Sumit Wadhwa Vs ITO (ITAT Chandigarh)
Summary: The Income Tax Appellate Tribunal, Chandigarh Bench, “B”, Chandigarh, allowed the appeal filed by Sumit Wadhwa for Assessment Year 2017-18 against the order passed by the Addl./JCIT(A)-2, Jaipur under section 250 of the Income-tax Act. The appeal arose from the assessment framed by the Assessing Officer on 26.12.2019. The sole grievance before the Tribunal concerned confirmation of an addition of Rs.13.34 lakh in respect of cash deposits under section 68 read with section 115BBE.
The assessee, a resident individual stated to be engaged in dealing in glass used for windows, doors, kitchens and similar purposes, had deposited Rs.17.34 lakh in his HDFC Bank account during the demonetisation period. The assessee explained that the deposits were sourced from sale proceeds and receipts from debtors. The Assessing Officer, however, observed a significant increase in cash deposits during the demonetisation period and alleged that the assessee had manipulated his data to justify the deposits. After partially accepting Rs.4 lakh, the Assessing Officer made the balance addition of Rs.13.34 lakh under section 68 read with section 115BE, as recorded in the supplied Full Text.
Before the Tribunal, the assessee submitted that the Assessing Officer had alleged absence of explanation and evidence regarding the cash deposits despite the assessee having furnished the documents called for during assessment proceedings. These included the cash book, bank statement, profit and loss account, balance sheet, sales account and other records. The assessee contended that the cash book established that the deposits came from available cash-in-hand and that cash sales and realisations from debtors were duly recorded in the regular books. It was also submitted that the sales and purchase transactions were evidenced by VAT returns, the trading results had been accepted, and the Assessing Officer had neither rejected the books of account nor doubted the sales or purchases.
The Revenue relied upon the findings of the lower authorities.
The Tribunal examined the material on record and found that the assessee had furnished the cash book, bank book, balance sheet, profit and loss account, cash details, sales account, copy of the income-tax return, computation of income, cash transaction statement and bank account statement before the Assessing Officer. According to the Tribunal, these records established that the cash deposits were sourced from cash sales and realisation from debtors.
The Tribunal further observed that the Assessing Officer’s allegation that the assessee had manipulated the data was not supported by any concrete material on record. No fault had been found in the regular books or trading results, the books had not been rejected, and no doubt had been raised regarding the purchases or sales.
On these facts, the Tribunal held that the source of the cash deposits could not be doubted unless it was established that the deposits were sourced from some other source of income. It consequently held that the impugned addition could not be sustained.
The Tribunal ordered the Assessing Officer to re-compute the income of the assessee and, since no other ground was urged, allowed the appeal.
Thus, the ITAT Chandigarh deleted the Rs.13.34 lakh addition made in respect of the cash deposits and allowed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The present appeal by the assessee is directed against the order passed u/s 250 of the Income Tax Act by Ld. Addl. /JCIT (A)-2, Jaipur in the matter of an assessment as framed by Ld. AO u/s on 26.12.2019. The sole grievance of the assessee is confirmation of addition of cash deposit for Rs.13.34 Lacs u/s 68 r.w.s. 115BBE. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. The assessee being resident individual is stated to be dealing in glass which is used in windows, doors, kitchen etc.
2. It transpired that the assessee deposits Rs.17.34 Lacs in its HDFC Bank account during demonetization period. The Assessee stated that the deposits were sourced out of sale proceeds and receipt from debtors. However, Ld. AO observed that there was significant increase in cash deposit during demonetization period and therefore, alleged that the assessee manipulated its data to justify the impugned cash deposits. After partially accepting Rs.4 Lacs, the remaining amount of Rs.13.34 Lacs was added u/s 68 r.w.s.. 115BE and the assessment was framed. On appeal the Ld. CIT(A) sustained the addition as having been made u/s 68 after rejecting the contention of the assessee that the said cash deposits were made out of cash sales & realization of debtors.
3. Before us, the Ld. AR, at the outset, stated that Ld. AO made addition in respect of cash deposits observing that the assessee has not given any explanation or evidences to substantiate the cash deposits and the assessee has manipulated its data. However, during the course of assessment proceedings, the assessee duly furnished all details as called for by the AO which include cash book, bank statement, profit and loss account, balance sheet, sales account etc. The perusal of cash book would establish that the deposits were sourced out of available cash-in-hand. The Ld. AR further submitted that the cash sales and realization from debtors were been duly recorded in the regular books of the assessee. The cash was deposited out of sale proceeds in the normal course of business. No doubt has been raised on the sales and purchase transactions which are evidenced by VAT returns. All these documents were furnished to Ld. AO and the trading results have been accepted. The Ld. AO did not reject the books of account nor doubted sales or purchases. Therefore, there is no justification for making impugned addition. The Ld. Sr. DR referred to the findings of lower authorities.
4. We have heard the rival submissions of the parties and perused the material available on record. It could clearly be observed that the assessee has furnished cash book, bank book, balance sheet, profit and loss account, cash details, sales account, copy of ITR, computation of income, cash transaction statement, bank account statement to Ld. AO during the course of assessment proceedings and established that the cash deposits were sourced out of cash sales / realization from debtors. The allegation of Ld. AO that the assessee has manipulated its data is not evidenced by any concrete material on record. No fault has been found in the regular books or trading results as shown by the assessee. The books have not been rejected and no doubt has been raised on purchases or sales. On these facts, the source of cash deposits could not be doubted unless it was established that the deposits were sourced from any other source of income. This being so, the impugned addition could not be sustained. We order so. The Ld. AO is directed to re-compute the income of the assessee. No other ground has been urged in the appeal.
5. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 25.08.2026.
