DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, LUDHIANA , LUDHIANA V. NV ENTERPRISES, LUDHIANA

ITA 827/CHANDI/2024

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The case involves an appeal by the revenue against the decision of the CIT(A) which had deleted the addition of Rs. 80.80 Lacs made by the AO during the assessment year 2021-22. The addition was initially made following a seizure of cash during a GST department search. The assessee, M/s NV Enterprises, engaged in trading of oil and other commodities, was scrutinized after the seizure. The AO added the amount under section 69A read with section 115BBE of the Income Tax Act, alleging that the sources of the cash were not fully explained. However, the CIT(A) found that the assessee had provided sufficient evidence, including cash books and GST returns, to explain the source of the cash. The Tribunal agreed with the CIT(A), noting that the AO had not pointed out any defects in the stock tally or the books of accounts and that the statement of Shri Vikas Vats, which was the basis of the AO's suspicion, was not part of the Income Tax proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786517 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Appeal Filed On: 03-08-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD KUMAR CHAUDHARY LD.
• Assessee Lawyers: SUDHIR SEH GAL LD
• Section: 143(3); 131

Judgement Text

"1 ITA No.827/Chandi/2024 Assessment Year 2021-22 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON’BLE SHRI RAJPAL YADAV, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं. / ITA No. 827/CHANDI/2024 (िनधाŊरण वषŊ / Assessment Year: 2021-22) DCIT Central Circle-1 Ludhiana – 141001 बनाम/ Vs. M/s NV Enterprises Booth No.3, New Grain Market Gill Road, Civil Lines, Ludhiana - 141001 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No. AALFN-3780-B (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) Assessee by : Shri Sudhir Sehgal (Advocate) - Ld. AR Revenue by : Shri Vinod Kumar Chaudhary (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 12-11-2025 घोषणाकीतारीख /Date of Pronouncement : 17/11/2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2021-22 arises out of an order of learned Commissioner of Income Tax (Appeals)- 5, Ludhiana [CIT(A)] dated 13-05-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 30-12-2022 making addition of Rs.80.80 Lacs. The Ld. CIT(A) has deleted the same against which the revenue is in further appeal before us. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2. From the facts, it could be seen that pursuant to receipt of information from GST department that during search on assessee by that Printed from counselvise.com 2 ITA No.827/Chandi/2024 Assessment Year 2021-22 department on 12-02-2021 wherein cash of Rs.80.80 Lacs was found, the assessee was subjected to scrutiny for this year. The assessee is stated to be engaged in wholesale and retail trading of oil and other commodities. The statement of Shri Vikas Vats was recorded u/s 131 during preliminary enquiry wherein he could not explain the sources of the cash as seized by GST department. During the course of assessment proceedings, it was explained on assessee’s behalf that cash of Rs.36 Lacs belonged to Shri Vikas Vats (M/s Ganpati Oil Traders) and remaining cash of Rs.44.80 Lacs belonged to the assessee-firm. Shri Vikas Vats admitted that cash of Rs.36 Lacs belonged to him. However, Ld. AO alleged that the sources of cash found were not completely explained. The assessee furnished cash books and cash invoices without any further details. Accordingly, the amount of Rs.80.80 Lacs was added u/s 69A r.w.s. 115BBE of the act and the assessment was framed. 3. During first appeal, the assessee vehemently opposed the action of Ld. AO by way of written submissions which have already been extracted in the impugned order. The Ld. CIT(A), at para 5.1.3, rendered factual finding and inter-alia, observed that the source of Rs.44.80 Lacs was well explained by the assessee to be out of cash sales. The sales were subjected to GST. The assessee furnished cash book containing entries of cash sales, GST returns, copy of audited financial statements. However, no defect was pointed out by Ld. AO as to stock tally or in the books of accounts of the assessee-firm. The statement of Shri Vikas Vats as made before GST department stood retracted within 2 months. Further, this statement was not before Income Tax Authorities but before GST authorities. Shri Vikas Vats maintained a consistent stand that cash of Rs.36 Lacs belonged to him which was not accepted by Ld. AO. The Ld. Printed from counselvise.com 3 ITA No.827/Chandi/2024 Assessment Year 2021-22 AO only acted under suspicion that there was surge in cash sales during the months preceding GST search action but he did not dispute the availability of stock as per audited books of accounts and the books were not rejected. Accordingly, the impugned addition was deleted against which the revenue is in further appeal before us. 4. From the facts, it clearly emerges that the whole basis of impugned addition is the statement of Shri Vikas Vats as made to GST authorities. The said statement is not before any Income Tax Authorities and therefore, no reliance could be placed on the same in Income Tax proceedings. Moreover, Shri Vikas Vats has maintained a consistent stand that the amount of Rs.36 Lacs belonged to him only and not to the assessee-firm. This being so, the stated amount could not be added in the hands of the assessee-firm since there is no evidence before Ld. AO to hold that this cash, in fact, belonged to assessee-firm. So far as the remaining cash is concerned, the assessee duly furnished its cash book to show availability of sufficient cash on the date of cash seizure. The assessee’s books of accounts were duly audited and the sales were subjected to GST. The books have not been rejected and no defect has been noted in the stock tally of the assessee-firm. By furnishing cash book containing entries of cash sales, GST returns, copy of audited financial statements, the assessee, in our considered opinion, had duly discharged the onus of proving the source of cash seizure and in the absence of any contrary evidence on record to that effect, this explanation is to be accepted. Therefore, we do not find any fault in the adjudication of Ld. CIT(A). Printed from counselvise.com 4 ITA No.827/Chandi/2024 Assessment Year 2021-22 5. The appeal stands dismissed. Order pronounced on 17/11/2025 Sd/- Sd/- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 17/11/2025 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH Printed from counselvise.com "