of the assessee and Shri Khub Chand Pandya, ld. Sr.DR is represented on behalf of the revenue.
It was submitted by the ld. AR that the assessee during the period of demonetization had deposited ₹26,60,000/- in her bank account. It was a submission that in the course of assessment, the Assessing Officer had asked the assessee to explain the source for the deposit of ₹ 26,60,000/-. It was a submission that the assessee had explained that the money was out of the cash in hand. It was a submission that the Assessing Officer did not accept the contentions of the assessee and treated the cash deposit of ₹ 7.00 in P a g e 1 | 3
ITA 118/Ran/2024 Prem Lata Sharma Vs ITO Central Bank of India vide account No. 1351807461 and an amount of ₹ 19,60,000/- deposited in IDBI Bank account No. 1101102000002110 as unexplained monies. It was a submission that on appeal, the ld. CIT(A) did not consider the explanations of the assessee. It was a submission that the assessee was filing her return of income under Section 44AD of the Act in respect of her business of purchase and sale of building materials. It was a submission that this amount of ₹ 26.60 lacs represented the sale proceeds from the business activity of the assessee. It was a submission that the addition as made by the Assessing Officer and has confirmed by the ld. CIT(A) is liable to be deleted.
In reply, the ld. Sr.DR submitted that the details in respect of the business activity of assessee has not been produced before the Assessing Officer. It was a submission that no evidence has been produced in regard to the transactions done by the assessee. It was the prayer that the order of the Assessing Officer and that of the order of ld. CIT(A) is liable to be upheld.
We have considered the rival submissions. The assessee has claimed that she is doing business in purchase and sale of building materials. The assessee claims that she is filing her income tax returns under 44AD. The assessee claims that for the A.Y. 2015-16, her turnover is ₹ 40.00 lacs, for the A.Y. 2016-17 it is ₹ 50.00 lacs and for the A.Y. 2017-18 it is ₹ 50.00 lacs. It is submitted by the ld. AR that the assessee is not filing GST returns. The assessee is unable to prove the turnover other than what is disclosed in her returns. The assessee has admittedly not been able to prove her business. However, in the interest of justice, we are of the view that this issue must be P a g e 2 | 3
ITA 118/Ran/2024 Prem Lata Sharma Vs ITO restored to the file of Assessing Officer for readjudication. The Assessing Officer shall depute his Inspector to verify the claim of the assessee in respect of her claim of the business of purchase and sale of building material. The assessee shall cooperate in the set aside proceedings. With these directions, the issues in this appeal are restored to the file of Assessing Officer for readjudication after granting the assessee adequate opportunity of being heard.