BHAI BHAI CO.,SILIGURI V. I.T.O., WARD - 1(2), SILIGURI

ITA 2097/KOL/2024

AI Insights

The case involves Bhai Bhai Co, a commission agent dealing in fruits, who appealed against the addition of Rs. 62,00,000 to their income, which was treated as unexplained cash withdrawals under section 68 of the Income Tax Act, 1961. The AO had doubts about the necessity of such cash for the business during the demonetisation period and added the amount to the income. The CIT(A) upheld this addition, leading to the appeal at the ITAT. The ITAT found that the AO's assumption was based on surmises and conjectures, and the transactions were part of the business turnover.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774819 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 18-10-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA SHRI GEORGE MATHAN, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No. 2097/Kol/2024 (Assessment Year 2017-2018) Bhai Bhai Co, C/o Subash Agarwal & Associates, Advocates Siddha Gibson 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata - 700069 [PAN: AAFFB8685H] ……..…...…………….... Appellant vs. ITO, Ward 1(2), Siliguri, Aayakar Bhawan, Matigara, Siliguri - 734001 ................................ Respondent Appearances by: Assessee represented by : Siddharth Agarwal, Advocate Department represented by : Dheeraj Kumar, Addl. CIT Date of concluding the hearing : 26.08.2025 Date of pronouncing the order : 01.09.2025 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER 1. This appeal arises from order dated 21.03.2024, passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)]. 1.1 In this case, the Ld. AO made an addition of Rs. 62,00,000/- u/s 68 of the Act. This amount constituted cash withdrawals made by the assessee from his own bank account over a period of time. It is a matter of record that the case was selected for scrutiny to verify substantial cash deposits Printed from counselvise.com 2 ITA No. 2097/Kol/2024 Bhai Bhai Co. during the demonetisation period. The Ld. AO doubted the reasons why the assessee would need so much of cash for his business as a commission agent in fruits and made the impugned addition. 1.1 The assessee carried this matter in appeal, where also he could not succeed since the Ld. CIT(A) disbelieved his claim that all the impugned transactions were on account of business exigency and the same were duly shown as part of the turnover of this business. 1.2 Further aggrieved, the assessee is in appeal before the ITAT with the following grounds: “1. For that the Ld. CIT(A) was not justified in confirming the addition of Rs. 62,00,000/- made by the AO on account of withdrawal from bank by wrongly invoking the provisions of sec. 68 of the Act. 2. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.” 2. Before us, the Ld. AR argued that the assessee was a commission agent for a business dealing in fruits. It was the submission that in in his line of business cash purchases and sales happened in a routine manner and hence the assessee needed cash from time to time for the purposes of his business. It was pointed out that during the said period, the assessee had withdrawn of Rs. 62,00,000/- and deposited Rs. 45,43,365/- in his bank accounts. It was the submission that the Ld. AO committed an error in merely assuming that the impugned amount was undisclosed, whereas the said amount were a result of constant withdrawals and deposits in the bank accounts. The Ld. AR argued that in the assessee’s line of trade such cash transactions would be routinely required. The Ld. AR argued that the impugned amount was very much part of the turnover of business and was duly reflected in the books of accounts. The Ld. AR pointed out that in any case, the provisions of section 68 of the Act would not be attracted since the impugned amount was a result of withdrawals from the banks. 2.1 The Ld. DR relied on the orders of authorities below. Printed from counselvise.com 3 ITA No. 2097/Kol/2024 Bhai Bhai Co. 3. We have carefully considered the rival submissions and have gone through the records before us, including the paper book filed by the Ld. AR. It is evident that the Ld. AO has resorted to surmises and conjectures in doubting the withdrawals but accepting the deposits. This action readily leads to the conclusion that the impugned transactions were part of the turnover of business and simply because they were cash withdrawals would alone not be sufficient reasons to doubt their genuineness. We are also conscious of the fact that the provisions of section 68 of the Act have been wrongly applied to normal business transactions. Accordingly, the impugned addition is directed to be deleted. 4. In result, this appeal is allowed. Order pronounced on 01.09.2025 Sd/- Sd/- (George Mathan) (Sanjay Awasthi) Judicial Member Accountant Member Dated: 01.09.2025 AK, Sr. P.S. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "