SANJEEV KUMAR JAIN,NEW DELHI vs. ITO,WARD- 58(7), DELHI

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ITA 944/DEL/2025Status: DisposedITAT Delhi24 October 2025AY 2017-18Bench: SHRI YOGESH KUMAR U.S. (Judicial Member), SHRI AVDHESH KUMAR MISHRA (Accountant Member)7 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the AO doubted only the closing cash in hand without concrete basis and committed an error in estimating interest without rejecting books of accounts. Additions of Rs. 19,98,000/- and Rs. 20,09,000/- were deleted. However, an addition of Rs. 3,75,000/- was sustained due to lack of cogent evidence.

What were the facts?

The Assessee's case was selected for scrutiny, and an addition of Rs. 45,57,000/- was made by the AO under Section 68 of the Act, treating it as unexplained money routed during demonetization. The CIT(A) upheld the assessment order.

What were the issues?

Whether the additions made on account of cash deposits during demonetization are to be deleted due to lack of proper basis and absence of doubt on books of account? Applicability of Section 115BE for AY 2017-18.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 68,Section 115BE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI YOGESH KUMAR U.S. & SHRI AVDHESH KUMAR MISHRA

For Appellant: Ms. VaishnaviYadav, Adv& Ms. Astha
Hearing: 18/08/2025Pronounced: 24/10/2025

ORDER

PER YOGESH KUMAR, U.S. JM:

1.

The captioned appeals are filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre (‘Ld. CIT (A)/NFAC’ for short), New Delhi dated 16/01/2025for the Assessment Year 2017-18.

2.

The grounds of appeal

are as under:-

1. On the peculiar facts of the case and in law, the assessment order passed by the learned AO and also the appeal order passed by the learned CIT(A)/NFAC are liable to be set aside.

2. On the peculiar facts of the case and in law, the additions of Rs.4557000/-(Rs.1909000/- + Rs.1898000/- + Rs.750000/-) are liable to be deleted, more particularly because no proper show cause notice had been issued to the appellant assessee prior to making such addition.

3. On the peculiar facts of the case and in law, the additions of Rs.4557000/-Rs.1909000/- Rs.1898000/- + Rs.750000/-) are liable to be deleted, more particularly because the provisions of section 68 had no applicability.

4. On the peculiar facts of the case and in law, the addition of Rs.1909000/-(difference of Rs.2009000/- being the total amount of cash deposited during the demonetization period, out of the closing cash in hand of Rs.2036799/- as on 08.11.2016 appearing in the books of M/s Anmol Rang Rasayan Kendra- a sole proprietary concern of the appellant assessee and Rs.100000/- being the benefit allowed on adhoc/estimated basis) is liable to be deleted

5. On the peculiar facts of the case and in law, the addition of Rs.1898000/-(difference of Rs.1998000/- being the total amount of cash deposited during the demonetization period, out of the closing cash in hand of Rs.2061261/- as on 08.11.2016 appearing in the books of M/s Zensons& Co.- a sole proprietary concern of the appellant assessee and Rs.100000/-being the benefit allowed on ad-hoc/estimated basis) is liable to be deleted.

6. On the peculiar facts of the case and in law, the addition of Rs.750000/-(being the total amount of cash deposited in the HDFC bank account of the appellant assessee which represented the amounts received back by the appellant assessee from various persons) is liable to be deleted.”

2. Brief facts of the case are that, the Assessee filed return of income of Rs. 4,67,950/-. The case of the Assessee was selected for scrutiny under CASS. An assessment order came to be passed u/s 143(3) of the Act by making an addition of Rs. 45,57,000/- u/s 68 of the Act on the ground that Assessee’s own unexplained and unaccounted money has been routed into his business concerns during the demonetization period. Aggrieved by the assessment order dated 26/12/2019, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 16/01/2025 dismissed the Appeal of the Assessee. As against the order of the Ld. CIT(A) dated 16/01/2025, the Assessee preferred the present Appeal on the grounds mentioned above.

3.

The Ld. Counsel for the Assessee submitted that in so far as deposit of cash of Rs. 19,98,000/- in the bank account maintained in the name of M/s Anmol Rang Rasayan Kendra, and M/s Zensons and Company i.e. Rs. 19,98,000/- and Rs. 20,09,000/- are concerned submitted that at no point of time A.O. doubted the sales or purchase or direct expenses or indirect expenses. Further submitted that both entities the accounts were duly audited and at no point of time A.O. normally rejected the books of account and estimated the income under the Profit and Gain of business and profession. Further submitted that in so far as cash deposit of Rs. 7,50,000/- in the personal account maintained by the Assessee. The Assessee submitted that those cash were withdrawn from personal account and re-deposited during the demonetization period, thus sought for deleting the addition.

4.

Per contra, the Ld. Departmental Representative submitted that the Assessee failed to prove the source of the cash deposited during the demonization period and no requested document has been provided in so far as cash deposited in the personal account of the Assessee, thus sought for dismissal of the Appeal.

5.

We have heard both the parties and perused the material available on record. During the demonization period, the Assessee deposited cash of Rs.1998000/- had been deposited in the bank accounts maintained in the name of M/s Anmol Rang &Rasayan Kendra (Rs.1500000/- on 16.11.2016 in CBI and Rs.498000/- on 28.11.2016 in Jain Cooperative Bank), out of the closing cash in hand available as on 08.11.2016 amounting to Rs.2036799/- as per cash book (duly audited); (ii) cash of Rs.2009000/- had been deposited in the bank accounts maintained in the name of M/s Zensons& Co. (Rs.500000/- on 21.11.2016 in HDFC Bank and Rs.1509000/- on 29.11.2016 in Jain Cooperative Bank) out of the closing cash in hand available as on 08.11.2016 amounting to Rs.2061261/- as per cash book (duly audited).

6.

During the assessment proceedings, the books of account in respect of two concerns M/s Anmol Rang and Rasayan Kendra and M/s Zensons and Company were made available to the A.O. The Assessee was the sole proprietary concerned to the said entities, further the Assessee has also furnished the books of both the entities. It is observed that A.O. has not doubted the sale or purchase or direct expenses or in direct expenses of the Assessee. The A.O. has doubted only closing cash in hand as on 08/11/2016 without their being any concrete basis. The A.O. committed grave error in estimating the interest under the head of profit and gain of business and profession without rejecting the books of accounts in the manner known to the law. Therefore, in our considered opinion, the said addition of Rs. 19,98,000/- and Rs. 20,09,000/- deposited in the account maintained in the name of M/s Anmol Rang and Rasayan Kendra and M/s Zensons and Company respectively is hereby deleted.

7.

In so far as cash deposited of Rs. 7,50,000/- in HDFC Bank Account (current) maintained in Assessee’s personal name, the Assessee contended before the Lower Authorities that the parties to whom the assessee had advanced monies through his personal bank account maintained with HDFC Bank some time ago during the same year, had left the old currency notes with the assessee, immediately after announcement of demonetization by Govt. of India; and (ii) the assessee had deposited such cash (left by the agents, as explained earlier) as well as the surplus cash arising out of his activities relating to cloth odd-lots, in his personal bank account maintained with HDFC Bank during the demonetization period.

8.

It is found that the Assessee has not provided any cogent evidence or even the bank statement in support of his claim. However, in the absence of any material we deem it fit to sustained he addition of Rs. 3,75,000/- and remaining addition of Rs. 3,75,000/- is hereby deleted.

9.

In so far as changing the higher interest u/s 115BE of the Act is concerned, the Hon’ble Madras High Court in the case of Smile Microfinance Ltd. Vs. ACIT in WP (MD) No. 2078 of 2020 and 1742/2020 vide Judgment dated 19/11/2024 held that the above said provision of law applies to transaction occurred on or after 01/04/2018, accordingly, the same cannot be applied to the year under consideration i.e. Assessment Year 2017-18.

10.

In the result, Appeal of the Assessee is partly allowed.

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