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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)-NFAC, Delhi [‘CIT(A)’ in short] dated 13.08.2025 arising from the assessment order dated 22.06.2021 passed by the Assessing Officer, NeAC, Delhi under section 143(3) read with section 144B of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2018-19.
Brief facts of the case are that assessee works as a commission agent at Delhi Ginger Trading Co. and Hari International, acting as commission agent (Arhtias) in Azadpur Mandi. The assessee filed a return of income for the A.Y. 2018-19, declaring an income of Rs.9,87,850/- on 12.09.2018. Later on, the case was selected for scrutiny under CASS for the reason of ‘cash deposit’ and investment in immovable property’. The assessment order u/s 143(3) of the Act was passed on 22.06.2021 assessing total income of Rs.11,93,54,934/- after making additions on account of cash deposit in bank account of Rs.10,83,07,084/- and investment in purchase of property of Rs.1,00,60,000/-. Aggrieved by the order of AO, assessee was in appeal before the CIT(A). Learned CIT(A) dismissed the appeal.
Aggrieved, assessee is before us with the following grounds:
1.The Ld. CIT(A) has erred in upholding the order of the Ld. AO of treating the Cash Deposit of ₹10,83,07,084/- as unexplained income u/s 68 of the Income Tax Act, 1961.
2.The Ld. CIT(A) has erred in upholding the order of the Ld. AO of treating the Investment of ₹1,00,60,000/- in immovable property as unexplained investment u/s 69 of the Income Tax Act, 1961.
3.The Ld. CIT(A) has erred in upholding the above additions of ₹11,83,67,084/-made by Ld. AO in spite of the fact that no show cause notice was issued by the Ld. AO before making the above additions.
4.That the appellant craves leave to add, alter, amend, or withdraw any of the above grounds of appeal at the time of hearing or thereafter.”
At the outset, learned Counsel for the assessee submitted that the AO has found cash deposit in two bank accounts of ICICI Bank, an amount of Rs.10.83 crores. In absence of any explanation from the assessee, the AO has added the same under section 68 of the Act. The AO further found that assessee with Smt. Veena Bhasin jointly purchased a property for a consideration of Rs.1.92 crore. Assessee explained that the source of the purchase of the said property were cash sales/cash deposits in the bank generated out of business related to commission agency & business of green vegetables. The AO however did not find the explanation plausible and added the same under section 69 of the Act. Upon appeal, learned CIT(A) upheld the addition made.
We have heard the rival submissions and have perused the relevant material on record. We find the assessee is in the business of commission agency & business of green vegetables. In the instant case, we find that the assessee has attempted to prove the entire source of cash deposit as cash sales. Although the assessee, prima facie, appears to have discharged its onus of explaining source of cash deposit, it’s contentions to prove the source, hardly deserves to be accepted in entirety especially when the assessee did not make available the Cash Book. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention that cash deposit has been made out of sales and cash in hand, cannot be fully justified, more so when the AO has not pointed out any specific defects and has not rejected the books of account. In this factual matrix, there is some element of failure to explain some of the cash deposit, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of 25 lakh only would be just and proper with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The ground of appeal no 1 is partly allowed.
That leaves us with the additions on account of investment made on immovable property. We find that the assessee has explained the source of the purchase of property as being from cash sales as reflected in cash book of its proprietary concerns (submitted before the CIT(A)) and repayment of loan from Gaurav Agarwal. We have already accepted herein above that the major portion of cash deposit of around Rs 10.50 crore are from the sales of the proprietary concern. We are of therefore of the considered view that investment in the above said property can be plausibly explained from being out of the cash deposits generated from sales of vegetables and commission income from the same. The addition is, therefore, deleted. Ground 2 is allowed.
In the result, appeal filed by the assessee in ITA No.5877/Del/2025 is partly allowed.