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Judgment
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2017-18, arises against the C IT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2025-26/1077804907(1) dated 25.06.2025, in proceedings u/s 143(3) of the Income Tax Act, 1961.
Heard both the parties at length. Case file perused.
Learned counsel submits very fairly that the assessee does not wish to press his first and foremost legal ground challenging non-issuance/service of section 143(2) allegedly vitiating the assessment itself. Rejected accordingly.
We next advert to the so le surviving issue between the parties regarding correctness of the learned lower authorities’ actio n treating the assessee’s cash deposits of Rs.1,40,00,000/-as unexplaine d; in assessment order dated 2 2.12.2019 as uphe ld in the lower appellate discussion reading as follows:
“6. Decision: -
I have perused facts o f the case, assessment or der of the AO, submission of the appellant and the documents available on record & afte r consider ing the same, adjudicatio n o f various gro unds o f appeal is as unde r:
6.1Ground N0.I is general in nature.
6.2Ground No . 2 pert ains to the addition made by AO of Rs.1,40,00,000/- as une xplained cash credit. The appe llant has stated that he made following withdrawals before demonetization pe rio d from his bank acco unt for operating the business activities for making cash payments to his suppliers which are mostly sm all khark ane dar s: The appellant contended that amount of R s. 1,40,00,000/-was w ithdrawnwithdraw n by emplo yee of the appellant named Deepak which was unnecessarily disputed by AO claiming that emplo yee o f the appellant named Dee pak is a different person than the perso n named Deepak who has withdrawn from bank. T he appe llant submitted that Deepak has a paternal house in Sambhal but due to job he resides in Mor adabad. There fore , he was issue d two Voter Ids one at Sambhal address and one at Moradabad Address. Further, the appellant contended that AO has not brought any co gent mate rial o n reco rd to prove that cash withdrawal of Rs. 1,40,00,000/- was paid to some other person and cash was re-deposited in the bank was from undisclose d so urce s.
6.2.1The contention made by appel lant is without any merit in it. F irstly, the appe llant has claimed that he withdrew cash of Rs.1,56,00,000/- from 03.11.2016 to 05.11.2016 to make cash payment to his supplie rs/khark anedars. Howe ver, it is noticed that on 03.11.2015 ope ning cash balance of the appellant was Rs.53,53,684/-. His expense o n 03/11/2016 was Rs.9,67,570/- which indicates that, had there been no cash withdrawal, appe llant’s opening cash in hand was more than sufficient to meet the e xpenses. His expense on 04/11/2016 and 05/ 11/2016 were Rs. 10,12,520/- and Rs.8,95,720/- re spectively. His cash expense til l 08/11/ 2016 were as below:
Date Amount o f cash expense
06/11/ 016 Rs.40,000/-
07/11/ 2016 Rs.9,02,898/-
08/11/ 2016 Rs.35,460/-
09/11/ 2019 Rs.14,785/-
From the abo ve , it can be seen that maximum cash expenditure the appe llant incurre d was o n 07.11.2016 amounting to Rs. 9,02,898/- . The above facts do not justify cash withdrawal of Rs. 1,56,00,000/- on mere three days befo re demonetization for the purpose of business payment to supplie rs as claimed by the appe llant.
Further, the appellant has claimed that AO has unnecessar ily doubted about the identity of Dee pak claiming that Deepak, emplo yee o f the appe llant and Dee pak , who withdre w cash from bank are different pe rsons. The contention of the appellant is without any substance in it. The Voter ID submitte d by the appe llant was compared with the Voter ID pro vided by bank and fo llowing discre pancies wer e found by the AO:
cards following discrepancies were fo und:
Items As per VOTER ID card of Deepak provided by Assessee As per VOTER ID card of Deepak provided by Bank Remarks Name Dipk Kumar Deepak Kumar Name spelling mismatch Father's Name Kamendra Singh Kamindra Singh Almost Matches Date of Birth xx/xx/1992 05/06/1990 Extremely Mismatch Photo As seen in Image no. 3 below As seen in Image no. 3 below Extremely Mismatch
Card no. XWV1147412 RLE0220081 Extremely Mismatch Date of Issue 24/03/2014 18/02/2014 Extremely Mismatch Address H.No.42, Sharipur, PS-Nakhasa, Teh-Sambhal, Dist-Sambhal. PIN-244302. H.No.915/24, Zahid Nagar, Bhaora Dehat., PS-Katghar, Teh-Moradabad, Dist-Moradabad. PIN-244001. Extremely Mismatch Signature As per Image no. 1 below As per Image no.2 below Extremely Mismatch Salary Bill For Sep 2016 Establishment for the month of Sep 2015 Station
No Name Depreciation Rate Period Amount Special Allowance Total Amount LESS DEDUCTION Net Advance Signature Rs % Rs % Rs % Adverse Value Other Deficiency Total Deficiency Rs % 1. Amanda Suraj 10,000 10,000 30 10,000 10,000 2. Saif Hau 10,000 10,000 30 10,000 10,000 3. Saif Hau 10,000 10,000 30 10,000 10,000 4. Saif Killah 10,000 10,000 30 10,000 10,000 5. Roy Aun 10,000 10,000 30 10,000 10,000 6. Madam Khan 10,000 10,000 30 10,000 10,000 7. Wakem 10,000 10,000 30 10,000 10,000 8. Deepan 10,000 10,000 30 10,000 10,000 IMAGE -1
From the above, it is clear that bo th persons are different as bo th have diffe rent date of births, different addresses, different signatures and differe nt photos in ID cards. Therefore, is clear that Dee pak who withdre w the cash from bank or to whom payment was made is diffe rent person from Dee pak who is employee of the appellant.
Moreover, the appe llant has not submitted any documentary evidences in suppo rt of his claim that both persons are same and two Voter I ds were issued to the same person due to diffe rent resi de nces one in Sambhal and o ne in Moradabad. The o nus of proving the genuineness and correctness o f the documents filed by the appellant lied on him. Howe ve r, the appellant has failed to do so in this case .
The appellant’s co ntention that due to clerical mistakes, discrepancies are reported in Vote r Ids, does not pass the test of human probability as there are multiple discrepancies namely DOB, address, signatures, photos.
From the abo ve facts, it is cle ar that the argument submitted by the appellant that the cash deposited in banks during the demonetization pe riod was out of cash withdrawals is not correct as the appellant has faile d to link the cash de po sit with cash withdrawals.
Hon’ble Punjab & Har yana High Court in case o f Smt. Kavita Chandra vs. Commissione r of Income-tax (Appe als) [2017] 81 taxmann.com 317 ( Punj ab & Har yana)[07- 03-2017] he ld that "Cash withdrawals were made for pur pose of business and s ame was not available fo r redeposit and, assessee was unable to link cash withdrawn from bank to cash deposit, same would be he ld to be assessee's unexplaine d incom e".
In case of Parveen Kumar vs. Com missioner o f Inco me-tax, Ludhiana [ 2019] 110 taxmann.com 256 (Punjab &Haryana)[16-03- 2018] , the Hon’ble Punj ab &Haryana High Court held where there was no specific evidence to explain assessee's stand that amount de posited in bank was actually his salary/income that was withdrawn earlier and rotated from time to time and that same was re-deposited in cash, additio n made as undisclose d income was justified.
6.2.2In view of the abo ve discussion and above mentioned judicial pronouncements, I am of the view that AO has rightly made addition of Rs.1,40,00,000/- as unexplaine d cash credit. Accordingly, addition made by AO is confirmed. Ground No . 2 of the appeal are dismisse d.
6.3Further, the conte ntio n of appellant raise d in Ground No. 4 o f the appeal is without any m erit in it.
As per Pro visions of Section 115BBE, where the total income of an asse ssee determined by the AO includes any income referred to in section 68, 69, 69A, 69B , 69C or sec 69D of the Act, the said incom e shall be charged to Income Tax at sixty percent. Accordingly, as per provisio ns of the Act, the said obje ction of the appellant stands rejected. Ground No. 3 o f the appeal is dismissed.”
This is what leaves the assessee aggrieved.
Both the learned representatives reiterate their respective stands against and in support of the impugned addition. The Revenue could hardly dispute that this assessee/an individual manufactures, supplies and exports Indian handicrafts coupled with sale of zinc and aluminum ingots. And that he had declared total business turnover of Rs.33,55,73,563/- which stands accepted in the assessment order itself. That being the case and keeping in mind the fact that possibility of cash purchases and sales in such a situation involving an unor ganized sector could not be entirely brushe d aside. We thus are of the considered view that a lump sum additio n of Rs.8 ,00,000/- only in the given fact would be just and proper with a rider that the same shall no t be tre ated as a precedent. The assessee gets relief of Rs.1 ,32,00,000/- in o ther words. We make it clear before parting that we have accepted the asse ssee’s case in principle that the impugned cash deposits for m part of his regular business turnover.
So far as assessee’s assessment under Section 115BBE is concerned, we quote S.M.I.L.E Microfinance Limited Vs. The ACIT CC-1 in W.P.(MD) No.2078 of 2020 & W.M.P. (MD) No. 1742 of 2020 held that the said provision applie d for transactions done on or after 01.04.2017 only. T he assessee is accor dingly directed to be assessed under nor mal provisions only
This assessee’s appeal is partly allowed.