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Judgment
PER MADHUMITA ROY, JUDICIAL MEMBER:
The instant appeal filed by the assessee is directed against the order dated 31.10.2025 passed by the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi [hereinafter referred to as the Ld. CIT(A)] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the Assessment Order dated 27.12.2024 passed by the Assessment Unit, Income Tax Department (hereinafter referred to as ‘the ld. AO’) under Section 147 r.w.s. 144B of the Act for Assessment Year 2020-21.
The assessee, an individual, carrying on the business of tour operation and ticket booking under the proprietorship concern, namely, M/s Destination Holidays, filed its return of income for AY 2020-21 declaring income at Rs.21,63,610/-. Subsequently, on the basis of information available on Insight Portal indicating high risk transactions, it was found that the appellant deposited Rs.5,66,17,450/- in cash in the HDFC Bank account during the FY 2019-20. The declared gross receipts were Rs.2,60,15,311/- and other income of Rs.10,94,546/- aggregating to Rs.2,71,09,857/-, leaving Rs.2,95,07,593/- as unexplained. The case of the assessee of the assessee was reopened under Section 147 of the Act upon issuance of notice under Section 148 dated 29.03.2024. However, no return of income in response to the said notice was filed. The Ld. AO proceeded thereafter upon issuing notice under Section 142(1) of the Act and notice under Section 133(6) was also issued to various banks and travel agencies responses whereof confirmed large cash transactions.
It is the case of the appellant that the deposits were from clients for travel booking including reimbursements and advancement and, therefore, the GST returns, financial statements and bank records were furnished. Surprisingly, discrepancies were too found between the GSTR -1 invoice value of Rs.1,78,78,652.44 and declared receipt of Rs.2,71,09,857/-. The assessee failed to reconcile the total deposits to substantiate them with credible evidence and, therefore, in the absence of lack of explanation, authenticity and documentary support and since no separate accounts or verifiable reconciliation of reimbursements were produced, the AO treated the said amount of Rs.2,95,07,593/- as unexplained money and added the same under Section 69A r.w.s. 115BBE of the Act in the hands of the assessee determining the total income at Rs.3,16,71,203/- which was further confirmed by the First Appellate Authority. Hence, the instant appeal before us.
Thus, the addition of Rs.2,95,07,593/- is the subject matter before us. During the course of assessment proceedings, in order to verify the genuineness of the transaction, notice under Section 133(6) of the Act was issued to the SBI Business Process Management Services Pvt. Ltd., Interglobe Technology Quotient Private Limited, Standard Chartered Bank, FCM Travel Solution Private Limited, HDFC Bank Limited and RBL Bank Limited whereupon bank statements and/or information in respect of the assessee was provided which was also available in the Form No.26AS of the assessee. The Ld. AO among other observations also found it to note that the contention made by the assessee’s reply dated 14.08.2024 in respect of questionnaire to notice under Section 142(1) of the Act issued on 01.08.2024 are contradictory to each other as the assessee replied that he was engaged in the business of tour and travels only and no other business was carried on during the year under consideration. But, the documents furnished reveal something different. The total invoice value of Rs.1,78,652.44 which means that the assessee must have received this amount in relation to his service as well as reimbursement of expenses. If that be so, the assessee did not disclose the complete receipt during the year under consideration. In the absence of any details furnished in regard to the source of cash deposit of Rs.2,95,07,593/-, show cause notice was issued proposing addition of the same under Section 69A r.w.s. 115BBE of the Act. The assessee replied, however, the same was not found to be acceptable and the AO, in the absence of non-furnishing of relevant documents and plausible explanation that the substantial evidence in regard to the source of deposits/credits made in the bank account during the year under consideration the amount of Rs.2,95,07,593/- was treated as unexplained money under Section 69A r.w.s. 115BBE of the Act and added in the hands of the assessee with the following observations:-
“3.3Summary of information/evidence collected which proposed to be used against it(attach documents if required) In order to verify the genuineness of transaction, a notice u/s 133(6) of the Act was issued to the SBI business Process Management Service Private Limited, Interglobe Technology Quotient Private Limited, Standard Chartered Bank, FCM Travel Solution Private Limited, HDFC Bank Limited and RBL Bank Limited. In response thereto, the above mention authority has provided the bank statements/Information’s in respect of above said assessee of the concerned year. These information are also available in Form No.26AS of the assessee.
3.4 Variation proposed on the basis of inference drawn (specify the basis of inference and quantify the variation proposed, if possible).
On perusal of bank statement it has been noticed that assessee deposited cash in his bank account amounting to Rs. 5,66,17,450/- during the year under consideration. Assessee also contended that he has only business income and interest income as offered in Income Tax return during the year under consideration. On perusal of GSTR-1 of assessee, it has been noticed that assessee shown taxable service amounting to Rs. 27,83,915/-and taxable service as per GSTR-3B amounting to Rs. 27,85,441/-. But while going through GSTR-1 “Total Invoice Value” column it has been noticed that assessee received Rs. 1,78,78,652.44/- from client including his service amount as well as reimbursement of expenses but while going through financial statement and ITR it has been noticed that assessee offered gross receipt of Rs. 2,71,09,857/-. So all documents and contention made by assessee in reply dated 14.08.2024 in respect of questionnaire to notice under section 142(1) issued on dated 01.08.2024 are contradicted to each other as assessee in his reply contended that he has engaged in business of tour and travels only and no other business carried out during the year under consideration but document furnished by assessee reveals something different because Total Invoice Value include anything provided to assessee whether service provided by assessee or other party by their client. If total invoice value is Rs. 1,78,78,652.44/-, it means that assessee received this amount in relation to his service as well as reimbursement of expenses. If total invoice value(Gross Receipts) of assessee during the year under consideration is amounting to Rs. 1,78,78,652.44/- it means that assessee did not disclose complete receipts during the year under consideration.
On perusal of ITR and financial statement filed by assessee, it has been noticed that assessee had declared gross receipts of Rs. 2,60,15,311/-only and other direct income of Rs. 10,94,546/- aggregating to Rs. 2,71,09,857/- declared net profit of Rs. 14,28,959/-. Therefore remaining amount of Rs. 2,95,07,593/- (Rs.5,66,17,450/- minus Rs. 2,71,09,857/- is undeclared/unexplained credit/cash of taxpayer. The assessee has not furnished any details with regard to the source of deposits made into the bank amounting to Rs. 2,95,07,593/- as assessee not taken into account while filing GST return as well as ITR. The assessee has simply stated that whatever cash deposit transaction mention in bank accounts are whatever cash collected from client, other than this he does not have any source of income and the only source of income was already disclosed by him in his return of income. The reply of the assessee is not acceptable because he did not furnish any plausible explanation with substantial evidence regarding the source of deposits/credits made in bank account during the year under consideration. Therefore, the said amount of Rs. 2,95,07,593/- is proposed to be treated as unexplained money u/s 69A of the Act r.w.s. 115BBE of the Act of the assessee and added to the total income of the assessee. Penalty u/s 271AAC of the I.T.Act, 1961 are proposed to be initiated separately
Accordingly, a show cause notice was issued to the assssesee on 03.12.2024 proposing an addition of Rs. 2,95,07,593/- under section 69A read with section 115BBE of the Act owing to the fact that assessee failed to furnish plausible explanation with substantial evidence regarding the source of deposits/credits made into the bank. The assessee was required to furnish his reply along with evidence /documents by 09.12.2024. In response thereto, assessee furnished his reply along with necessary documents on the stipulated date. It is stated by the assessee that he has deposited cash of Rs.5,54,71,650/- in all his bank accounts including Savings A/c. but figure of Rs. 5,66,17,450/- claimed by the department is not correct. Assessee further stated that in Form GSTR-1 under GST they include their gross billing including reimbursement. If they describe nature of business and as a tour operators they offered their services only on reimbursement plus their service charges plus GST on the services charges. In GSTR-I they declare their service charges and GST on that. Being in most of the cases their services include future bookings the exact amount of reimbursement are not certain at the time of booking hence they generally receive the round figure/approximate amount and final settlement is happens only when the actual travel is done. Further in some of the cases bookings either changes or cancelled. In short the final settlement is done on the actual date of execution of the travel. Regarding variation in the figures mentioned in the profit and loss account it is stated that most of the time the exact amount of ticket and other related expenditure are not certain at the time of booking so it is to be mentioned in the gross consolidated billing. In the first instance the amount of re-imbursement is clear and mentioned in the billing along with service charges and GST. In that case the turnover includes only the service charges. But in other instance where the actual re-imbursement is not clear than the turnover includes the re-imbursement part also. In second type of cases the usually claim the re-imbursement part as expenditure. In support of his contention assessee drawn a table in which he has mentioned the details of air ticket purchases, hotel booking purchases and other direct purchases with the details of gross amount of purchases, reimbursement claimed and net expenses claimed.
Moreover, assessee has also sought an opportunity of being heard through video conference. Accordingly, a video conference held on 11.12.2024 at 4.00 P.M. in which assessee’s counsel present and described his contentions. During the course of hearing assessee stated all the things which were mentioned in his reply dated 09.12.2024. These contentions have been perused and considered carefully. These contentions prima facie were made as per asssessee’s own wishes and whims. The assessee has not made any separate and authentic accounts which explained exact working of the business. The accounts submitted by the assessee are not reliable and fully explained. Therefore, assessee failed to prove the correctness of the said cash deposit/credits with authentic evidence with self explanatory reply.
The reply of the assessee is not acceptable because he did not furnish any plausible explanation with substantial evidence regarding the source of deposits/credits made in bank account during the year under consideration. Therefore, the said amount of Rs. 2,95,07,593/- is treated as unexplained money u/s 69A of the Act r.w.s. 115BBE of the Act of the assessee and added to the total income of the assessee. Penalty u/s 271AAC of the I.T.Act, 1961 are being initiated separately.
With the above observations, the variation made is as under :-
5. Table of Addition proposed :-
Income declared in return filed in response to the
notice U/s 139 of the Act
Rs. 21,63,610/- Addition as per para-3.4 above Rs. 2,95,07,593/- Total Income assessed Rs.3,16,71,203/- Assessed under section 147 read with section 144B of the Act. Penalty proceedings U/s 271AAC(1) of the Act are being initiated separately.”
Before the First Appellate Authority, the assessee filed its written submission which was duly noted by the Ld. CIT(A) and consideration whereof further reveals that the appellant deposited cash totaling approximately to Rs.5.66 crore in the bank account whereas the assessee declared amount of Rs.21.63 lakh and gross receipt of Rs.2.71 crore which included business income and other direct income. As there was a gap between the declared turnover and cash deposits figured the AO’s scrutiny and the cash receipts were in amounts ranging from Rs.50,000/- to Rs.2 lakh raising suspicion due to non-compliance with prescribed KYC, i.e., Know Your Customer norms under Section 139A(5)(c) r.w.r 114B. The own admission of the assessee regarding the uncertainty in exact reimbursement amount and delayed settlements resulting in complete accounting and under-reporting of income as observed by the Ld. AO was further considered by the Ld. CIT(A). In fact, the deposit of Rs.5.54 crore was not properly explained by purchase ledgers or customer lists.
Considering the entire aspect of the matter and the inquiry conducted by the Ld. AO, the addition under Section 69A of the Act upon correctly assessing income and to detect unaccounted or unexplained amounts was confirmed by the Ld. CIT(A). The Ld. CIT(A), therefore, dismissed the appeal preferred by the assessee with the following observations:-
“5.3.1I have carefully considered the facts of the case, the assessment order, the grounds of appeal, the appellant’s submissions, and all material on record. The appellant, engaged as a tour operator and ticket booking agent, challenges the addition made by the AO under section 69A of the Income Tax Act, relating to unexplained cash credits in the appellant’s bank accounts during the relevant financial year. The assessment order reveals that the appellant had cash deposits totaling approximately Rs. 5.66 crore in bank accounts, whereas the appellant declared an income of Rs. 21.63 lakh and gross receipts of Rs. 2.71 crore, which included business income and other direct income. This wide gap between declared turnover and cash deposits triggered the AO’s scrutiny. The AO, utilizing information from the Insight portal and detailed bank statement analysis, flagged these cash deposits as high-risk transactions. Notably, a significant number of cash receipts were in amounts ranging from Rs. 50,000 to Rs. 2 lakh, which raised suspicion due to non-compliance with prescribed Know Your Customer (KYC) norms under section 139A(5)(c) read with Rule 114B. The AO observed that the declared turnover and income did not reconcile with the volume and value of cash deposits, and this gap was unexplained by the appellant.
5.3.2As a result, the AO treated the difference nearly Rs. 2.95 crore as unexplained cash credits under section 69A. Section 69A enables the AO to add to income any cash credits for which the assessee fails to provide a satisfactory explanation regarding the nature and source. The appellant argued that the cash deposits largely comprised reimbursements received from clients, along with service charges and GST, which are typical in the travel agency business. It was contended that reimbursements are merely pass-through amounts and do not constitute income. The appellant explained that due to the nature of the travel business involving future bookings, cancellations, adjustments, and final settlements only after travel completion exact reimbursement amounts cannot always be determined at the time of filing returns or billing. To substantiate these claims, the appellant furnished financial statements, GST returns (GSTR-1 and GSTR-3B), bank statements, audit reports, and detailed purchase ledgers. The appellant further submitted a reconciliation table attempting to correlate purchases and reimbursements with cash deposits. The appellant asserted that service charges and GST collected on these transactions had been appropriately declared as income and reflected in turnover figures. Based on this, the appellant contended that the invocation of section 69A was misplaced and that the deposits corresponded broadly with genuine business transactions. The AO, however, found the appellant’s explanations unsatisfactory and inconsistent with documentary evidence. The GSTR-1 returns and financial statements reflected discrepancies in turnover and failed to reconcile fully with the cash deposits. The appellant did not produce authentic books or accounts that distinctly demarcated reimbursements from business income, resulting in blurred accounting treatment.
5.3.3The AO noted that the appellant’s own admission regarding the uncertainty in exact reimbursement amounts and delayed settlements pointed to incomplete accounting and underreporting of income. The bank statements showed cash deposits in savings accounts amounting to Rs. 5.54 crore, which were not satisfactorily explained by purchase ledgers or customer lists. Consequently, the AO concluded that the unexplained cash credits of approximately Rs. 2.95 crore did not represent genuine business receipts but income that had escaped assessment, warranting addition under section 69A read with section 115BBE. The legal position under section 69A is clear: when an assessee fails to provide a satisfactory explanation regarding the nature and source of cash credits, such credits are deemed to be income of the assessee and added to taxable income. The onus lies squarely on the assessee to establish the genuineness of such deposits. This principle has been consistently upheld by judicial precedents, including the decisions in Sudhir Kumar Sharma (HUF) v. CIT, Kavita Chandra v. CIT, and Ravinder Kumar v. ITO. Mere assertion without credible documentary proof or coherent, verifiable accounts does not discharge the burden of proof. In this case, while the appellant correctly asserted that reimbursements are pass-through amounts and not income per se, the appellant failed to establish the genuineness and exact nature of these transactions through reliable and verifiable evidence. The lack of clear and consistent accounting, discrepancies in turnover reporting, and failure to reconcile cash deposits with declared income resulted in an untenable position.
5.3.4The appellant contended that the AO mechanically adopted the allegations and observations contained in the show-cause notice without due consideration of the appellant’s detailed replies, thereby violating the principles of natural justice and rendering the assessment order invalid. However, on careful perusal of the assessment order and the material placed on record, it is evident that the AO has duly examined the appellant’s submissions, including the purchase ledgers, bank statements, confirmations, and detailed explanations furnished during the course of assessment. The AO has applied his judicial mind and independently evaluated the genuineness of the receipts. The findings recorded in the assessment order are based on identified inconsistencies in the accounts and the appellant’s failure to satisfactorily reconcile the cash deposits with the declared income, and not on a mere reproduction of the show-cause notice.
5.3.5It is a settled legal position that the AO is empowered to reject explanations which are not substantiated by reliable evidence or which contain contradictions. The AO’s statutory duty to correctly assess income and to detect unaccounted or unexplained amounts justifies the examination and consequent addition made under section 69A. The appellant, being the party asserting the genuineness of the receipts and the claim of reimbursements, bore the burden of proof to substantiate such claim with credible documentary evidence. Having failed to do so, the AO was justified in not accepting the explanation offered.
5.3.6Upon careful examination of all submissions, documents, and applicable legal principles, it is evident that the appellant has not discharged the onus of satisfactorily explaining the source and nature of the cash deposits aggregating to Rs. 2.95 crore. The explanations, though stated in principle, remain unsupported by consistent or verifiable evidence. The discrepancies between the cash deposits, declared turnover, GST returns, and accounting records continue to persist. The AO’s invocation of section 69A and consequential addition under section 115BBE are, therefore, in accordance with law and supported by the facts on record.
5.3.7Accordingly, the appellant’s contention regarding mechanical adoption of the show-cause notice is found to be devoid of merit. The addition of Rs. 2.95 crore made under section 69A read with section 115BBE is confirmed. Consequently, the ground of appeal is dismissed, and the assessment order is upheld in toto.”
In the absence of onus having not been discharged satisfactorily explaining the source and nature of cash deposits aggregating to Rs.2,95,07,593/-, further having regard the discrepancies between the cash deposits, declared turnover, GST returns and accounting records which are also before us, the addition invoking the provisions of Section 69A of the Act and the consequential addition under Section 115BBE of the Act is found to be just and proper so as not to warrant any interference.
In the result, the appeal filed by the Assessee is dismissed.