SH RAJ KUMAR ,HARYANA V. ITO WARD -5 , ROHTAK

ITA 5449/DEL/2025

AI Insights

The case involves Raj Kumar, who operates a petrol pump and was assessed for unexplained cash deposits during the demonetization period in India. The Assessing Officer (AO) added Rs. 34,30,729 as unexplained cash credit under section 68 of the Income Tax Act, which was upheld by the First Appellate Authority. Raj Kumar appealed to the Income Tax Appellate Tribunal, arguing that the cash deposits were from legitimate sales recorded in his books. The Tribunal agreed with Raj Kumar, noting that the sales were accepted by the AO and the VAT department, and there was no defect pointed out in the books of accounts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785484 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 02-09-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Assessee Lawyers: LALIT MOHAN
• Keywords: Condonation of delay; Unexplained cash credit; Bogus
• Section: 143(3); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH “SMC’’ : NEW DELHI) BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT ITA No. 5449/Del/2025 Asstt. Year : 2017-18 RAJ KUMAR, vs. ITO, Ward-5, 1107/34, VIJAY NAGAR, ROHTAK ROHTAK-124001 HARYANA (PAN: BFYPK0435H) (Appellant) (Respondent) Appellant by : Sh. Lalit Mohan, CA Respondent by : Sh. Manoj Kumar, Sr. DR. Date of Hearing 27.10.2025 Date of Pronouncement 27.10.2025 ORDER This appeal by the assessee is emanating from the order of the NFAC, Delhi in Appeal No. ITBA/NFAC/S/250/2024-25/1073567557(1) dated 21.02.2025. 2. At the threshold, it is noted that there is a delay of 125 days in filing the appeal before the Tribunal. For this purpose, the assessee has filed the application for condonation of delay due to the fact that Accountant Sh. Jogender Kumar of the applicant had inadvertently omitted to notice the uploading of the aforesaid order on the income tax portal and in support of this contention, an affidavit of the said Accountant. Ld. DR did not controvert the aforesaid proposition. After hearing both the sides and perusing the records, I am of the view that reasonable reasons has been attributed to the assessee in filing the belated appeal before the tribunal, hence, the same is hereby condoned and proceed further. 3. Brief facts of the case are that assessee is running petrol pump in the name and style of M/s RS Chuadhary Filing Station at Village Kansala, Distt. Printed from counselvise.com 2 | P a g e Rohtak. During the year under consideration the assessee filed his return of income on 09.08.2018 declaring income of Rs. 2,91,080/-. The case was selected for scrutiny through CASS under complete scrutiny criteria. In the course of the assessment proceedings, the assessee has deposited Rs. 49,58,500/- in his bank accounts in SBN notes during the demonetization period. AO observed that the appellant had closing cash in hand as on 08.11.2016 Rs. 15,27,771/-. Balance cash deposit of Rs. 34,30,729/- in specified notes was due to sale proceeds of petrol pump of Esssar Company. AO found that only public sector Oil Marketing Companies were authorized by Government of India to accept the demonetized currency. Since Essar company is not the public sector oil company, AO made the addition of Rs. 34,30,729/- as unexplained cash credit u/s. 68 of the Act by passing order u/s. 143(3) of the Act. However, in appeal, Ld. First Appellate Authority sustained the addition. Against the above, assessee appealed before the Tribunal. 4. Heard both the parties and perused the records. 5. At the time of hearing, Ld. AR has submitted that Ld. CIT(A) erred in upholding an addition made of Rs. 34,30,729/- representing alleged unexplained cash deposits in the bank account of the assessee during the period of demonetization and brought to tax under section 68 of the Act read with section 115BBE of the Act. It was further submitted that the Ld. CIT(A) failed to appreciate that the AO having accepted the cash sales and taxed income thereon could not by any stretch of imagination either legally or logically hold that cash deposited is unexplained and taxable as income of the assessee u/s. 68 of the Act. It was further submitted that Ld. CIT(A) failed to appreciate that once the sale are duly recorded in the books of accounts and have been made out of stock available in the books of accounts then both logically and legally, such sales could not be separately assessed to tax as bogus sales and unexplained cash credit u/s. 68 of the Act. It was further submitted that Ld. CIT(A) has failed to appreciate that once the purchase declared in the books of accounts were duly accepted then no Printed from counselvise.com 3 | P a g e subjective assumption and presumption could be made a basis to assume, allege and conclude that sales made out of such purchases were unexplained money under section 68 of the Act. I note that during the proceedings before the lower authorities, the assessee attached the cash book, wherein AO could not even pointed out a single defect in the books of accounts and the books of account were also never rejected by the AO. The sales figures were accepted by the AO as well as by the VAT department. In view of the aforesaid factual matrix, in my considered opinion, since the source of cash deposit being generated from cash sales 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. 6. The instant assesseee’s appeal is allowed in the aforesaid terms. Order pronounced in the Open Court on 27.10.2025. Sd/- (MAHAVIR SINGH) VICE PRESIDENT Date: 30-10-2025 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 Printed from counselvise.com "