Nisarahmed Aralimatti Vs ITO (ITAT Bangalore)
A ₹2 Lakh Cash Deposit, a Retail Shop, and an Impossible Customer List
The deposit under scrutiny
During the demonetisation period, Nisaráhmed Aralimatti deposited ₹2 lakh in the bank account of his proprietary concern, Royal Traders, a retail tobacco and supari business. He said the cash came from ordinary shop sales and was already reflected in the business turnover declared in his return.
The assessing officer was unconvinced. After an earlier scrutiny assessment was reopened for further examination following a revision under section 263, the officer added the ₹2 lakh to Aralimatti’s income. The Commissioner of Income Tax (Appeals) upheld the addition, leading to the appeal before the Bangalore Bench of the Income Tax Appellate Tribunal.
The case raised a practical question: what evidence can reasonably be expected from a small retail business to explain a cash deposit arising from daily sales?
A business conducted largely in cash
Aralimatti was the proprietor of Royal Traders and also a partner in a separate wholesale tobacco firm. For the relevant year, he declared income of ₹22,69,100. Royal Traders reported turnover of ₹53,68,170, with its income offered under the presumptive taxation provisions of section 44AD. That turnover worked out to average monthly sales of approximately ₹4.47 lakh.
