Ganga Singh Chauhan Vs DCIT (ITAT Agra)
Section 69A: Business Dealings Cannot Prove Alleged Cash Receipts—Additions Based on Undisclosed Third-Party Material Deleted
Background of the Dispute
The assessee, proprietor of Chauhan Road Lines, carried on the business of transport logistics services. For assessment year 2020-21, he filed his return declaring total income of ₹42,53,970.
A search under section 132 was conducted on the Bansal Group, Bhopal, on 18 November 2022. According to the Department, analysis of documents and loose papers seized during that search indicated that Bansal Construction Works Pvt. Ltd. had paid ₹12,20,000 in cash to the assessee.
The Department treated this alleged payment as income escaping assessment. After obtaining approval under section 151, the Assessing Officer issued notice under section 148 on 26 February 2024.
The assessee filed a return in response and denied having received the alleged cash payment during the relevant financial year.
Assessing Officer Relied on Existing Business Relations
The Assessing Officer noted that the assessee had business transactions with Bansal Construction Works Pvt. Ltd. through banking channels amounting to ₹1,24,31,818.
From this admitted business relationship, the Assessing Officer reasoned that the alleged cash payment could not be ruled out. He consequently added ₹12,20,000 as unexplained money under section 69A read with section 115BBE.
For assessment year 2021-22, a similar addition of ₹10,45,000 was made. Both reassessment orders were passed on 30 March 2025.
The Commissioner (Appeals), NFAC, confirmed the additions through orders dated 22 December 2025.
The central issue was whether an established business relationship and a reference to third-party search material were sufficient to prove that the assessee had actually received unaccounted cash.
Assessee Challenged the Addition and Non-Supply of Material
In the appeal for assessment year 2020-21, the assessee disputed the addition and specifically complained that the Assessing Officer had not provided the material relied upon to make it.
The assessee did not appear before the Tribunal or seek an adjournment. Nevertheless, the Tribunal examined the record and decided the appeals on merits after hearing the Departmental Representative.
Thus, the assessee’s absence did not prevent scrutiny of whether the assessment findings had an adequate evidentiary foundation.
Tribunal: Nature and Contents of Seized Documents Were Unexplained
The Tribunal found that the reassessment originated from information concerning documents or loose papers recovered from the premises of a third party.
However, the assessment order did not identify the nature of the alleged incriminating document or explain what was written or printed on it.
The Tribunal also found nothing on record suggesting that copies of those documents had ever been furnished to the assessee.
These were material deficiencies. Without identifying the document and its contents, the assessment order did not disclose the foundation for the conclusion that the assessee had received the specified cash amount.
A general reference to incriminating material could not substitute an examination of the evidence allegedly connecting the assessee with the receipt.
“Cash Payment Cannot Be Ruled Out” Was Only Guesswork
The Tribunal also rejected the inference drawn from the assessee’s banking transactions with Bansal Construction Works Pvt. Ltd.
The existence of business dealings established a commercial relationship. It did not, by itself, prove a separate cash payment outside the recorded transactions.
The Tribunal characterised the Assessing Officer’s approach as guesswork, noting that the addition proceeded on the proposition that cash payment “may not be ruled out”.
That possibility was insufficient to sustain the addition. On the record before it, the Tribunal found not even prima facie documentary or oral evidence supporting the alleged cash receipt.
It therefore held that the Commissioner’s order confirming the addition was unsustainable.
Both Additions Deleted on Merits
The Tribunal deleted the addition of ₹12,20,000 for assessment year 2020-21.
Since the facts and issue for assessment year 2021-22 were identical, apart from the amount involved, the same findings were applied to delete the addition of ₹10,45,000.
Both appeals were allowed, resulting in deletion of aggregate additions of ₹22,65,000.
The relief was granted on the evidentiary merits of the additions. The Tribunal did not merely restore the matter for another opportunity, nor did it quash reassessment proceedings on a jurisdictional ground.
Author’s Comments
The decision highlights the difference between a basis for enquiry and evidence sufficient to sustain an addition.
Existing business dealings may justify examining information about an alleged cash transaction. They cannot establish that transaction merely because the parties already know and deal with each other.
The evidentiary weakness here was compounded by the assessment order’s failure to identify the seized document, disclose its contents or demonstrate that the material had been supplied to the assessee.
The ruling does not hold that third-party search material can never support an addition. Its relevance lies in the absence of a demonstrated connection between the alleged material and the assessee’s supposed cash receipt.
An addition requires affirmative evidentiary support; the possibility that a payment cannot be ruled out is not proof that it occurred. On that distinction, the Tribunal granted final relief against both additions.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
The facts and issues involved in both these appeals are almost identical, hence, for the sake of convenience and brevity, these appeals are being decided by this common order. The facts of ITA No. 143/Agr/2026 are only being narrated as under.
ITA No. 143/Agr/2026
2. This appeal has been preferred against the impugned order dated 22.12.2025 passed in Appeal No NFAC/2019-20/10467237 by the ld Commissioner of Income Tax(Appeals), NFAC(DELHI) [hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act), for the A.Y. 2020-21, wherein ld CIT(A) has dismissed assessee’s appeal, against the addition of Rs. 12,20,000/- made on account of unaccounted cash and added u/s 69A r.w.s. 115BBE of the Act in the total income of the assessee, vide assessment order dated 30.03.2025 passed u/s 147 of the Act.
3. The brief facts of the case are that the assessee is an individual and is engaged in the business of transport logistics services and is the proprietor of M/s Chauhan Road Lines. Assessee filed his return of income for A.Y. 2020-21 on 10.01.2021, declaring total income of Rs. 42,53,970/. A search and seizure action was carried out in the case of Bansal Group of Bhopal u/s 132 of the Act on 18.11.2022. During the search, various incriminating documents/ loose papers were found and seized by the department. During the course of analysis of seized data, it was revealed that Bansal Construction Works Pvt. Ltd had given cash of Rs. 12,20,000/- to Chauhan Road Lines (Prop. Ganga Singh Chauhan), which was treated as escaped income in the hands of the assessee. The reassessment proceedings were initiated u/s 147 of the Act after obtaining approval from the competent authority u/s 151 of the Act. Notice u/s 148 of the Act was issued on 26.02.2024. Assessee filed return of income in response thereof on 09.01.2025. Statutory notices u/s 143(2) and 142(1) of the Act were also issued and served upon the assessee, seeking assessee to furnish his explanation. Assessee filed reply and denied to have received any cash from Bansal Construction Works Pvt. Ltd during the relevant financial year. The ld assessing officer noted that the assessee had business transactions with Bansal Construction Works Pvt. Ltd through banking channels amounting to Rs. 1,24,31,818/- and observed that the said payment of cash by Bansal Construction Works Pvt. Ltd to the assessee may not be ruled out as detected during the course of search and seizure, thus added the said unaccounted cash of Rs. 12,20,000/- u/s 69A r.w.s. 115BBE of the Act in the hands of the assessee.
4. Aggrieved, assessee preferred an appeal before ld CIT(A), who dismissed assessee’s appeal, confirming the assessment order in verbatim.
5. Appellant assessee has preferred this second appeal on the following grounds:
“1) That the Learned CIT(A)/Assessing Officer erred in facts and circumstances of the case in making addition of Rs 12,20,000/- to the income of the assessee.
2) That the Learned Assessing Officer did not provide any material on which he relied upon in making addition of Rs 12,20,000/-
3) Any other point will be raised at the time of hearing.”
6. Appellant assessee neither responded nor moved any adjournment request. Perused the records and heard ld Sr DR for the respondent revenue. The matter is being adjudicated on merits.
7. The main point for determination under appeal is as to whether ld CIT(A) has erred in confirming the addition of Rs. 12,20,000/- as unaccounted cash in the hands of assessee u/s 69A r.w.s.115BBE of the Act?
8. On perusal of records, it transpires that the reassessment proceedings were initiated against the appellant assessee on the basis of the information consequent upon the search and seizure action dated 18.11.2022 conducted on Bansal Group of Bhopal u/s 132 of the Act, suggesting to have found certain incriminating documents/ loose papers (from the premise of third party), on the basis of which assessee was alleged to have received a cash amount of Rs. 12,20,000/- from Bansal Construction Works Pvt. Ltd. The assessment order does not speak as to what kind of incriminating document/ loose paper was found during the said search. Nothing is on record to suggest that the copies of the said incriminating documents/ loose papers were ever furnished to the appellant assessee? Ld assessing officer has added the impugned amount in the case of assessee merely on the basis of guess work stating that since the assessee had the business relations with the Bansal Construction Works Pvt. Ltd and had transaction amounting to Rs. 1,24,31,818/- through banking channels, therefore, the payment of impugned amount in cash by Bansal Construction Works Pvt. Ltd to assessee may not be ruled out. The foundation of said detection is not disclosed in the assessment order as to what was the document and what was printed or written material on the said documents. We do not find even a prima facie documentary/ oral evidence to sustain the impugned addition, hence the same stands deleted. The impugned order confirming the impugned addition is thus unsustainable. The aforesaid point is accordingly determined in positive in favour of the appellant assessee and against the respondent revenue. This appeal is liable to be allowed.
ITA No. 144/Agr/2026
9. This appeal has been preferred against the impugned order dated 22.12.2025 passed in Appeal No NFAC/2020-21/10467240 by the ld Commissioner of Income Tax(Appeals), NFAC(DELHI) u/s. 250 of the Income Tax Act, 1961, for the A.Y. 2021-22, wherein ld CIT(A) has dismissed assessee’s appeal, confirming the addition of Rs. 10,45,000/- made on account of unaccounted cash and added u/s 69A r.w.s. 115BBE of the Act in the total income of the assessee, vide assessment order dated 30.03.2025 passed u/s 147 of the Act.
10. The facts and issue involved in this case are exactly similar and identical to the one involved in ITA No. 143/Agr/2026 except that in this case, an addition of Rs. 10,45,000/- has been made as unaccounted cash in the hands of the assessee as against the addition of Rs. 12,20,000/- made in ITA No. 143/Agr/2026. Our findings in ITA No. 143/Agr/2026 shall mutatis-mutandis apply in this case also. This appeal is thus liable to be allowed.
11. In the result, the assessee’s appeals viz ITA No. 143&144/Agr/2026 are allowed.
Order pronounced in Open Court on – 13.10.2026
