KANHAIYA LAL,ETAWAH vs. COMMISSIONER OF INCOME TAX (APPEALS), DELHI

Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 08-02-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] on best judgment basis u/s. 144 of the Act on 20-09-2019.

In the assessment order, Ld. AO estimated business income of 8% on bank credits and determined business income of Rs.3.24 Lacs. The cash deposited during demonetized period for Rs.13.88 Lacs was separately added u/s 69A. The total income was thus determined at Rs.17.12 Lacs. The assessee is admittedly engaged in the business of hardware. During appellate proceedings, the assessee’s submissions were subjected to remand proceedings wherein Ld. AO still refused to accept the claim of the assessee. The assessee stated that the actual sales were Rs.51.05 Lacs which was supported by copy of trading account. The cash deposits and bank credits represent sales turnover only. The business income was arrived at Rs.4.31 Lacs which was to be accepted. The Ld. CIT(A), after due consideration, provided partial relief and held that sum of Rs.3.24 Lacs out of cash deposits during demonetization period for Rs.13.88 Lacs was to be considered as cash sales on which estimation could be made at 8%. The remaining assessment was confirmed. Aggrieved, the assessee is in further appeal before us.

The Ld. AR contended that all the bank credits represent business turnover only which is duly supported by the financial statements and therefore, the cash deposit during demonetization period could not be separately added u/s 69A. The Ld. AR further submitted that the assessee is in a position to establish the same if another opportunity of hearing is provided to the assessee. The Ld. Sr. DR has opposed any interference in the orders of lower authorities.

It is undisputed fact that the assessee is engaged in trading of hardware items and it do not have any other source of income. All the deposits in the bank account apparently represent sales turnover of the assessee which is supported by assessee’s financial statements and other documents as placed in the paper-book. Under these circumstances, the cash deposits could not be separately added u/s 69A. Therefore, accepting the prayer of Ld. AR and on the given facts, we deem it fit to restore the matter back to the file of Ld. AO for fresh adjudication with a direction to the assessee to substantiate its stand.

The appeal stand allowed for statistical purposes. Order pronounced on 12th February, 2025.