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Facts
The assessee, a proprietor of Gopal Trading Co., engaged in sugar trading, had cash of Rs. 38,01,800/- seized. This led to the reopening of the assessment under Section 147 of the Income Tax Act. The assessee claimed the seized cash was part of their available cash balance as per their cash book.
Held
The Tribunal held that the assessee's books of account were accepted with regard to sales turnover and no specific defect was found. The business involved significant cash transactions, and the generation of cash was reflected in the cash books, stock records, and VAT returns.
Key Issues
Whether the seized cash was adequately explained by the assessee's books of account and business operations, and if the lower authorities erred in rejecting the assessee's claim.
Sections Cited
147, 144B
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Income Tax Appellate Tribunal, “A” BENCH, DELHI
(Assessment Year:2018-19) Amar Vs. ACIT,-1 Gopal Trading Co., Income Tax Officer Faryai Bazar Chandausi Civil Lines Chandausi, Distt.Sambhal Moradabad Uttar Pradesh – 202412 Uttar Pradesh – 244001 �थायीलेखासं./जीआइआरसं./PAN/GIR No: ABIPK2944G Appellant .. Respondent Appellant by : Sh. Kalrav Mehrotra, Adv. Respondent by : Sh. Ajay Kumar Arora, Sr.DR Date of Hearing 28.10.2025 Date of Pronouncement 28.11.2025 O R D E R PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 21.11.2024 of the Ld. National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No:
ITBA/NFAC/S/250/2024-25/1070533515(1) arising out of the order dated 27.03.2023 passed u/s 147 r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Assessment Unit, Income Tax Department (hereinafter referred to as ‘the AO’) for AY: 2018-19.
The assessee filed return of income declaring total income at Rs.30,22,560/- on 04.08.2018. The assessee is an individual proprietor running Gopal Trading Co. engaged in high volume, low margin wholesale and retail of trading sugar. It is claimed that the business practice involved purchasing from sugar factories via banking channels and making sales against cash to various retailers and customers. On 14.06.2017 cash deposit of Rs.38,01,800/- was seized from Sh. Sumit Kumar accountant of the assessee by local law enforcement authorities for which the case of the assessee was reopened by an order under 148A(d) of the Act dated 29.03.2022 in response to which assessee filed return on 30.04.2022 declaring the same income. The case of the assessee is that the cash was being taken for deposit in the bank account maintained in Chandausi, which was part of the available cash in hand balance of Rs.43,28,904.24 as on 14.06.2017, the copy of cash book is filed before us at page 165.
Heard, and perused the record. It comes up that there is a total sales turnover of Rs.81.61 crores declared in profit and loss account and net profit of 31.72 lakhs, seized cash has been disclosed as an asset in the audited balance sheet. Assessee has been regularly depositing cash in bank account notably deposits were made on 26.04.2017, 16.05.2017, 20.05.2017 & 25.05.2017.
However, the AO was of the view that purchaser and their individual bills were not produced and the explanation for physical movement for cash was not found plausible. Ld. DR has also supported the same and it was also contended that assessee has failed to map the cash in hand with the cash book.
Now what material is that assessee’s books of account have been accepted with regard to sales turnover of Rs.81.16 crores and no specific defect has been found in the books of including the cash books. The appellants business certainly involves dealing in cash as Rs.66.29 crores is cash sales out of total Rs.80.88 crores of the sale of sugar. The tax audit report shows consistency in financial in terms of profit margin and the assessment for AY. 2017-18 was completed accepting GP ratio on 0.56% against 0.49% in the present year. The assessee is maintaining bank account at Chandausi and Moradabad, therefore, the movement of funds cannot be considered to be an implausible.
The chain of business in the form of cash book, stock record, VAT returns on indicating generation of cash as reflected in the cash books from which this seized amount has been explained. Thus, we are of the considered view the ld. tax authorities below have fallen in error in rejecting the claim of the assessee that the cash found is not reflected in the books. Accordingly, we are inclined to sustain ground B to F and allow appeal of the assessee. The impugned addition is deleted.
Order pronounced in the open court on 28.11.2025