Mohamed Asmi Vs ITO (ITAT Chennai)
Goat Trader Fails to Explain ₹7.10 Crore Bank Deposits: ITAT Upholds Section 69A Addition Despite 44AD Claim
The Chennai ITAT upheld massive addition of ₹7.10 crore under Section 69A against a goat trader who claimed that huge bank deposits represented cash-based business receipts from rural goat trading and commission transactions. The Tribunal held that presumptive taxation under Section 44AD cannot be used as a shield to regularize unexplained money when the assessee fails to substantiate the nature and source of deposits.
The assessee, engaged in goat trading and animal husbandry activities under the name M/s Asmi Agro Traders, had not originally filed return of income. Reassessment proceedings were initiated after the department detected substantial cash deposits and bank credits exceeding ₹8.39 crore across multiple bank accounts. In response to notice under Section 148, the assessee declared turnover of only ₹92.10 lakh and offered presumptive income under Section 44AD.
During assessment proceedings, the assessee contended that goat trading in rural markets is largely informal, trust-based and cash-driven, where bills, vouchers and formal documentation are generally unavailable. A reconciliation statement was also furnished claiming that part of the deposits represented inter-bank transfers and non-business transactions, while the remaining amounts related to goat trading turnover and commission business.
However, the Tribunal observed that except for broad assertions regarding rural business practices, the assessee failed to produce any meaningful documentary evidence such as purchase records, sale bills, stock details, transport documents, customer confirmations, auction records or commission agreements. The ITAT noted that the magnitude of deposits running into several crores was wholly disproportionate to the turnover disclosed in the return and the reconciliation statement itself remained unsupported by independent evidence.
Rejecting the plea that only profit element should be taxed, the Tribunal held that such estimation is possible only where existence of genuine business turnover is first reasonably established. Since the assessee failed to prove that the deposits actually arose from goat trading activity, the authorities were justified in invoking Section 69A.
On the legal issue relating to validity of notice under Section 148 issued by the Jurisdictional Assessing Officer after CBDT Notification No.18/2022 introducing faceless reassessment mechanism, the Tribunal noted that the controversy is presently pending before various High Courts pursuant to Supreme Court directions. The issue was therefore kept open without rendering any conclusive finding.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the appellant is directed against the order passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as “CIT(A)”] dated 31.10.2025 for the Assessment Year 2020-21.
