NAVEEN GARG,GHAZIABAD V. ITO,WARD-2(2)(5), GHAZIABAD

ITA 32/DEL/2025

AI Insights

The case involves Naveen Garg, the appellant, who is engaged in the dairy business and has been declaring his turnover under section 44AD of the Income Tax Act. The Income Tax Officer (ITO) added Rs. 15,18,000 to his income as undisclosed income, noting that this amount was deposited in cash from sales proceeds of his dairy business. The First Appellate Authority upheld this addition. However, upon appeal to the Income Tax Appellate Tribunal, it was argued that the deposits were legitimate business receipts, and the assessee had been consistently declaring his income under section 44AD without maintaining books of accounts. The Tribunal agreed with the assessee's explanation and allowed the appeal, removing the addition to his income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314706 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHYAM MANOHAR SINGH
• Assessee Lawyers: PANKAJ GOEL
• Keywords: Business income; Income from undisclosed sources
• Section: 44AD

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH “SMC’’ : NEW DELHI) BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT ITA No. 32/Del/2025 Asstt. Year : 2017-18 Naveen Garg, vs. ITO, Ward 2(2)(5), Shop No. 23, Tailmill Gate No. 4, Ghaziabad Modinagar, 0 201204 Ghaziabad (PAN: AHGPG4584Q) (Appellant) (Respondent) Appellant by : Sh. Pankaj Goel, Adv. Respondent by : Shri Shyam Manohar Singh, Sr. DR. Date of Hearing 07.05.2025 Date of Pronouncement 07.05.2025 ORDER This appeal by the assessee is emanating from the order of the NFAC, Delhi in Appeal No. ITBA/NFAC/S/250/2024-25/1070100107(1) dated 05.11.2024. 2. Brief facts of the case are that AO made the addition of Rs.12,60,500/- by noting that assessee deposited cash amounting to Rs. 15,18,000/- out of sales proceeds of milk dairy business and income computed as per under section 44AD, as the sources remained unexplained and unsubstantiated, hence, AO added the same to the income of the assessee as income from undisclosed sources. However, in appeal, Ld. First Appellate Authority sustained the addition of Rs. 15,18,000/-. Against the above, assessee appealed before the Tribunal. 4. Heard both the parties and perused the records. 2 | P a g e 5. At the time of hearing, Ld. AR has submitted that during the year assessee has declared a total turnover of Rs. 69,47,725/- under section 44AD and offered business income at presumptive rate of 8.37% and filed his return declaring net taxable income of Rs. 5,29,300/-. The returned income was accepted u/s. 143(1). During the year the assessee has deposited Rs. 15,18,000/- in cash into his Allahabad Bank account (now Indian Bank) out of which only Rs. 2,40,000/- was deposited in the demonetization period. The nature of assessee’s business involves local procurement of milk from rural vendors and sale in urban areas primarily in cash. Given the nature of the business, daily collections are made in cash and deposited in the bank account as and when needed. The assessee has deposited a total cash of Rs. 15,18,000/- during the year from the period commencing from 2nd April, 2016 to 13th November, 2016. The entire cash is derived from the dairy business only. It is further submitted that assessee has declared income under section 44AD and is not required to maintain books of accounts. Thus, the source of deposits was adequately explained as business receipts from the dairy business. It was further submitted that assessee is in the same business of dairy products since many years viz. Ayrs. 2011-12 to 2024-25 by declaring turnover u/s. 44AD over the years. Hence, it was pleaded that the addition confirmed by the Ld. CIT(A) may be deleted. 5. I have heard both the parties and perused the records. I have given my thoughtful consideration to the assessee’s contentions before the lower authorities and Revenue’s contention in support of the 3 | P a g e impugned addition. In view of the aforesaid factual matrix, in my considered opinion, since the source of cash deposit has been clearly explained, therefore addition in dispute is not sustainable in the eyes of law and deserve to be deleted, for which Ld. DR has no serious objection. I hold and direct accordingly. 7. The instant assesseee’s appeal is allowed in the aforesaid terms. Order pronounced in the Open Court on 07.05.2025. Sd/- (MAHAVIR SINGH) VICE PRESIDENT SRBhatnagar Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order, Assistant Registrar, ITAT, Delhi Bench "