GAURAV HANS ,DELHI V. ITO WARD 43 (7) , DELHI

ITA 5011/DEL/2025

AI Insights

The case involves Gaurav Hans, the Appellant, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming an addition of Rs. 37,75,000 to his income for the Assessment Year 2017-18. The addition was initially made by the A.O. under section 143(3) of the Income Tax Act, citing unexplained cash deposits during the demonetization period. The Appellant argued that these deposits were from recorded cash sales, supported by various documents including VAT returns and an audited balance sheet. The Departmental Representative contended that the Appellant failed to provide sufficient documentary evidence to prove the genuineness of the cash sales. The Tribunal, after reviewing the submissions and evidence, concluded that the addition was erroneous as it amounted to double taxation of the same income.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 848350 (ITAT-NEW DELHI)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Delhi
• Assessment Year: 2017-2018
• Appeal Filed On: 18-08-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANKUSH KALRA
• Assessee Lawyers: SANJAY WADHWA; SANJEEV
• Keywords: Business income; Unexplained cash credit; Rejection of books of accounts
• Section: 143(3); 40A(3)

Judgement Text

"1 ITA No. 5011/Del/2025 Gaurav Hans Vs. ITO IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘E’ NEW DELHI BEFORE SHRI YOGESH KUMAR U.S, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No. 5011/Del/2025 ( A.Y 2017-18) Gaurav Hans 134 SF-Harsh Vihar, Pitampura, New Delhi PAN: ABXPH4069G (APPELLANT) Vs ITO Ward 43(7)/CIT Appeal, New Delhi (RESPONDENT) ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 23/06/2025 for the Assessment Year 2017-18. 2. Brief facts of the case are that, the Assessee filed return of income declaring income of Rs. 5,16,960/-. The case of the Assessee was selected for complete scrutiny. An assessment order came to be passed u/s 143(3) of the Act on 19/02/2019 by making an addition of Rs. 37,75,000/- on account of cash deposited during the demonization period, made addition of Rs. 44,44,846/- due to mis- match in the custom duty paid by the Assessee and also made disallowance of Rs. 5,531/- and Rs. 32,077/- claimed by the Assessee as expenses. Aggrieved by the assessment order dated 19/12/2019, Appellant by Sh. Sanjay Wadhwa, Adv & Sh. Sanjeev Khurana, CA Respondent by Ms. Ankush Kalra, Sr. DR Date of Hearing 24.02.2026 Date of Pronouncement 25.03.2026 Printed from counselvise.com 2 ITA No. 5011/Del/2025 Gaurav Hans Vs. ITO Assessee preferred Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 23/06/2025 confirmed the addition of Rs. 37,75,000/-. As against the order of the Ld. CIT(A) dated 23/06/2025, Assessee preferred the present Appeal. 3. The Ld. Counsel for the Assessee submitted that the solitary grievance of the Assessee in the present Appeal is against the order of the Ld. CIT(A) in confirming the addition of Rs. 37,75,000/- and further submitted that Assessee has no other grievance in the present Appeal, accordingly, not pressed all other grounds of Appeal except Ground No. 3(a). 4. The Ld. Counsel for the Assessee vehemently submitted that during the assessment proceedings, the Assessee has produced all the documents to prove that the cash deposits are from recorded cash sales in the books, the sales were duly recorded in the VAT Returns. Further submitted that Assessee has also produced cash book, bank statements, cash sales details, VAT Returns, audited balance sheet. The Assessee has substantially proved the source of cash deposits and the authorities below erroneously confirmed the addition without even rejecting the books of accounts. Thus, the ld. Assessee's Representative submitted that order of the Ld. CIT(A) in sustaining the addition of Rs. 37,75,500/- is erroneous, accordingly sought for deleting the said addition. Printed from counselvise.com 3 ITA No. 5011/Del/2025 Gaurav Hans Vs. ITO 5. Per contra, the Ld. Departmental Representative submitted that the Assessee has not produced requisite documents in order to discharge primary onus cast upon the Assessee of proving genuineness of cash sales. The Ld. Departmental Representative relying on the orders of the Lower Authorities sought for dismissal of the Appeal. 6. We have heard both the parties and perused the material available on record. The Ld. A.O. while making the addition of Rs.37,75,500/-, observed that no documentary evidence was produced in support of cash sale claimed by the Assessee and the same pattern does not match with the earlier sale and as the Assessee failed to justify the purpose of keeping cash in hand received from sale, accordingly, A.O. made the addition in the hands of the Assessee. The said addition made by the A.O. has been confirmed by the Ld. CIT(A) in following manners:- “The grounds of appeal no.4 to 12 relate to the sole issue of addition of Rs 37,75,000/- as unexplained cash credit and hence the same are consolidated and adjudicated together. (6 6.1 Various contentions raised by the appellant in these grounds of appeal have been carefully perused and considered. It is an undisputed fact that during the demonetization period of the relevant previous year, appellant has deposited cash amounting to Rs.37,75,000/- in Axis bank account no.914020014760109. It is also evident from the impugned assessment order that the case of the appellant was specifically selected for scrutiny for verification of one of the reasons that- abnormal increase in cash deposit during demonetization period as compared to pre- demonetization period. Therefore, for the purpose of verification of Printed from counselvise.com 4 ITA No. 5011/Del/2025 Gaurav Hans Vs. ITO the nature and source of this cash deposit, AO issued statutory notices to the appellant as detailed in earlier ground of appeal and in response, appellant merely alleged that the source of cash deposit is out of cash sale of Rs.39,76,019/- from 1.4.2016 to 08.11.2016, however no documentary evidences was submitted in support of cash sales. As stated earlier, even during appellate proceedings the appellant failed to provide any details of cash sales with necessary authentic documentary evidences to establish on record cash sale of Rs.39,76,019/- from 1.4.2016 to 08.11.2016. 6.2 Since the appellant has alleged that the nature and source of said cash deposit is out of cash sales, primary onus lie on the appellant to provide required details and sufficient authentic documentary evidences like copies of sales invoice giving particulars of the purchasers with it's name and address, description of items sold with quantity, rate and value, coples of delivery of goods like transport receipt /delivery challanto show delivery of these from the place of appellant's business to the place of purchaser and finally the amount of cash receipt with date. It was also required on the part of appellant to provide details of corresponding purchase of goods with copies of purchase invoice and transport receipt / delivery challan. The appellant was also required to provide copies of purchase register, sales register, stock register etc. All these documentary evidences in support of cash sale are very much essential in the case of appellant especially considering that there was no cash sale during the entire earlier financial year i.e. in F.Y. 2015-16. However, appellant failed to provide any of these documentary evidences and thus failed to discharge primary onus cast upon it of proving genuineness of cash sales either during the course of assessment proceedings or even at the appellate stage. 6.3 It is not sufficient proof that cash sales have been recorded in the books of accounts or cash book but to explain the source of cash deposit with should be proved on record that there is actually cash sale made by the appellant. It is also to be noted that in view of provision u/s 40A(3) of the I.T. Act, no deduction on account of expenditure shall be allowed to the assessee in respect of which payment is made otherwise than by a/c payee cheque or a/c draft or use of electronic clearing system through bank account exceeding Rs. 10,000/-. Therefore, even the purchaser would not make cash payment to the appellant exceeding Rs. 10,000/-, which will make them disentitle for claim of deduction on account of purchases made.” Printed from counselvise.com 5 ITA No. 5011/Del/2025 Gaurav Hans Vs. ITO 7. In the present case, during the assessment proceedings, Assessee submitted following documents in order to prove the source of the cash deposits. i. Cash book reflecting inclusion of cash receipt on account of cash Gross sales of Rs. 3976017/- and showing cash deposit of Rs. 3775000/- on 15.11.16 out of cash balance as on 08.11.16 ii. Axis Bank deposit details with narrations along with bank statement iii. Cash sales details iv. VAT Returns for all four quarters- Q1, Q2, Q3,Q-4 reflecting Annual sales of Rs. 3,68,94,894/-, and which were never revised. v. Q-3 returns include cash sales of Rs. 3657935/- (plus Tax of Rs. 318083.25/- making Gross sales for Rs. 3976018.25) vi. Audited Balance sheet reflecting sales values of Rs. 3,68,94,894/-, which is tallying with consolidated sales of all quarters DVAT Return vii. Supporting records evidencing source of cash deposits 8. It is a matter of record that, at no point of time, A.O. rejected the books of accounts of the Assessee and no defects or adverse inference was drawn and confronted to the Assessee. The addition has been made by the A.O. disregarding the VAT Returns and Sales Tax Returns. It is well settled law that, when the books of accounts of the Assessee was not rejected and sales have been accepted by treating the same as business receipts, which are duly supported by books of account and VAT Return and corresponding tax liability is paid, the A.O. cannot make the addition on account of cash deposit, which would amounts to double taxation. In view of the above, we find Printed from counselvise.com 6 ITA No. 5011/Del/2025 Gaurav Hans Vs. ITO merit in the contention of the Ld. Assessee's Representative, accordingly, the addition of Rs. 37,75,000/- made by the A.O. which has been confirmed by the Ld. CIT(A) is hereby deleted. As the Assessee has not pressed other grounds of Appeal, all other Grounds are dismissed as not pressed. 9. In the result, Appeal of the Assessee is partly allowed. Order pronounced in the Open Court on this 25th Day of March, 2026 Sd/- Sd/- (AMITABH SHUKLA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25/03/2026 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "