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Income Tax Appellate Tribunal, DELHI
ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of Ld.
Commissioner of Income Tax (Appeals)- 3(‘Ld. CIT(A)’ for short), New Delhi dated 26/02/2024 for the Assessment Year 2021-22.
The grounds of appeal are as under:-
“The appellant respectfully objects to the impugned order of assessment made by the learned CIT (Appeals) vide his order dated 26.02.2024 on the following grounds:- 1) That the learned CIT(Appeals) has erred both in law and on facts, overlooking the fundamental fact that the cited expenditure was never incurred. The document referred to merely constitute a rough estimate from a plumber and was not indicative of any actual payment, as explicitly stated on the face of it. Treating this as unexplained expenditure under Section 69C due to the Respondent's dissatisfaction with the Appellant's submission, and upholding the additions made by the Ld. Assessing Officer, renders the action unjust & invalid. 2) The learned CIT(Appeals) erred in law and on fact by confirming the addition of Rs. 95,640/-, imposed by the Assessing Officer under Section 69C of the IT Act 1961, alleging it to be unexplained expenditure and taxing the same under Section 115BBE of the Income Tax Act 1961.
ANUJ KUMAR Vs. ACIT 3) The learned CIT(Appeals) disregarded the appellant's submissions regarding the non-applicability of the disallowance of Cash expenditure under Section 40A(3), given that the assessee was offering income under Section 44AD of the IT Act. Consequently, the provisions of Section 40A(3) were not pertinent. Despite this, the learned CIT(Appeals) displayed overenthusiasm in upholding the addition made by the Assessing Officer under the stringent provisions of Section 69C of the IT Act. 4) That the order upheld by the learned CIT(Appeals) is based on conjecture and surmises. The Learned CIT(Appeals) completely disregarded the submissions filed by the appellant during the First Appeal proceedings, leading to confirmation of unjust addition. 5) The appellant craves leave to reserve its right to add to, delete from, amend, alter or modify its Grounds of Appeal before or at the time of hearing.”
Brief facts of the case as mentioned in the order of the Ld. CIT(A) are as under:
“a warrant was issued under the section 132 of the Income-Tax Act, 1961 for carrying out the Search & Seizure operation on 17.12.2021. Further, as per AO, during the search operation carried out, certain documents were found and seized from the Assessee’s business and residential premises. Subsequently, the assessee filed his regular Return of Income u/s 139(1) of the Act on 30.12.2021, declaring thereon a Total Income of Rs. 15,32,730/- for the year under consideration. The assessee is an individual who runs a proprietorship concern in the name and style of 'M/s Neeraj Kumar Anuj Kumar' which deals in retail trade of FMCG goods and declared income under the heads 'income from salary', 'Profit & Gains from Business & Profession' & 'Income from other sources for the period under consideration. Further, the AO has mentioned that during, the assessment proceedings, it is noticed that, an image was found and seized from the mobile phone of the assessee during the course of search and seizure operation carried out in his residential and business premises which contains various entries and total of these entries were amounting to Rs. 95,640/-. Accordingly, as per AO, the assessee was asked to ANUJ KUMAR Vs. ACIT explain the source of the expenditure amounting to Rs. 95,640/- incurred by him in cash and explain whether the said expenses were recorded in his books of account or not. Further, the AO stated that if the expenses were not recorded, then why the same shouldn't be disallowed as per the provisions of the section 40A(3) of the Act. Further, as per AO, the assessee submitted that he had declared his business income on presumptive basis u/s 44AD of the Act and hence the cash payments can't be disallowed. But, as per AO, no explanation with regard to the source of the expenditure could be submitted by the assessee.
Further, the AO stated that on examination of the assessee's sole saving bank account bearing no. 1326000100112409 with Punjab National Bank, Haripur, Kalsi Gate, Dehradun, it is observed that, the assessee had nil cash withdrawal from his said bank account during the year under consideration. Thus, the AO stated that the assessee had not enough cash withdrawals from his bank account to source the above cash expenditure and as per AO, the assessee had no explanation with regard to the source of the expenditure incurred in cash and the assessee had failed to satisfactorily satisfy regarding the source of the expenditure incurred by him. Hence, the AO held that the cash expenditure amounting to Rs. 95,640/- by the assessee was treated as unexplained as per the provisions of the section 69C.”
Aggrieved by the assessment order dated 28/12/2022, the Assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 26/02/2024, dismissed the Appeal filed by the Assessee. As against the order of the Ld. CIT(A) dated 26/02/2024, the Assessee preferred the present appeal on the grounds mentioned above. in the present appeal is covered with the order of the Tribunal having similar facts of a family member i.e. Neereaj Singh for Assessment Year 2021-22 in ITA No. 124/DDN/2025. Thus, sought for allowing the Appeal.
Per contra, the Ld. Department's Representative by relying on the orders of the Lower Authorities, sought for dismissal of the Appeal.
The only issues involved in the Appeal is regarding the addition on account of unexplained expenditure of Rs. 95,640/- u/Sec. 69C of the Act r/w Section 115BBE of the Act. The said addition came to be made on the basis of an image ceased from the mobile phone of the Assessee.
For the purpose of ready reference, the said image is reproduced as under:- regarding the receipt of payment or identity of person who possibly existed and had received the payment. There is no evidence to prove that the said loose sheet/image represents payments made by the Assessee so as to either invoked the provision Section 40A(3) or Section 69C of the Act. The said image does not even mentionsas to whether the figures mentioned thereon are either payment or receipt.
The Co-ordinate Bench of the Tribunal in the case of brother of the Assessee i.e. Neeraj Singhal in pertaining to Assessment Year 2021-22, vide order dated09/04/2025, examined the evidentiary value of the very same document/image found in the mobile of the Assessee herein. The Co-ordinate Bench of the Tribunal held that the said image being a ‘dumb document’ cannot be made basis for making the addition in following manners:-
“Be that as it may, on perusal of the said loose sheets, we find that these papers are some estimates and rough notings. There is no mention of receiver of payment or identity of person who possibly existed and had received any payment. There is no Neeraj Singhal Page | 6 evidence to prove that the said loose sheet represent payments made by the assessee so as to either invoke the provisions of section 40A(3) or section 69C of the Act. The said loose sheet does not even mention that it represent either payment or receipt. Hence, we hold that these loose sheets are mere dumb documents not corroborated with any other extraneous link with the transactions of the assessee or his business. Hence, we have no hesitation to delete the said additions made in the sums of Rs. 32,969/- and Rs. 45,570/- u/s 69C of the Act. Accordingly, Ground No. 3 raised by the assessee is allowed.” following the order of the Co-ordinate Bench of the Tribunal in the case of Neeraj Singhal (supra), we delete the addition made by the A.O. which has been confirmed by the CIT(A).
In the result, the Appeal of the Assessee is allowed.
Order pronounced in the open court on 06th August, 2025