NAHTA PRAKASH CHAND THROUGH LEGAL HEIR VACHAN KUMAR NAHATA,SEONI vs. ASSESSING OFFICER, SEONI

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ITA 158/JAB/2024Status: DisposedITAT Jabalpur18 September 2025AY 2017-184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the lower authorities erred by assuming the deposit was from cash on hand, rather than cash sales. Since the sales were supported by evidence and accepted in VAT returns, the addition was based on conjecture.

What were the facts?

The assessee deposited Rs. 15,00,000/- in cash during the demonetization period. The Assessing Officer added Rs. 12,00,000/- as unexplained money, rejecting the assessee's explanation that it was from cash sales. The CIT(A) upheld the addition.

What were the issues?

Whether the cash deposit during demonetization, explained as arising from cash sales supported by evidence, can be treated as unexplained money. Whether the CIT(A) properly considered the evidence of sales and VAT returns.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JABALPUR BENCH “SMC”, JABALPUR

Before: SHRI KUL BHARAT

For Appellant: Shri PC Bardia, Advocate, Shri Rahul Bardia, CA
For Respondent: Shri Alok Bhura, Sr. DR

PER KUL BHARAT, VICE PRESIDENT.:

1.

This appeal, by the deceased assessee filed through legal heir is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 16.08.2024 pertaining to the assessment year 2017- 18. The assessee has raised the following grounds of appeal: -

“1) Under the facts and circumstances of the case the Id. CIT (Appeal) whole order is invalid unjustified and unlawful hence the addition us 69A for Rs. 12 lakh out of cash deposit Rs. 15 lakh during demonetization period be deleted. 2) Under the facts and circumstances of the case when the ITR filed u/s 44AD, declaring (Gross Total income of Rs. 2565570/-) business taxable income of Rs.727308/- (14.89%) on total sales of Rs. 48,83,652/-the CIT(Appeals) erred in confirming NO DOUBLE TAXATION of the further addition made for Rs. 12 lakh u/s 69A.

Page 2 of 4 3) That in view of the facts and circumstances of the case and the return of income filed u/s 44AD on presumptive basis, the Id. Cit appeal faceless erred in: i) In assuming the cash balances on different dates particularly at Rs. 3 lakh as on 8.11.2016 as against shown in the cash book Rs. 1393610/as on 31.10.2016 and on. 9.11.2016 Rs. 1581490 ii) denying cash deposit out of sale proceeds Rs. 15 lakh DULLY SUPPORTED WITH sale bills issued, purchase bills, VAT/GST returns, quantitative trading a/c etc. iii) In not affording reasonable opportunity to explain the case in spite of request made, in justifying A O failure to supply copy of reasons recorded iv) in drawing adverse inference to every explanations filed/submitted for the sake of justifying addition made by the AO 4) The Id CIT (appeals) faceless erred in alleging that A.O. is justified for not following the slandered procedure for verification of cash deposit during denomination period vide CBDT circular No. 225 145 2019.”

2.

Briefly stated facts are that the case of the assessee was reopened on the ground that he deposited cash amounting to Rs.15,00,000/- in his bank account maintained with Union Bank of India. In response to the notice, the assessee filed his return of income declaring total income of Rs.25,65,570/-. The Assessing Officer issued a notice to the assessee to explain as to why the cash deposited during the demonetization period should not be treated as unexplained money. In response thereto, the assessee stated that the deposit was made out of the cash sale. However, the Assessing Officer did not accept the explanation offered by the assessee and proceeded to make addition of Rs.12,00,000/- out of Rs.15,00,000/- deposited in the bank account. Aggrieved by this, the assessee preferred appeal before the Ld. CIT(A) who also sustained the addition and dismissed the appeal of the assessee. Now, the assessee is in appeal before this Tribunal.

3.

Apropos to the grounds of appeal, the Ld. Counsel for the assessee contended that the authorities below have grossly erred in making the addition. It appears that the lower authorities had Page 3 of 4 throughout considered as if the money was deposited out of cash on hand However, the cash was deposited out of the sales made in cash, therefore, the finding of the lower authorities is erroneous.

4.

On the other hand, the Ld. Departmental Representative (DR) supported the orders of the lower authorities and contended that the Assessing Officer has given a finding that the cash was not available with the assessee.

5.

I have heard the Ld. Representatives of the parties and perused the material available on record. It is the case of the assessee that the sales are accepted no adverse finding is given with regard to the purchases and sales. The sales and purchase are duly supported by the evidence and also accepted in the VAT return. Under these facts, the addition has been made purely on the basis of conjectures and surmises. I find force into this contention of the assessee as the Ld. CIT(A) has not given any finding with regard to the filing of the VAT return, sale and purchase made by the assessee. For the sake of clarity, the finding of the Ld. CIT(A) is reproduced as under: -

“9 This ground of appeal is in regard to the appellant's contention that the amount of Rs. 12,00,000/- has been double taxed as the same was included in the total Turnover as well. In this regard it shall be noted that the appellant has failed to prove the correctness of the total turnover claimed. The appellant has failed to submit any satisfactory documentary evidence towards the sales and considering the details submitted by the appellant himself, it is concluded that the appellant was not having sufficient cash in hand as on 09.11.2016 in relation to the business activities. Therefore, the same shall be above the business receipts offered by the appellant and escaped taxation in the Income u/s. 44AD of the IT Act. Therefore, as the amount of Rs. 12,00,000/- was above the turnover offered by the appellant, there is no question of the double taxation and accordingly, this ground of appeal is dismissed.”

Page 4 of 4 6. From the above finding, it is clear that the Ld. CIT(A) has merely stated that there was no sufficient cash on hand to make such deposit. However, the case of the assessee is that the deposit was made out of the cash sale. Under these facts, I hereby direct the Assessing Officer to delete the impugned addition. Grounds of appeal of the assessee are allowed.

7.

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

Order pronounced in the open Court on 18/09/2025.

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