RITU SINGHAL,DEHRADUN vs. DCIT/ACIT , CENTRAL CIRCLE, DEHRADUN

Year : 2022-23] Ritu Singhal vs DCIT/ACIT 34F, Narendra Vihar, Central Circle Kaulagarh Road, Dehradun Uttarakhand-248001 Uttarakhand PAN-BAYPS8429Q APPELLANT RESPONDENT Assessee by Shri Harshit Gupta, CA Revenue by Shri S.K.Chaterjee, CIT DR Date of Hearing 04.08.2025 Date of Pronouncement 29.10.2025 ORDER

PER MANISH AGARWAL, AM :

1. “The learned Ld. CIT (Appeal) has erred both in law and on facts by confirming an addition of Rs. 1,74,709/- alleging that the amount remained credited in the accounts of employees allegedly controlled by the appellant. The Ld. CIT (Appeal) failed to properly and adequately appreciate the facts and evidence on record, which demonstrate that the appellant had no control over these accounts.

2. The learned Ld. CIT (Appeal) has wrongly made an addition of Rs. 1,74,709/- by adopting an arbitrary "ad hoc approach, even after allowing a deduction of Rs. 1,91,805/- for cash withdrawals utilized for employee salaries. The total deposits in these accounts were in the nature of salary payments, which were duly recorded in the books of accounts, and the addition lacks any legal or factual basis.

3. The learned Ld. CIT (Appeal) has erred in fact by confirming that the appellant controlled the passbooks and ATM cards associated with the employees' accounts, In reality, the passbooks and ATM cards were kept at the business premises where the employees worked. The employees' statements clearly confirm that these accounts were owned and controlled by the employees, and not by the appellant. 4. The learned Ld. CIT (Appeal) has erred in law and on facts by upholding the addition of Rs. 4,87,000/- under Section 69A of the Income Tax Act, 1961, on account of cash found during the search proceedings. The appellant had clearly explained that the cash represented legitimate sales receipts from the appellant's petrol pump business. This cash was part of the regular business income, already declared in the audited financial statements, supported by the books of accounts and daily sales registers that were verified during the search proceedings.

6. The appellant craves leave to add, amend, alter, or modify any of the grounds of appeal at or before the hearing, as may be necessary.”

In Ground of appeal Nos. 1 to 3, at the outset, the Ld.AR for 5. the assessee submitted that this issue is came up before the Co- ordinate Bench of Tribunal in assessee’s own case in for AY 2019-20 wherein Co-ordinate Bench has decided the issue in favour of the assessee by observing as under:-

7. “First of all, the addition has been made by the lower authorities u/s 69A of the Act, for which purpose the revenue is duty bound to prove that assessee is the owner of the monies lying to the credit of bank account of the employees. It is not in dispute that additions sustained by the ld CIT(A) to the tune of Rs. 7,01,769/- represent amounts lying to the credit of the employees of the assessee. The assessee is having control over its employees only for the limited purpose of extracting the work from them for the salary paid to them. The assessee has given a plausible explanation by explaining the modus operandi which remain undisputed that bank accounts were opened in the name of the employees with the scheduled bank wherein, the salaries are directly credited in the employees bank account. The assessee had also given explanation that passbooks and ATM cards of some employees found at the time of search in view of the fact that the assessee’s manager Shri Sandeep Sangal was assisting those employees to enable them to withdraw cash from the bank account as and when they required the monies. This certainly amounts to a plausible explanation. In any event, the assessee cannot be construed as a person owning the said cash lying in the bank account of the employees of the assessee. It is not the case of the revenue that the employees does not exist at all whereby the assessee had merely used certain names of persons in fictitious names and had taken money from the system in the form of booking of salary. This proposition argued by the ld AR has lot of force in view of the fact that employees were indeed found present at the time of search itself and statements were even recorded from Page | 3 them in post search proceedings. Hence, we have no hesitation to hold that the monies lying in the bank account of the employees of the assessee are owned and belonging only to the employees and not the assessee herein. Accordingly, the provisions of Section 69A of the Act per se could not be pressed into service. Consequentially there is no requirement at all for the assessee to explain those credits in the bank account under any provisions of the Act. Accordingly, the grounds raised by the assessee are allowed.”

Grounds of appeal Nos. 4 & 5 raised by the assessee are with 9. respect to the addition of INR 4,87,000/- made u/s 69A of the Act.

Order pronounced in the open Court on 29.10.2025.