Sudhir Yashwant Kadam Vs ITO (ITAT Pune)
Mango Sales, Not Unexplained Money: Only 20% of Receipts Taxed
The controversy
Cash deposited in a bank account does not necessarily represent income in its entirety. Where the evidence establishes that the deposits arose from business sales, the distinction between gross receipts and taxable profit becomes decisive.
In Sudhir Yashwant Kadam, the Pune Tribunal found that the disputed cash deposits represented receipts from the assessee’s fruit business, mainly involving mangoes. It consequently restricted the addition to an estimated 20% net profit, sustaining ₹2,69,543 and deleting ₹10,78,170.
The relief followed examination of purchase records, bank transactions and other supporting documents. It was not granted merely because the assessee described himself as a fruit seller.
Cash deposits triggered reassessment
The assessee was an individual residing in Ratnagiri. Information available with the Department showed cash deposits of ₹10,84,000 in his account with Bank of Maharashtra for assessment year 2012-13.
The Assessing Officer issued a notice under section 148, followed by statutory notices under section 142(1).
The assessee did not furnish a return or comply with the assessment proceedings. In those circumstances, the Assessing Officer completed a best-judgment reassessment on 6 November 2019 under section 144 read with section 147.
An addition of ₹13,47,713 under section 69A was made as unexplained money. The assessment also included a separate addition of ₹15,569 towards interest income.
The assessee’s challenge before the CIT(A) was unsuccessful. He therefore approached the Tribunal against the NFAC order dated 28 November 2025.
DIN objection was not pursued
The assessee had raised a legal ground challenging the assessment order on the basis that it had been issued without a Document Identification Number.
At the hearing, counsel did not press this ground. The Tribunal accordingly dismissed it as not pressed.
The decision therefore does not lay down any finding on the consequences of an assessment order lacking a DIN. The relief ultimately granted arose from the Tribunal’s examination of the source and nature of the deposits on merits.
Fruit-business records explained the receipts
Before the Tribunal, the assessee relied upon a 135-page paper book.
Counsel submitted that the assessee carried on the business of purchasing and selling fruits. Fruit purchase account statements, placed at pages 12 to 17, were furnished to support the existence and nature of that activity.
The assessee also owned agricultural land, and 7/12 extracts were placed at pages 18 to 25.
It was explained that the fruit-sale transactions were mainly routed through bank accounts. Certain business transactions were also carried out through an account with State Bank of India held in the assessee’s wife’s name.
Taken together, these records were relied upon to demonstrate that the deposits were connected with an identifiable business rather than unexplained money from an undisclosed source.
Business receipts cannot be equated with profit
After considering the documents and submissions, the Tribunal was satisfied that the assessee had carried on the purchase and sale of fruits, principally mangoes.
It expressly found that the disputed cash deposits formed part of the business receipts.
On that finding, the Tribunal held that only the profit element deserved to be taxed, rather than the gross receipts themselves.
This was the central reason for granting relief. Once the business source was accepted, treating every rupee received from customers as income would ignore the expenditure involved in acquiring and selling the fruit.
Why the Tribunal applied 20%
The Tribunal observed that the assessee operated in the fruit business, where, in its view, profit margins were generally higher.
It therefore estimated net profit at 20% of the disputed receipts.
Applied to ₹13,47,713, this yielded ₹2,69,543, which was sustained. The remaining addition of ₹10,78,170 was deleted.
The CIT(A)’s finding was set aside to that extent, and the appeal was partly allowed.
The order does not refer to section 44AD as the basis of this estimate. Nor does its operative discussion expressly delete the separate interest-income addition. The quantified relief concerns the ₹13,47,713 addition under section 69A.
Author’s comments
The decision is useful for the distinction it draws between unexplained money and established business proceeds. The existence of cash deposits may justify an enquiry, but their ultimate tax treatment depends upon the evidence explaining their source.
The fruit purchase statements and banking records supported the business explanation. The agricultural land records formed part of the material considered, but the Tribunal did not hold that the disputed receipts were exempt agricultural income. Its finding was that they represented fruit-trading receipts.
The 20% rate is a factual estimate adopted in this case, rather than a prescribed profit rate for all fruit or mango traders. The short order does not provide a detailed comparable-margin analysis.
For similar disputes, reliable purchase records, sales particulars and bank reconciliations remain important both to establish the business source and to support the appropriate profit margin.
Mango-sale proceeds may include taxable profit, but the entire sale collection does not become income merely because it is deposited in cash.
FULL TEXT OF THE ORDER OF ITAT PUNE
1. The captioned appeal at the instance of assessee pertaining to A.Y. 2012-13 is directed against the order dated 28.11.2025 of NFAC, Delhi emanating out of Assessment Order dated 06.11.2019 passed u/s.144 r.w.s.147 of the Income Tax Act, 1961 (in short ‘the Act’).
2. The grievance of the assessee revolves around the addition of Rs.13,47,713/- made by the Assessing Officer invoking section 69A of the Act for unexplained money.
3. At the outset, ld. Counsel for the assessee requesting for not pressing the legal issue raised in Ground No.1 challenging the assessment order being issued without Documents Identification Number. The same is dismissed as ‘not pressed’.
4. I have heard the rival submissions and perused the record placed before me. So far as merits of the case are concerned, I note that the assessee is an individual and based on the information about cash deposit of Rs.10,84,000/- in the bank account held with Bank of Maharashtra in the name of assessee for A.Y. 2012-13, ld. Assessing Officer issued valid notice u/s.148 of the Act followed by issuance of statutory notices u/s.142(1) of the Act. Since assessee has not furnished return of income, notice u/s.143(2) was not required to be issued. During the course of assessment proceedings, assessee has not made any compliance resulting into addition u/s.69A of the Act at Rs.13,47,713/- and addition for interest income at Rs.15,569/-. Income assessed at Rs.13,66,282/-. Assessee challenged the addition before ld.CIT(A) but failed to succeed. Now the assessee has approached this Tribunal.
5. Ld. Counsel for the assessee referring to the paper book running into 135 pages made submissions that the assessee is into business of fruit seller. Assessee also owns agricultural land and 7/12 extracts has been placed of pages 18 to 25 of the paper book. Assessee also filed Fruit purchase Account Statements placed at pages 12 to 17 of the paper book. It is also submitted that the business transactions of selling fruits mainly been routed through bank account. Further assessee also entered into business transactions with the account held with State Bank of India in the name of assessee’s wife Ms. Basheera Basheer.
6. Considering all these details, I am satisfied that the assessee has carried on the business of purchase and sale of fruits and mainly deals in Mango and that the alleged cash deposits are part of the business receipts and therefore only the profit element deserves to be taxes and not the gross receipts. Considering the fact that the assessee is into fruit business where the profit margin is generally higher, I estimate the Net Profit @ 20% of alleged receipts from such business which works out to Rs.2,69,543/- and the same is hereby sustained. Remaining addition of Rs.10,78,170/- stands deleted. Finding of ld.CIT(A) is set aside. Grounds of appeal raised by the assessee are partly allowed.
7. In the result, the appeal of the assessee is partly allowed.
Order pronounced on this 05th day of October, 2026.
