SH. PARAMJIT SINGH MITTU,PANCHKULA V. ITO, WARD -3, PANCHKULA

ITA 664/CHANDI/2022

AI Insights

The case involves Shri Paramjit Singh Mittu, who appealed against the addition of Rs.66 Lacs to his income for the Assessment Year 2017-18, which was confirmed by the Commissioner of Income Tax (Appeals). The addition was based on the allegation that the cash deposits made during the demonetization period were from unaccounted sources. The Tribunal found that the assessee had provided sufficient evidence, including audited books and VAT returns, to substantiate that the deposits were from legitimate cash sales of his jewelry business. The Tribunal criticized the lower authorities for not providing concrete evidence to support their claims and for relying on assumptions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837528 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 21-10-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: . RANJIT KAUR LD.
• Assessee Lawyers: PARIKSHIT AGGARWAL; SHRUTI
• Keywords: Income from undisclosed sources
• Section: 143(3)

Judgement Text

"1 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.664/CHANDI/2022 (िनधाŊरण वषŊ / Assessment Year: 2017-18) Shri Paramjit Singh Mittu Shop No. 312, Haripur, Near Post Office, Sector – 4 Panchkula, Haryana - 134112 बनाम/ Vs. ITO Ward-3 Aaykar Bhawan, Sector -2, Panchkula - 134115 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. ABCPM-0392-A (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/Appellant by : Sh. Parikshit Aggarwal (CA) and Ms. Shruti Khandelwal (Advocate) – Ld. ARs ŮȑथŎकीओरसे/Respondent by : Sh. Dr. Ranjit Kaur (Addl.CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 12.02.2026 घोषणाकीतारीख /Date of Pronouncement : 18.02.2026 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017- 18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 26-08-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 26-12-2019. The sole grievance of the assessee is confirmation of addition of Rs.66 Lacs which represent cash deposit during demonetization period. Having heard rival submissions and Printed from counselvise.com 2 having considered documents as placed before us, the appeal is disposed-off as under. 2. The assessee filed return of income at Rs.4.57 Lacs which was scrutinized to examine the sources of cash deposit during demonetization period. The assessee was engaged in trading of jewellery under his proprietorship concern by the name M/s Mittu Jewellers. The assessee was found deposited a sum of Rs.66 Lacs in one of his bank account. The assessee stated that the cash was sourced out of cash sales. However, Ld AO observed that there was abnormal sale of Rs.66 Lacs in November, 2016 as against average monthly turnover of Rs.5.33 Lacs. The assessee was subjected to survey on 09-03-2017 wherein stock of Rs.123.16 Lacs was found. On these facts, Ld. AO alleged that the assessee manipulated his books of accounts to adjust the cash sales in the month of October, 2016 and the deposits were out of unaccounted income. Finally, the cash deposits of Rs.66 Lacs was held to be out of unexplained sources and added to assessee’s income. 3. During first appeal, the assessee reiterated that cash deposits were derived out of cash sales only. The sales were accepted by VAT authorities. During assessment proceedings, the sales and purchases were duly explained and the sales were made out of trading stock as available with the assessee. However, Ld. CIT(A) endorsed the findings of Ld. AO and confirmed the addition against which the assessee is in further appeal before us. Printed from counselvise.com 3 4. It emerges that the assessee is engaged in trading activities. Apparently, the assessee does not have any other source of income. In fact, survey findings revealed that the assessee was having stock of Rs.123.16 Lacs for which no adverse view has been taken by Ld. AO. From assessee’s paper-book, it is quite clear that the books of the assessee have duly been audited. The assessee has reflected turnover of Rs.133.59 Lacs which is evident from Trading Account. The sales turnover has duly been accepted by Ld. AO. The sales turnover is further evidenced by VAT returns of the assessee. No discrepancy in the stock has been pointed out by Ld. AO. Simply because the turnover was high in one month, the same would not be a good ground to reach a conclusion that the sales were not genuine unless evidence to that effect was brought on record. The assessee has maintained cash book and all the deposits have duly been reported therein. No shortage of cash has been noted. The assessee has furnished sales and purchase register. It is trite law that no addition can be made on mere assumptions and presumptions. On the given facts, the impugned addition is not sustainable. Finding substantial merits in the arguments and documentary evidences as furnished by Ld. AR, we delete the impugned addition. The Ld. AO is directed to re-compute the income of the assessee. 5. The appeal stand allowed. Order pronounced on 18th February, 2026. -Sd- -Sd- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Printed from counselvise.com 4 Dated:18.02.2026 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 "