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Judgment
PER NAVEEN CHANDRA [ACCOUNTANT MEMBER]:
The above captioned two appeals are preferred by the assessee against the order dated 12.09.2025, passed by Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)/NFAC], under section 250 of the Income Tax Act, 1961 [hereinafter referred to as, ‘Act’] arising out of the Assessment Order dated 20.12.2019 passed by the Income Tax Officer, Ward – 60(8), Delhi (hereinafter referred as ‘the AO’) under section 143(3) of the Act for Assessment Year 2017-18 & penalty order dated 16.08.2021, passed by Learned NFAC, Delhi under section 270A of the Act for Assessment Year 2017-18.
Since the above captioned appeals were heard together and the facts in issues are identical, both the appeals are being disposed of by this common order for the sake of convenience and brevity.
The grounds of appeal raised by the assessee in ITA No.7949/Del/2025 are as under:
“1.That on facts and in law addition of Rs. 6,02,25,496/- made u/s 69 by Ld. AO on account of cash deposited in bank accounts is totally wrong and unjustified. During the year under consideration assessee has deposited cash of Rs. 88,47,000/- in bank accounts which are in the nature of sales made in routine way and duly accounted for in books of accounts. Therefore, the basis taken by Ld. AO as well as Ld. CIT(A) to confirm the addition of Rs. 6,02,25,496/- u/s 69 is totally wrong and unjustified and same deserves to be deleted in full.
2.That on facts & in law applying 8% G.P rate on credit entries amounting to rs. 148,37,053/- as appearing in bank account and making addition of Rs. 11,64,964/-is totally wrong & unjustified. Credit entries in bank accounts are fully explainable and have taken place in normal course of business activities. Therefore, addition of Rs. 11,86,964/- made u/s 69A of the Act deserves to be deleted in full.
3.That on facts & in law treating entire sundry creditors of Rs. 49,50,603/- as assessee income is totally wrong & unjustified. Most of the creditors are on account of opening balance and assessee books of accounts are subject to tax audit u/s 44AB of the Act. Therefore, addition of Rs. 49,50, 603/- deserves to be deleted in full.
4.That on facts & in law addition of Rs. 75,92,000/- to the returned income on account of purchase of property is totally wrong & unjustified. Ld. AO has stated that source of investment is unverified but Ld. AO had allowed only one day to justified the investment in property. In appeal CIT(A) has not considered the assessee's contention. Therefore, the basis take by Ld. AO as well as CIT(A) to treat the investment in property as unexplained investment is totally wrong, unjustified & illegal and addition of Rs. 75,92,000/- deserves to be deleted in full.
5.That on facts & in law initiation of penalty proceedings u/s 271AAC(1) & 270A is totally wrong & unjustified. Total cash deposited in bank accounts are fully explainable and duly recorded in books of accounts and other transactions/credit entries are fully explainable & verifiable.
6.That charging of interest u/s 234A, 234B and 234C of The Act is excessive and not chargeable on assessee and same deserves to be deleted in full.
7.Assessee craves leave to add, amend, alter or withdraw any of the ground of appeal on or before the date of hearing.”
Brief facts as culled from the record are that the assessee is carrying on business of trading in printing and stationary items under the name and style of M/s. Asha Prakashan. Assessee had filed return of income for A.Y. 2017-18 on 31.10.2017 at total income of Rs.6,95,450/- after claiming deduction of Rs.2,35,000/-. Thereafter case was selected for scrutiny assessment.
The AO during the assessment proceedings, added Rs.6,02,25,496/- as unexplained cash deposit in eight bank accounts of the assessee as income of the assessee; estimated 8% of income on credit entries in the bank of Rs 1,48,37,053/-; added Rs 49,50,603/- as unexplained creditors; added Rs 75,92,000/- as unexplained investment in property and disallowed deduction under chapter VIA of Rs 2,35,000/-.
Aggrieved, assessee was in appeal before the learned CIT(A)/NFAC in which learned CIT(A)/NFAC upheld the additions. Aggrieved, assessee is now in appeal before us.
The ld counsel of the assessee argued that there is no such sum Rs.6,02,25,496/- deposited in banks. It is submitted that only Rs 56,63,000/- of cash has been deposited which is out of cash sales of Rs 1,46,55,762/-. It is further submitted that one account 3080008700000422 belongs to her son and has nil cash deposit as against Rs 1,09,01,528/- assumed by the AO. The ld AR stated that the addition u/s 44AD is not warranted as the books are duly audited and the AO has not rejected the books. The addition of sundry creditors are of period prior to AY 2017-18. With respect to investment in property, the ld AR stated that the same is made from his son’s account and submitted the documents such as bank statement of the son for the first time before us as additional evidence.
Per contra, the ld. DR relied upon the orders of Assessing Officer.
We have heard the rival submissions and have perused the relevant material on record. We find that the AO has not made proper and due enquiry of the bank statements in Punjab National Bank to ascertain the quantum of cash deposit. The claim of the assessee that one account 3080008700000422 in Punjab National Bank belongs to the son of the assessee and actual cash deposit during the year in this account is nil, has not been examined/verified. Further the issue of sundry creditors and additions u/s 44AD requires a fresh adjudication. We further find that the investment in property could not be explained with evidence before the AO/CIT(A) and accordingly, in the interest of justice, the same are admitted now. In view of the fact and circumstances of the case, we are of the view that the issues involved in the instant case be re-examined by the AO. The AO is directed to afford three effective opportunities to the assessee to represent its case and after verification make a fresh adjudication. The assessee is likewise directed to avail the opportunities and furnish evidence/documents as required. Appeal of the assessee is allowed for statistical purpose.
ITA No.7950/Del/2025
As the quantum appeal is set aside to the file of the AO, the penalty u/s 270A is also set aside to the file of the AO for a fresh consideration. Appeal of the assessee is allowed for statistical purpose.
In the result, both the appeals of the assessee in ITA Nos. 7949 & 7950/Del/2025 is allowed for statistical purposes.