ASSISTANT COMMISSIONER OF INCOME TAX, GHAZIABAD V. JASPAL SINGH SALUJA, GHAZIABAD

ITA 3979/DEL/2025

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(A) which had deleted an addition of Rs. 25,24,07,826 made by the Assessing Officer (AO) on account of cash credit under section 68 of the Income Tax Act, 1961. The AO had initially added this amount, suspecting it to be a bogus cash credit, due to the assessee's failure to provide satisfactory evidence during the assessment proceedings. However, during the appellate proceedings, the assessee provided substantial documentary evidence, including cash books, bank statements, and invoices, which were later accepted by the AO in the remand report. The CIT(A) deleted the addition based on these findings, leading to the Revenue's appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787326 (ITAT-DELHI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2018-2019
• Appeal Filed On: 18-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER KAUR
• Assessee Lawyers: R.S AHUJA
• Keywords: Business income; Additional evidence; Corroborative evidences; Bogus
• Section: 143(3); 68

Judgement Text

"ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 1 | P a g e IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 3979/DEL/2025 Asstt. Year: 2018-19 ACIT 201-202, 2nd Floor, CGO-1 Near Purani Hapur Chungi, Kamala Nehru Nagar, Ghaziabad Vs Shri Jaspal Singh Saluja R-7/21, New Raj Nagar, Ghaziabad- 201001 Uttar Pradesh (APPELLANT) (RESPONDENT) PAN No. AGPSS0863Q Assessee by : Shri R.S Ahuja, CA; Shri Pushpdeep Singh, Advocate Revenue by : Dr. Rajinder Kaur, CIT DR Date of Hearing: 18.11.2025 Date of Pronouncement: 18 .11.2025 ORDER Per Mahavir Singh, Vice President: This appeal is filed by Revenue, arising out of the order of Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi in Appeal No. NFAC/2017-18/10079682, vide order dated 17.04.2025. The Assessment was framed by AO of NFAC, Delhi for the AY 2018-19 u/s 143(3) read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as, “the Act”) vide his order dated 28.06.2021. Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 2 | P a g e 2. The only issue in this appeal of Revenue is as regards to the order of CIT(A), deleting the addition made by AO for an amount of Rs. 25,24,07,826/-, on account of cash credit u/s 68 of the Act. For this, the Revenue has raised six grounds which are reproduced as below: “ (a) On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs. 25,24,07,826/-, made by the AO by stating that the assessee has produced documentary evidences which conclusively establish the genuineness of the transaction, without considering the fact that even availing sufficient opportunities during assessment proceedings, the assessee failed to prove the genuineness of transactions. (b) On facts and circumstances of the case and in law, the Ld. CIT(A) has erred as he failed to observe that that banking facility exist at Hyderabad, Haridwar and Delhi and the assessee failed to deposit the cash on the above places and claimed that cash was brought from Hyderabad and other station which involves risk of theft etc. Also the assessee failed to give documentary evidence (Train TKT etc) in respect of its claim of carrying the cash through train from Hyderabad to Ghaziabad. (c) On facts and circumstances of the case and in law, the Ld. CIT(A) has erred as he failed to observe that cash sales are not conclusive proof of cash deposits at Ghaziabad, Haridwar and Delhi and transportation of the cash from these places to Ghaziabad was not conclusively proved and also it has not been explained as to why cash was not deposited at above three places when banking facility is available on all such places. (d) On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs. 25,24,07,826/- made by the AO, without Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 3 | P a g e considering the fact that during assessment proceedings the assessee could not prove that the branches of Haridwar, Hyderabad and Delhi actually existed. Further, assessee failed to prove conclusively whether sales of such amount took place at various branches and daily cash transfer totaling Rs. 25,24,07,826/- from respective branches of Delhi, Haridwar, and Hyderabad to Main Office in Ghaziabad actually took place. (e) On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs. 25,24,07,826/-, made by the AO, without considering the fact that during assessment proceedings the assessee was asked to furnish the mode of transfer of daily cash from branch offices to main office. However, assessee failed to furnish copy of train. (f) That the Ld. CIT(A) has erred is not taking the cognizance of the assessment order wherein it was categorically brought out that the assessee/AR was asked to file its explanation and supporting documents and the assessee failed to file complete documentary evidences despite the fact that the assessee was given many opportunities spanning a period of 6 months. Thus, the Ld. CIT(A) has not acted in consonance with the provisions of Income Tax Rule 46A while deciding the case. ” 3. Brief facts of the case are that the Assessee is engaged in the business of trading in electronic items and mobile phones. The AO noticed that during the course of assessment proceedings, the Assessee has made cash deposits to the tune of Rs. 31,62,46,750/- during the FY 2017-18 relevant to the AY 2018-19. The AO required the Assessee to explain and file details with respect to these cash deposits. The Assessee explained that he was engaged in the business of retail sale of electronic items and mobile phones and some of the items are of very low price and are of such nature that earn the maximum counter sales is Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 4 | P a g e excluded in cash only. He explained that the Assessee has executed total sale of Rs. 247,55,26,230/- and the same is incorporated in the trading account and profit and loss account. The assessee explained that this deposit is out of sales. The Assessee before the Assessing Officer submitted cash book, ledger and copy of bank statements. The Assessee was again asked to furnish bank statement, highlighting the above cash statements and copy of cash sale register etc. The AO further submitted that the main office is Ghaziabad whereas there are branches at Delhi, Haridwar, and Hyderabad wherefrom cash sales are also transferred to Ghaziabad. The Assessee filed complete details of sales and cash transfer to Head Office which is recorded by the AO at Para 4.4 while quoting the reply of Assessee and also statement of date-wise sums transferred from Branch to Head Office against cash sales. The AO after considering the reply of the Assessee, rejected the Assessee’s explanations by stating that the Assessee could not furnish the details of movement of stock from purchaser and retail sales. The Assessee also could not segregate into cash sales and sales through banking transactions. The AO was of the view that the Assessee could not produce or furnish transport receipts and other supporting documents. Therefore, the AO added the cash deposit totaling to Rs. 25,24,07,826/-, transferred from respective branches of Delhi, Haridwar and Hyderabad to main office in Ghaziabad to the returned income of the Assessee u/s 68 of the Act by observing in Para 4.13 as under: “ 4.13 The above submissions of assessee and observations and findings prove that assesse failed to prove conclusively whether sales of such amount took place at various branches and daily cash transfer totalling Rs. 25,24,07,826/-, from respective branches of Delhi, Haridwar and Hyderabad to Main Office in Ghaziabad actually took place. Thus based on above submissions and findings it can be concluded that the said cash transfer and deposits are bogus cash credit u/s 68 of Income Tax Act 1961. ” Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 5 | P a g e 4. Aggrieved Assessee preferred appeal before CIT(A)/NFAC. 5. The CIT (A) after considering the submissions of the Assessee and taking the evidences with respect to cash deposit like copy of complete cash books and ledger account along with the bank statements, month-wise break-up of cash sales and sales other than cash at different branches, month-wise break-up of the total purchases at different branches, statement of item wise purchases and sales, invoices of sales and purchases, VAT Returns, Rent Agreements, documentary evidence of services rendered by M/s Prosegur SIS Cash Service Pvt. Ltd, for transfer of cash from Haridwar. The CIT(A), after taking these evidences, asked Remand Report from the AO and the AO in his Remand Report examined these details and noted and admitted these evidences as correct. He recorded his finding of fact and adjudication vide Para 6.3 to Para 6.8, which is reproduced as under: “ 6.3 During appellate proceedings the appellant filed additional evidence in support of his submission to establish the sales which took place at various branches and transfer of daily cash aggregating to Rs. 25,24,07,826/- from respective branches of Delhi, Haridwar and Hyderabad to main office at Ghaziabad along with the documentary evidence for establishing the movement of stock from purchaser to main office and branch office and movement of daily cash from branch offices to main office. 6.4 The Appellate contended that the appellant is engaged in the business of retail sale of electronic items and mobile phones, and some of the items are of very low price and are of such nature, where the maximum amount of sale is executed as a counter sale, which is in cash only. The appellant has stated to have executed total sales of Rs. Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 6 | P a g e 247,55,26,230/- that stands incorporated in the profit and loss account. 6.5 The appellant further contended in the submission that the cash deposits in the bank were all highlighted with reference to the cash book for the sake of convenience. It is stated that whenever the cash is deposited in the bank, it is debited in the cash book, and the cash deposited in the bank is not directly verifiable from the cash sales because on some days there may be small cash sales, while, on other days, it may be quite heavy. It is further contended that the cash deposited in the bank is verifiable from the cash book. 6.6 The appellant also contended that with respect to the case deposit of Rs. 31,62,46,750/- documentary evidences were furnished like (i) copy of the complete cash book along with the bank statement, (ii) month-wise break up of cash sales and sales other than cash sales at different branches (iii) month-wise breakup of total purchases at different branches, (iv) statement of item-wise purchases and sales (v) Invoices, (vi) VAT Returns (vii) Rent Agreements (viii) documentary evidence of services rendered by Securitrans India Private Limited for transfer the cash from Hyderabad and (ix) documentary evidence of services rendered by Prosegur SIS Cash Service Private Limited for transfer of cash from Haridwar. 6.7 The appellant further submitted that the sales outlet at Haridwar and Hyderabad had been in operation for the months of April and May 2017 only, while the sales outlet at Delhi had been in operation for the period of April 2017 to August 2017. It was stated that after the implementation of GST, these branches were closed resulting in no further sales at these locations. 6.8 The above contentions of the appellant were considered by the AO during the remand proceedings and Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 7 | P a g e after examining the documentary evidence as referred In Para 6.5 hereinabove which were furnished by the appellant it has been categorically stated by the AO in the remand report that submissions and evidences have been found to be in order after examination. Thus in effect the AO in the remand report proceedings accepted the submissions of the appellant that the cash deposits of Rs. 25,24,07,826/- is out of the sales made through his branch offices situated at Haridwar, Delhi & Hyderabad and the aforesaid cash deposit is duly included in the total turnover of Rs. 247,55,26 230/- and has been offered for tax by the appellant in his Return of Income filed by the appellant for the year under consideration. ” Thereby, the CIT(A) deleted the addition by treating the cash as explained being transferred from Branch Office situated at Haridwar, Delhi and Hyderabad to the main office at Ghaziabad. The CIT(A) stated that once the AO has accepted the submissions and evidences in his Remand Report, nothing survives. Aggrieved, the Revenue preferred its appeal before the Tribunal. 6. We noted that the AO has submitted his comments on the Remand Report which are reproduced as under: “ The AO had completed assessment u/s 143(3) r.w.s 144B of I.T. Act, 1961 for AY 2018-19 at total income of Rs. 25.71.87,946/- after making the addition of Rs. 24,24,07,826/- to the return income of Rs. 47,80, 120/- on account of cash deposits u/s 68 of I.T. Act 1961. On perusal of assessment order, it has been observed by the then A.O. that the assessee failed to prove conclusively whether sales of such amount took place at various branches and daily cash transfer totaling R. 25,24,07, 26/- from respective branches of Delhi, Haridwar and Hyderabad to main office at Ghaziabad actually took place. Further, the then A.O. has also observed that the Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 8 | P a g e onus was on the assessee to establish the genuineness of the transactions by presenting supporting facts and various questions were also asked by the A0. However, no conducive supporting documents were furnished by the assessee during the assessment proceedings. However, on perusal of the submission and supporting evidence submitted by the appellant (as attached with the letter of NFAC for calling remand rep ort), the following submissions made by the appellant. (a) The appellant is engaged in the business of trading in electronic items and mobile phones and the business is conducted under the name of M/s Saluja Electronics as a proprietor with its outlet situated at Rainbow Market, Railway Road, Ghaziabad. The appellant is filling return for the last several years. The copy of the Balance Sheet, Profit and Loss Account, computation sheet and Audit Report have been filed with the lTR. (b) That as stated above, appellant is engaged in the business of retail sale of electronic terns and mobile phones and Some of the items are of very low price and are of such nature that where the maximum courter sale is executed and IN CASH ONLY. The appellant has executed total sales of Rs. 247,55,26,230/- that stands incorporated in the profit and loss account In trading of such electronic items, the margin of profit is generally very low. The cash sales are periodically deposited in the bank, because, the bank refuses to accept heavy cash that too in small denominations. The copy of the cashbook had been enclosed in evidence of cash deposited by appellant in Axes Bank bearing number 914030025598480, Navyug Market Branch, Ghaziabad. (c) That the assessing unit seems to have misdirected it to observe that the details are not in order. The deposits in cash in the bank were all highlighted with reference to the cash book for the sake of convenience. Whenever, the cash is deposited in the bark, t is debited in the cash book The cash deposited in the bank are not directly verifiable from Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 9 | P a g e the cash sales because in some days, there may be small cash sale while, on other days it mar be quite heavy. THE CASH DEPOSITED IN THE BANK IS DIRECTLY NERIEIABLE FROM THE CASH BOOKAND NOT CASH SALE LEDGER. (d) lt had been explained that with respect to cash deposit of Rs 31,62, 46,750/-, the copy of the complete cash book had been submitted along with bank statement in this connection, it was further explained that the cash book submitted by the appellant incorporates cash sales entries only because, the business of the appellant involves heavy cash sales across the counter. The shop of the appellant is situated in electronic market. The electronic items are of different make, size, volume and quality and such electronic tens of daily use such as mobile phone, chargers, cables, ear buds and speakers are prone to frequent wear and tear being low-cost items The material has to be sold on cash base s only because, once the item is un-packed, the cost gets to zero level. (e) That the assessment unit in part 2 of paragraph 4.3 of the assessment order has observed that we have stated to have received cash room our branch offices such as Delhi, Haridwar and Hyderabad. The branch office in Haridwar and Hyderabad is operated only for April and May 2017 while the branch office at Delhi was in active operation for the period April to August only. Thereafter, the GST regime came in to force and uniform taxation had come to be levied. The appellant then closed its operations at these places and focused its business only fro mits main business office at Ghaziabad. These sale offices were established on account of VAT difference. As per observations made by the Assessment unit, the mode of receipt of cash from branch offices are not explained. (f) That in paragraph 4.4 of the assessment order after incorporating the part of the reply submitted by appellant, the assessment unit has made out tables giving therein date wise, the amount transferred from the respective branches to the head office at Delhi. Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 10 | P a g e (g) The assessee had filed complete details and summarized month wise break up of sales showing cash sales and other mode of sales at different branches namely Ghaziabad, Delhi, Haridwar and Hyderabad in the format that had been provided in point number 4 of the questionnaire identified as Annexure-B. Similarly, summarized month wise beak up of total purchases with at different branches of the assessee namely Ghaziabad, Delhi, Haridwar and Hyderabad had also been filed separately in format provided in point number 6 of the questionnaire and identified as Annexure-D. (h) It was explained that total sales of Appellant for Rs. 247,56,26230/- as against total sales of Rs. 97,93,17,343/- for the assessment year 2017-18 because during the year, the appellant had been awarded the distributorship of i- phone which attracted very huge customers resulting into increase in the turnover. (i) Premises of the branches at Delhi, Haridwar and Hyderabad are not self- owned but are on rent. Necessary details were submitted to the assessing officer vide Annexure F. It was also explained that expenses attributed to various branches is incurred from the head office at Ghaziabad |only except the rent which is paid to owner at their respective places. The appellant had requested for an adjournment on account of pandemic situation then prevailing in the Country, as a result of which, staff of the appellant had been not reporting to duty and in the absence of staff besides the limitation involved in submitting reply, the appellant had no choice but to file the reply on assumptions and presumptions only. The main person handling the banking and sale had left for his home town immediately on the pronouncement of the lock down in the country and did not report back for sufficiently long time and thus the critical details explanation with supporting documents could not be fled. On the other hand, instead of accepting request for adjournment, draft order had been sent based on purely assumptions, presumptions and on hypothetical reasonings. The situation in the country during Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 11 | P a g e relevant period had been well known to everybody and beyond the control of the appellant to enforce attendance of the staff to prepare documents. (j) The appellant operated its branch offices at Delhi, Haridwar and Hyderabad. The sales outlet at Haridwar and Hyderabad had been in operation for the month of April and May 2017 only, while the sales out let at Delhi had been in operation for the period April 2017 to August 2017. Thereafter, the GST regime came in to force with uniform tax structure all over the country, branches were closed The assessing officer has observed that the appellant failed to justify and submit evidence of mode of transportation of the cash from branches at Haridwar and Hyderabad to its main office at Ghaziabad, it is stated that on the examination of the books of account with the help of the accountant, who has since joined back the office, it transpired that the cash from the branch office at Haridwar and Hyderabad had been transferred to main office at Ghaziabad by the courier company attached mainly with the banks Necessary evidence of the services rendered by the company to the appellant is enclosed The evidence is self-explanatory and it is further fortified from the fact that the gross sales match with the total deposits in the bank account of the appellant (k) The assessing officer has not disputed the fact that sales match with the deposits in the bank account There is no observation that gross deposits in the bank are in Excess of total sales reported by appellant prompting the assessing officer to make addition of such excess cash deposit made in the bank account if any. Getting the cash sale amount transferred to head office at Ghaziabad on daily bases had been a prudent business decision of appellant to exercise and manage better control over the finances. (l) A detailed statement of tem wise purchase and sale had been submitted before the assessment unit the copies of the rent agreements as executed with the local land lords were also submitted the documentary evidence had been Submitted before the assessment unit as required to prove Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 12 | P a g e that the branches functioned at the respective places in the form of copies of VAT, GST returns submitted at the head office at Ghaziabad, and also at branch offices at Delhi, at branch office at Haridwar and also at the branch office at Hyderabad. This proves the sales at the respective out lets. It is not out of place to mention that just to earn a margin of 1 to 2%, the appellant would declare bogus sales and that too in the VAT/GST return to invite heavy taxation which is much more than the income tax leviable. The certified copies of VAT/GST return in respect of HO Ghaziabad, Branch office at Delhi, Haridwar and Hyderabad as submitted to the department are again enclosed in evidence. All these documents were submitted before the assessment unit who failed miserably to apply judicious mind before framing assessment. The assessment unit has failed to appreciate the evidence in the right perspective and has simply observed that the documents/evidence submitted is found not tenable. Such observations have been made simply on hypothetical reasoning and to make addition for the sake of addition so to make high pitch assessment. On perusal of the submission and supporting evidence submitted by the appellant, it is claimed by the appellant that the ash deposits of Rs. 25,24,07,826/- made by the assessee during FY 2017-18 in the bank accounts was out of his sales made through branch office situated at Haridwar, Delhi & Hyderabad also the same have been incorporated in the total turnover of Rs. 247,55,26,230/- which was offered for taxation in the ITR of A.Y. 2018-19. In support of his claim the assessee/appellant has submitted copy of bills, copy of cash book, copy of VAT return filed and copy of rent agreement and documentary evidence of service rendered by te concern (M/s Saluja Overseas Prop. Jaspal Saluja) to transfer the cash from Hyderabad by M/s Securitrans India Pvt Ltd and Haridwar by M/s Prosegur SIS Cash Service Pvt Ltd. 7. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the Appellant has filed complete Printed from counselvise.com ITA No. 3979/DEL/2025 ACIT Vs Jaspal Singh Saluja 13 | P a g e details, cash books and ledger account along with the bank statements, month-wise break-up of cash sales and sales other than cash at different branches, month-wise break-up of the total purchases at different branches, statement of item wise purchases and sales, invoices of sales and purchases, VAT Returns, Rent Agreements, documentary evidence of services rendered by both the parties i.e., M/s Securitrans India Private Limited and M/s Prosegur SIS Cash Service Pvt. Ltd, for transfer of cash from Hyderabad and Haridwar to Ghaziabad. We noted that the AO has not doubted the documents rather he accepted all the cash sales as genuine in his Remand Report. In view of these facts, we are of the view that once the AO accepted that the cash sale as genuine, consequent cash deposit stands explained as ‘out of sales’. Hence, we affirm the order of CIT(A), deleting the addition. 8. Accordingly, the appeal of Revenue is dismissed in the above terms. Order pronounced in the Open Court on 18 -11-2025. Sd/- Sd/- (Manish Agarwal) (Mahavir Singh) Accountant Member Vice President Dated: 20.11.2025 Pooja Mittal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi Printed from counselvise.com "