SHREE SATI SAW MILL,SILIGURI V. ITO, WARD 1(3), SILIGURI

ITA 1402/KOL/2025

AI Insights

The case involves Shree Sati Saw Mill, the appellant, contesting an addition of \\u20b91,33,66,960 to their income, which was confirmed by the National Faceless Appeal Centre (CIT(A)) and originally made by the AO under section 69A of the Income-tax Act, 1961. The addition was based on substantial cash deposits identified in the appellant's bank accounts during the assessment year 2016-17. The AO had reopened the case under section 147 due to non-filing of returns and based on third-party information. Despite the appellant providing explanations and documentation, the CIT(A) upheld the AO's decision. However, the Tribunal found that the cash deposits were from business operations and had been properly recorded, leading to the decision to allow the appeal and remove the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 776503 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2025
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Appeal Filed On: 30-06-2025
• Laws Referred To: Income-tax Act, 1961
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: PRAKASH AGARWAL; MAKING AN
• Keywords: Set aside; Business income
• Section: 147; 148; 68; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.1402/KOL/2025 (Assessment Year:2016-17) Shree Sati Saw Mill 2.5 Mile, Sevoke Road, H.No. 2217, Siliguri, West Bengal-734401 Vs. ITO Ward 1(3), Siliguri Siliguri, Matigara, West Bengal-734100 (Appellant) (Respondent) PAN No. ABBFS5373G Assessee by : Shri Prakash Agarwal, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 01.09.2025 Date of pronouncement: 15.09.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 16.04.2025 for the AY 2016-17. 02. The only issue raised by the assessee in the various grounds of appeal is against the confirmation of addition of ₹1,33,66,960/-, by the ld. CIT (A) as made by the ld. AO u/s 69A of the Income-tax Act, 1961 (the Act) in respect of cash deposited during the year. 03. The facts in brief are that the case of the assessee was selected for scrutiny on the basis of information in the insight portal under the category of RMS -Non filling of return and accordingly, the case of the assessee was reopened u/s 147 of the Income-tax Act, 1961 (the Act). The ld. AO observed on the basis of third-party information that assessee has deposited huge cash into the bank account. The Notice Printed from counselvise.com Page | 2 ITA No.1402/KOL/2025 Shree Sati Saw Mil; A.Y. 2016-17 u/s 148A(b) of the Act was issued which was complied by the assessee and thereafter the order u/s 148A(d) of the Act was passed on 31.03.2023. Subsequently, the notice u/s 148 was issued on 31.03.2023. The assessee is engaged in the business of Saw Mill under the name and style of M/s Shree Sati Saw Mill and has been regularly doing business. The books of account of the assessee are also audited by the tax auditor. The ld. AO called for the information from the assessee which were duly replied, comprising the copy of audited annual accounts and other details. Besides, the ld. AO issued notice u/s 133(6) of the Act to the State Bank of India and Karnataka Bank Limited, calling for the account details, which were accordingly furnished by the banks. The ld AO found that the assessee has deposited ₹25,29,960/- in State bank of India account number 9497 and ₹1,08,44,000/- in Karnataka bank Limited account no.18801. Accordingly, show cause notice was issued as to why the same should not be added to the income of the assessee u/s 68 of the Act, which was replied by the assessee submitting cash book, cash flow statement bank of Karnataka bank Limited and State bank India. The assessee also explained these deposits by availing video conference, however, the ld. AO was not satisfied with the contentions of the assessee and he treated the cash deposit as unexplained money u/s 69A of the Act and added to the income of the assessee by making an addition of ₹1,33,66,960/- vide order dated 01.03.2024 passed u/s 147 read with section 144B of the Act. 04. In the appellate proceedings, the ld. CIT (A) simply affirmed the order of the ld. AO by holding that the assessee has failed to explain the cash deposit and therefore, the ld. AO has rightly made the addition. Printed from counselvise.com Page | 3 ITA No.1402/KOL/2025 Shree Sati Saw Mil; A.Y. 2016-17 05. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has been doing business and regularly filing the return of income. During the year, the assessee has turnover of ₹1,59,79,477/-. We note that the assessee has reported turnover of ₹1,71,02,121/- in A.Y. 2015-16 and ₹2,07,05,313/- in A.Y. 2017-18. We also note that the cash deposited were also made in the bank account of the assessee i.e. during A.Y. 2017-18 of ₹82,61,500/- and 2014-15 of ₹46,81,500/-. We note that the assessee has duly accounted for the cash receipts in the cash book giving narration therein that the cash receipts were on account of sales or receipt from sundry debtors. We note that the books of account were duly audited by the tax auditor and no adverse inference was drawn. We note that both the authorities below have failed to correctly appreciate the facts available on record that cash deposits into the bank accounts were out of business receipts only. We also note that cash shown by the assessee was represented by cash sales / receipts from the sundry debtors which were duly shown in the books of account. Therefore, once, the cash has been treated as sales no addition can be made u/s 69A of the Act towards unexplained money as the same amounts to double taxation of the same income which is not permissible under the Act. Consequently, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the additions. 06. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 15.09.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:15.09.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 4 ITA No.1402/KOL/2025 Shree Sati Saw Mil; A.Y. 2016-17 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "