RAIDEEP BHALLA & SONS,LUDHIANA V. INCOME TAX OFFICER, WARD-VII (2), LUDHIANA, LUDHIANA

ITA 869/CHANDI/2025

AI Insights

The case revolves around an appeal by Raideep Bhalla & Sons against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs.20,86,585 to the assessee's income for the assessment year 2017-18. This addition was initially made by the AO, suspecting that the assessee had introduced unaccounted income under the guise of cash sales during the demonetization period. The assessee argued that the cash deposits were from legitimate sales made before the demonetization announcement, and due to the demonetization, they were unable to reinvest the cash and thus deposited it in the bank. The Tribunal, after reviewing the evidence and the AO's assessment, concluded that the addition was not justified as the AO had not pointed out any defects in the audited accounts or the sales evidence provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783512 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2017-2018
• Appeal Filed On: 28-06-2025
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: K.J. SHALLEY
• Keywords: Income from undisclosed sources; Search and seizure

Judgement Text

" आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ “एकल” चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “SMC” CHANDIGARH Įी संजय गग[, ÛयाǓयक सदèय BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER आयकर अपील सं./ ITA No.869/CHD/2025 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Raideep Bhalla & Sons, 51-A, Kitchlu Nagar, Ludhiana. बनाम The ITO, Ward – VII (2), Ludhiana. èथायी लेखा सं./PAN NO: AARHR9229R अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri K.J. Shalley, Advocate राजèव कȧ ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr.DR सुनवाई कȧ तारȣख/Date of Hearing : 06.11.2025 उदघोषणा कȧ तारȣख/Date of Pronouncement : 07.11.2025 HYBRID HEARING आदेश/ORDER The present appeal has been preferred by the assessee against the order dated 08.04.2025 of the Commissioner of Income Tax (Appeals) NFAC, Delhi [in short ‘the CIT (Appeals)] pertaining to 2017-18 assessment year. Printed from counselvise.com ITA 869/CHD/2025 A.Y. 2017-18 2 2. The assessee in this appeal is aggrieved by the action of the CIT (Appeals) in confirming the addition of Rs.20,86,585/- made by the Assessing Officer (in short ‘the AO’) on account of cash credits into the bank account of the assessee during demonetization period. 3. The brief facts of the case are that the assessee had deposited the cash of Rs.43,72,500/- in its bank account out of the cash sales made prior to the announcement of the demonetization scheme. It was pleaded that because of declaration of demonetization scheme, the assessee was not able to reinvest/purchase material out of the cash received and as required by the government, the cash out of cash sales was deposited in the bank account. On being asked to explain in this respect, the assessee furnished the required details including evidence of purchase, stock-in-trade, closing stock, evidence relating to sales made on credit/banking channel as well as cash sales. The AO, considering the evidences and other details, however, could not point out any defect or discrepancy in the audited accounts submitted by the assessee and other evidences relating to the business of the assessee and sales made by the assessee during the year. He, however, was of the view that entire deposit out Printed from counselvise.com ITA 869/CHD/2025 A.Y. 2017-18 3 of cash sales was not justified and that the assessee might have introduced some of his unaccounted income into the garb of cash sales. He, giving some benefit to the assessee of the cash sales and thereby, accepting the cash sales to the extent of Rs.22,85,915/-, made the addition of the remaining amount, out of the cash sales at Rs.20,86,585/-. 4. The ld.CIT (Appeals) confirmed the additions so made by the AO. 5. I have heard the rival contentions and gone through the record. The ld. counsel for the assessee has brought my attention to page 3 of the assessment order, wherein, the AO himself has given a chart of the cash sales made by the assessee as well as the details of the amounts deposited in the bank account. A perusal of the said chart would reveal that the assessee had made cash sales of Rs.2.85 lacs in the month of July,2016, Rs.7.93 lacs in the month of August,2016, Rs.7.47 lacs in the month of September,2016, Rs.20.78 lacs in the month of October 2016 and Rs.3.69 lacs from 01.11.2016 to 08.11.2016. Out of the said cash sales, the assessee had deposited Rs.18.90 lacs in the month of November and further an amount of Rs.24.82 lacs in the month of December, 2016. Printed from counselvise.com ITA 869/CHD/2025 A.Y. 2017-18 4 The AO has not disputed the cash sales made in the month of July, 2016, Aug.,2016, September, 2016 and even October 2016 to some extent. The impugned addition has been made by the AO only on the basis of assumptions and presumptions without any evidence that the amount deposited was out of any unexplained income of the assessee. The purchases, stock-in-trade and closing stock has not been suspected by the AO. The only plea that the assessee had not deposited the cash in the bank account during the earlier period except during demonetization period, in my view, rather,goes in favour of the assessee. Since the Government had declared demonetization scheme, hence, the assessee was estopped from circulating the cash received from the cash sales for reinvestment etc. and hence, per force, the assessee was required to deposit the same into the bank account. No adverse view can be taken in this respect. Moreover, ld. counsel for the assessee has further demonstrated that the total cash sales of the assessee during the entire year were just 4.57% of its turnover of the year, which was very minor and was reasonably acceptable considering the business turnover of the assessee. In view of this, the impugned addition made by the lower authorities is not sustainable and the same is ordered to be deleted. Printed from counselvise.com ITA 869/CHD/2025 A.Y. 2017-18 5 6. In the result, appeal of the assessee stands allowed. Order pronounced on 07th November,2025. Sd/- ( संजय गग[) (SANJAY GARG ) ÛयाǓयक सदèय/ Judicial Member “Poonam” आदेश कȧ ĤǓतͧलͪप अĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. आयकर आयुÈत (अपील)/ The CIT(A) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 6. गाड[ फाईल/ Guard File Assistant Registrar Printed from counselvise.com "