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Facts
The assessee appealed against a disallowance of ₹ 4,63,709/- made by the Assessing Officer, confirmed by the CIT(A), out of a cash deposit during the demonetization period. The assessee contended this amount represented recoveries from sundry debtors, for which an opening balance and cash sales were accepted, but this specific part of sundry debtor recoveries was disbelieved by the AO. The assessee had provided full details including PAN, addresses, and confirmations of the debtors.
Held
The Tribunal noted that the Assessing Officer accepted other sources of cash deposits but disbelieved only a portion of sundry debtor recoveries without specifying which debtors were disbelieved, despite the assessee furnishing complete particulars. Consequently, the Tribunal found the addition of ₹ 4,63,709/- by the Assessing Officer and confirmed by the CIT(A) to be unsustainable and directed its deletion.
Key Issues
Whether the disallowance of cash deposit representing sundry debtor recoveries is justified when the Assessing Officer fails to specify disbelieved debtors despite assessee providing complete details.
Sections Cited
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri Vinay Goenka, C.A. 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 ld. Addl/JCIT(A)-5, Kolkata in Appeal No. CIT(A), Ranchi/10642/2019-20 dated 08/01/2024 for the A.Y. 2017-18.
Shri Vinay Goenka, 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 in the course of assessee, the Assessing Officer had disallowed cash deposit of ₹ 4,63,709/-. It was a submission that this amount of ₹ 4,63,709/- represented the disallowance out of the sundry debtors recovered by the assessee. It was a submission that the assessee had an opening balance of ₹ 16,09,585/- as on 09/11/2016 and had also disclosed cash sales of ₹ 13,53,706/-. It was a submissions that both these were accepted. In respect of the recoveries from the sundry debtors to an P a g e 1 | 3
ITA 43/Ran/2024 Vishnu Kumar Bhartia Vs ITO extent of ₹ 11,28,661/-, the same was not accepted. It was a submission that the total of ₹ 16,09,585/- and 13,53,706/- comes to ₹ 29,63,291/- and this was accepted as the source for the deposit in the bank account. The balance of ₹ 4,63,709/- was a partial disallowance from the sundry debtors. It was a submission that the all the sundry debtors, ledgers has been produced, they are income tax assessee, their PAN numbers were available in the ledger and confirmation of accounts. It was a further submissions that the Assessing Officer has not identified which of the debtors recovered is not being accepted. It was a submission that as the details had also been produced before the Assessing Officer. The addition as made by the Assessing Officer and as confirmed by the ld. CIT(A) is liable to be deleted.
In reply, the ld. Sr.DR vehemently supported the orders of the Assessing Officer and the ld. CIT(A).
We have considered the rival submissions. A perusal of the facts in the present case clearly shows that out of the cash deposit of ₹ 34,27,000/- during the demonetization period, the Assessing Officer has accepted the opening balance as on 09/11/2016 and the cash sales during the demonetization period. The Assessing Officer has disbelieved the part of the sundry debtors recovered to the extent of ₹ 4,63,709/-. The Assessing Officer has admittedly not specified which of the debtors are being disbelieved. The details and the account confirmations as provided by the assessee contains the names, addresses, confirmations and the PAN numbers of the debtors. This being so, we are of the view that the addition as made by the Assessing
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ITA 43/Ran/2024 Vishnu Kumar Bhartia Vs ITO Officer and as confirmed by the ld. CIT(A) to the extent of ₹ 4,63,709/- is unsustainable and consequently delete the same. 6. In the result, this appeal of the assessee is allowed. Order announced in open court on 20th August, 2025. Sd/- Sd/- (RATNESH NANDAN SAHAY) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated: 20/08/2025 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Ranchi
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