DCIT, CIRCLE-1, SILIGURI, SILIGURI V. SANJAY KUMAR AGARWAL, SILIGURI

ITA 1463/KOL/2025

AI Insights

The case involves an appeal by the Revenue against the order of the National Faceless Appeal Centre, Delhi, which had deleted the additions made by the Assessing Officer regarding unexplained cash deposits and an unexplained investment in immovable property by the assessee, Sanjay Kumar Agarwal. The Assessing Officer had initially treated the cash deposits of \\u20b9304,06,000 as unexplained money under section 69A of the Income Tax Act, 1961, and similarly added \\u20b926,00,000 as unexplained investment under section 69. However, the CIT (A) found that the deposits were from cash sales and the investment in property was sourced from documented withdrawals from the assessee's business. The Tribunal agreed with the CIT (A) and dismissed the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779296 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Appeal Filed On: 07-07-2025
• Other Referred Cases: PCIT Vs. Improve Financial Consultants Private Limited
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: SOUMITRA CHOUDHURY; PRANABESH SARKAR; ARS
• Keywords: Additional evidence; Question of law; Unexplained investment; FORM 26AS
• Section: 143(3); 142(1); 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRISONJOY SARMA, JM ITA No.1463/KOL/2025 (Assessment Year:2022-23) DCIT, Circle-1, Siliguri Aaykar Bhawan Poorva, Matigara Siliguri, Siliguri-734010, West Bengal Vs. Sanjay Kumar Agarwal, M/s Sanjay Agencies, Sevoke Road, 2nd Mile, Siliguri-734001, West Bengal (Appellant) (Respondent) PAN No. ACGPA7365J Assessee by : Shri Soumitra Choudhury & Shri Pranabesh Sarkar, ARs Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 22.09.2025 Date of pronouncement: 16.10.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 27.03.2025 for the AY 2022-23. 02. At the outset, we observe from the appeal folder that there is a delay of 37 days in filing the appeal by the department in support of which a condonation petition was filed. It was stated in the condonation petition that the delay has occurred due to obtaining the administrative approvals from the competent authorities and accordingly, the delay may be condoned. The ld. AR, on the other hand, did not oppose the condonation of delay. Considering the Printed from counselvise.com Page | 2 ITA No.1463/KOL/2025 Sanjay Kumar Agarwal; A.Y. 2022-23 reasons cited before us, we are inclined to condone the delay and admit the appeal for hearing. 03. The issue raised in ground No.1 by the Revenue is against the deletion of addition of ₹3,04,06,00,00/- by the learned CIT (A) as made by the learned AO in respect of cash deposited by the assessee into bank account. 04. The facts in brief are that the assessee filed the return of income on 21.10.2022, declaring total income at ₹57,84,800/-. The case of the assessee was selected for CASS under complete scrutiny and the notice u/s 143(2) and 142(1) along with questionnaire were duly issued and served upon the assessee. The assessee replied the said notices on the e-assessment module of ITBA by filing submissions on 17.06.2023 and 27.10.2023 furnishing the copies of computation of income, Form 26AS, bank statement, etc. The learned AO observed on the basis of information available before him that the assessee has deposited cash of ₹3,04,06,000/- into his bank account during the year. The assessee replied to the notice issued u/s 142(1) of the Act that the cash was deposited out of cash sales proceeds in the normal course of business. The learned AO noted that assessee has not furnished any satisfactory reply nor gave/produced any documentary evidences to substantiate his claim and therefore, the learned AO treated the cash deposited as unexplained money u/s 69A of the Act and added to the income of the assessee. 05. In the appellate proceeding, the learned CIT (A) allowed the appeal of the assessee by observing and holding as under: - “4. I have gone through the statement of facts, grounds of appeal and facts available on record, Brief facts of the case are that the appellant filed his return of Income for AY2022-23 on 21.10.2022 declaring total income of Rs 57,84,800/- The case was selected for complete scrutiny under CASS and a Printed from counselvise.com Page | 3 ITA No.1463/KOL/2025 Sanjay Kumar Agarwal; A.Y. 2022-23 notice u/s 143(2) of the Act was issued on 02.06.2023 which was replied on 06.06.2023. Thereafter, notices uis 142(1) of the Act, were issued on 12.10.2023 and 18.01.2023 and were replied by the appellant. A show cause notice was issued on 08.03.2024 and was replied by the appellant on 12.03.2024. The assessment was completed on total income of Rs.3,87,90,800/- an 22.03.2024 u/s 143(3) r.w.s. 1448 of the Act after making following two additions: (1) Unexplained money u/s 69A of the Act of Rs.3,04,06,000/- The Assessing Officer found that the appellant had made cash deposits of Rs.3,04,06,000/- in bank account of his proprietary concern. The appellant was required to explain the nature and source of the deposits. The appellant submitted that the deposits were out of sales but he could not furnish any documentary evidence to substantiate his claim. The Assessing Officer treated this amount to be unexplained money u/s 69A of the Act. (ii) Unexplained investment u/s 69 of the Act of Rs.26,00,000/- Assessing Officer found that the appellant had purchased immovable property for a consideration of Rs.26 Lakh during FY 2021-22. The appellant was required to explain the source of this investment but the appellant could not provide complete details and necessary documentary evidences. The Assessing Officer treated this amount to be unexplained investment u/s 69 of the Act. Now the appellant has filed this appeal on ground of appeal mentioned in Para 1 of this order, the appeal is decided as under - 5. Ground No. 1: For that in the facts and circumstances of the case the Assessment Unit, NFAC erred in making addition amounting Rs.3,04,06,000/- on account cash deposit to the bank treating it as unexplained money u/s 69A of the IT Act. This addition was uncalled for and unwarranted and hence the same be deleted. Ground No. 2:- For that in the facts and circumstances of the case the addition of Rs.3,04,06,000/- being part of the cash sales proceeds deposited during the year under consideration as unexplained money u/s 69A of the IT Act, 1961 was uncalled for and illegal and hence the same be deleted. In these grounds the appellant has challenged the addition of Rs.3,04,06,000/- made by the Assessing Officer u/s 69A of the Act. The Assessing Officer found that the appellant had made cash deposits amounting to Rs.3,04,06,000/- in his bank account during the FY 2021-22. The Assessing Officer required the appellant to furnish documentary evidences with respect to nature and source of these deposits. The appellant submitted that the deposits were out of receipts of cash sale. The Assessing Officer further required the appellant to furnish evidences with respect to his claim. The appellant filed sales account and bank statements the appellant enclosed the copy of audit report trading P & L account and balance sheet. The appellant also filed details of top ten parties from whom purchases were made. However, the Assessing Officer did not find Printed from counselvise.com Page | 4 ITA No.1463/KOL/2025 Sanjay Kumar Agarwal; A.Y. 2022-23 the replies satisfactory and he added Rs.3.04,06,000/- as unexplained money u/s 69A of the Act. During the appellate proceedings the appellant submitted that he had filed return of income declaring total Income of Rs.57,84,800/-. He submitted a chart of comparative financial which is reproduced below:” The appellant also filed month wise total cash sales which were Rs.2,27,33,912/- for FY2020-21, Rs.3,88,67,864/- for FY 2021-22. During the appellant proceedings the appellant was required to furnish GST returns which were furnished by the appellant vide reply dated 25.03.2024, copy of bank account in the books of the appellant was also required and was also furnished by the appellant. After perusal of all these details and various charts filed during the appellate proceedings I find that the cash deposit is 34.03% of the turnover and is not abnormal looking to the cash deposits in immediately preceding and succeeding years which are 36.08% and 35.91% respectively. I find that the details required by the Assessing Officer were furnished before him along with audit report copy of bank account, sale details etc and the Assessing Officer did not point out any deficiency in the books of accounts therefore, treating the cash deposits as unexplained in this case was not correct. The evidences submitted prove that the deposits in the bank account for out of sale proceeds of the appellant. Therefore, the addition of Rs.3.04,06,000/- is deleted and the grounds of appeal are allowed. Printed from counselvise.com Page | 5 ITA No.1463/KOL/2025 Sanjay Kumar Agarwal; A.Y. 2022-23 06. After hearing the rival contentions and perusing the materials available on record, we find that the assessee is running the business of trading in tiles and bath fittings. We note that the assessee made detailed submissions before the learned AO which were extracted by learned CIT (A) at page number 6 to 16. In the said submissions we note that the assessee has filed the month wise statement of cash deposited during F.Y. 2021-22. Similarly, the assessee had filed the details of cash from 1stApril to 31stMarch for F.Y. 2019-20 to 2022-23 and financials for all these years from F.Y. 2019-20 to F.Y. 2022-23, stating sales, cash sales, cash deposits, purchases, cost of goods sold, gross profit and net profit and thereafter, the total turnover and cash deposit ratio. The assessee also furnished the sales as per books and sales as per GST returns. We note that the assessee has comprehensively explained the cash deposited by the assessee into the bank accounts. We note that assessee has furnished all the evidences before the learned AO through ITBA e-assessment module, however, the ld. AO has failed to consider all the evidences. We note that the learned CIT (A) has recorded very clear-cut findings on these evidences. We also note that the learned CIT (A) has analyzed the details filed by the assessee in the form of total cash sales for A.Y. 2020-21 and A.Y.2021-22 and after recording the finding as to cash deposits in all the assessment years noted that during the year the assessee deposited cash of 33.04% of the total turnover and in the immediately preceding and succeeding years the cash deposits were 36.08% and 35.91% respectively of the total turnover. We note that the learned CIT (A) has recorded factual finding of facts to this effect in the appellate order. Therefore, we do not find any infirmity in the order of learned CIT (A), who has passed a very speaking and well- reasoned order while deleting the addition. Accordingly, we hold that Printed from counselvise.com Page | 6 ITA No.1463/KOL/2025 Sanjay Kumar Agarwal; A.Y. 2022-23 the cash deposits by the assessee were out of cash sales made during the year. Consequently, we uphold the order of learned CIT (A) by dismissing the appeal of the revenue. Ground No.1 of the Revenue’s appeal is dismissed. 07. The issue raised in ground No.2 is against the deletion of addition of ₹26.00 lakh by learned CIT (A) as made by the learned AO in respect of investment in immovable property purchased by the assessee for which complete and necessary documents were not filed before the ld. Assessing Officer. 08. The facts in brief are that the AO during the course of assessment proceedings noted that assessee has purchased an immovable property for a consideration of ₹26 lakhs for which the assessee was asked to furnish the source of investment by issuing notice u/s 142(1) of the Act, which were not provided and accordingly, the same was added as unexplained investment under section 69 of the Act. 09. In the appellate proceedings the learned CIT (A) deleted the addition after taking into consideration the submission and contention of the assessee by observing and holding as under: - “5.1 Ground No. 3: For that in the facts and circumstances of the case the Assessment Unit, NFAC erred in making addition amounting Rs.26,00,000/- on account purchase of property treating it as unexplained investment u/s 69 of the IT Act. This addition was uncalled for and unwarranted and hence the same be deleted. In this ground of appeal the appellant has challenged the addition of Rs.26 Lakhs made by the Assessing Officer on account of unexplained investment in purchase of immovable property u/s 69 of the Act. During the assessment proceedings the appellant was required to explain the nature and source of investment of Rs.26 Lakh in purchase of immovable property. The Assessing Officer observed that the appellant could not provide the complete and necessary documentary evidences about purchase immovable property for consideration of Rs.26 Lakh. I find that the appellant had replied during the Printed from counselvise.com Page | 7 ITA No.1463/KOL/2025 Sanjay Kumar Agarwal; A.Y. 2022-23 assessment proceedings that payments of Rs.26 Lakh was through banking channel and the source of this amount was withdrawal from proprietary concern M/s Sanjay Agencies. The appellant submitted his passbook and the withdrawals from M/s Sanjay Agencies. During appellate proceedings the appellant was required to submit details of withdrawal for payment of Rs.26 Lakhs for purchase of property. The appellant submitted the required details of withdrawal copy of capital account and copy of Punjab National Bank account form which payments were made. I do not find any discrepancy in the submission of the appellant and the source of Rs.26 Lakh is explained. Therefore, the addition of Rs.26 Lakh made by the Assessing Officer is deleted and the ground of appeal is allowed.” 010. After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has purchased a property for ₹26 lakh. The AO noted that the assessee did not provide complete and necessary evidences about the purchase of the property. However, the learned CIT (A) noted that the assessee had replied during the assessment proceedings that payments were through banking channel and the source of this investment was out of withdrawals from proprietary concern of M/s Sanjay Agencies. The assessee has submitted passbook and withdrawals from M/s Sanjay Agencies. The ld. CIT (A) further noted that the assessee was required to submit the details of purchase of property along with withdrawals made which were accordingly filed by the assessee along with copy of bank account i.e. Punjab National Bank (PNB) from which the payments were made.We note that accordingly the ld. CIT (A) recorded a conclusion that there was no discrepancy in the submissions of the assessee and source of ₹26 lakh was rightly explained. Therefore,we do not find any infirmity in the order of ld. CIT (A) and accordingly, the same is upheld by dismissing the ground No. 2 of the Revenue’s appeal. 011. The issue raised in ground No. 3 is against the order of ld. CIT (A) deleting the addition of ₹ 26 lakh by admitting additional evidences in the form of details of withdrawals copy of capital Printed from counselvise.com Page | 8 ITA No.1463/KOL/2025 Sanjay Kumar Agarwal; A.Y. 2022-23 accounts of the assessee along with copy of bank statements of PNB thereby violating a provision of Rule 46A of the Income-tax Rules 1962. 012. After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee has not filed any additional evidences and ld. CIT (A) in para 5.1 has specifically mentioned that the assessee was required to submit the details of withdrawals for payments of ₹26 lakhs for purchase of property and accordingly, in compliance the assessee furnished the same comprising copy of bank capital account and copy of PNB bank statements. In our opinion the evidences filed by the assessee are at the instance and at thebehest of the ld. CIT (A) and has not filed any additional evidences suo moto. Therefore, these evidences filed by the assessee cannot be considered as additional evidences calling for compliance under rule 46A of the IT Rules on the part of the ld. CIT (A). The assessee filed before us the decision of Honorable Jurisdictional High Court in the case of PCIT Vs. Improve Financial Consultants Private Limited in ITAT/71/2025 GA/2/2025 vide order dated 17.09.2025, wherein the ld. Honorable High Court has held that even if the documents which were available before the ld. CIT (A) were not considered while deciding the appeal and the tribunal has rightly taken into account all these evidence while deciding the appeal. Therefore, in this case it was a submission of the ld. DR for the revenue that Tribunal has relied on certain documents which were not placed or produced before the ld. CIT (A) and also before AO and it was only before the appellate authority such documents were placed for consideration. In that context the Honorable Court has held that no substantial question of law is involved in the appeal and accordingly, the same was dismissed by upholding the order of tribunal as it was Printed from counselvise.com Page | 9 ITA No.1463/KOL/2025 Sanjay Kumar Agarwal; A.Y. 2022-23 entirely question of facts decided in favor of the assessee on the basis of evidences produced before the Tribunal. Accordingly the ground no.3 is dismissed. 013. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 16.10.2025. Sd/- Sd/- (SONJOY SARMA) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 16.10.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "