VASUDEV HARGUNDAS TEJWANI,VADODARA V. THE ACIT, CIRCLE-3(1), VADODARA

ITA 1060/AHD/2025

AI Insights

The case involves Vasudev Hargundas Tejwani, who appealed against the addition of Rs.14,42,000 to his income for the Assessment Year 2017-18, which was treated as unexplained cash deposit by the Assessing Officer during the demonetization period. The assessee argued that the deposits were from legitimate cash sales and opening cash balances. The Tribunal examined the monthly sales data and the peculiar maintenance of two bill books in October 2016, which raised suspicions about the authenticity of the cash sales reported. The Tribunal found part of the cash deposit explained and deleted the addition for Rs.10,00,000 while sustaining it for Rs.4,42,000.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712135 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAMAL DEEP SINGH
• Assessee Lawyers: URVASHI SHODHAN
• Keywords: Business income; Unexplained cash credit; Initiation of penalty proceedings
• Section: 143(3); 68

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ SMC,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD \u0014ी टी.आर. से\u0018\u0019ल क ुमार, \u0011ाियक सद\u001b एवं \u0014ी नरे \"साद िस#ा, लेखा सद\u001b क े सम%। ] ] BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.1060/Ahd/2025 िनधा \u000fरण वष\u000f /Assessment Year : 2017-18 Vasudev Hargundas Tejwani Panchmukhi Mahadev Pole Opp. Jubilee Baug Raopura Vadodara – 390 001 बनाम/ v/s. The ACIT Circle-3(1) Vadodara – 390 007 \u0013थायी लेखा सं./PAN: AAVPT 5712 B (अपीलाथ'/ Appellant) (\"( यथ'/ Respondent) Assessee by : Ms. Urvashi Shodhan, AR Revenue by : Shri Kamal Deep Singh, Sr.DR सुनवाई की तारीख/Date of Hearing : 10/07/2025 घोषणा की तारीख /Date of Pronouncement: 22/07/2025 आदेश/O R D E R PER NARENDRA PRASAD SINHA, AM: This appeal by the Assessee is directed against the order dated 28/03/2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘CIT(A)’], arising from the assessment order dated 27/11/2019 passed under Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year (AY) 2017-18. Printed from counselvise.com ITA No.1060/Ahd/2025 Vasudev Hargundas Tejwani vs. ACIT Asst. Year : 2017-18 2 2. The brief facts of the case are that the assessee had filed the return of income for AY 2017-18 on 04/10/2017 declaring income of Rs.20,59,950/- The case was selected for limited scrutiny under CASS on the issue of cash deposit during demonetization period. It was found that the assessee had made cash deposit of Rs.14,42,000/- in old cash currency during demonetization period. It was explained that the assessee is engaged in retail and wholesale business of dress materials and that the cash deposit represented cash sales. The Assessing Officer (AO) was, however, not satisfied with the explanation of the assessee for the reason that cash sales shown during the month of Octobere-2016 was abnormally high and the assessee has produced two different types of sale bill-books for the month of October-2016. Therefore, he treated the entire cash deposit of Rs.14,42,000/- made during the demonetization period, as unexplained and, accordingly, made the addition. The assessment was completed u/s.143(3) of the Act on 27/11/2019 at total income of Rs.35,01,950/-. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. Against the order of the Ld. CIT(A), the assessee is in second appeal before us. The following grounds have been taken in this appeal: “1. Ld. CIT (A) (NFAC) erred in law and on facts in confirming addition made by AO of Rs. 14, 42, 000/- as unexplained cash credit u/s 68 rws 115BBE of the Act. 2. Ld. CIT (A) (NFAC) erred in law and on facts in confirming huge addition made by AO not appreciating the submission that cash deposited in bank account was from Printed from counselvise.com ITA No.1060/Ahd/2025 Vasudev Hargundas Tejwani vs. ACIT Asst. Year : 2017-18 3 cash sales, opening cash balance and cash withdrawal from pre demonetization period. 3. Ld. CIT (A) (NFAC) erred in law and on facts overlooking the documentary evidence like books of accounts with sales & purchase bills, vouchers, stock register, cash in hand register to substantiate the fact that cash deposits in the bank account was from cash sales of retail business. 4. Ld. CIT (A) (NFAC) ought to have deleted addition specially when books of accounts are duly audited and no adverse remark regarding cash deposits is made by the Auditors. 5. Ld. CIT (A) erred in law and on facts confirming addition of cash deposited in the bank out of cash sales as unexplained cash deposit and also accepting the cash sales offered to taxation which amounted to double addition by AO. 6. Levy of interest u/s 234A/234B, 234C & 234D of the Act is unjustified. 7. Initiation of penalty proceedings u/s 271AAC of the Act is unjustified.” 5. All the grounds taken by the assessee pertain to addition of Rs.14,42,000/- in respect of cash deposit. Ms. Urvashi Shodhan, Ld. AR of the assessee explained that the assessee was engaged in the business of retail and wholesale of dress materials and total cash deposit of Rs.72,30,000/- was made during the Financial Year (FY) 2016-17. She explained that cash sales was regular feature of business of the assessee and the cash deposits were made in each month. Under the circumstances, the AO was not correct in treating the cash deposit of Rs.14,42,000/- made during the demonetization period as unexplained. She explained that the cash deposit was made out of a cash sales and the cash balance as available with the assessee. 6. Per Contra, Shri Kamal Deep Singh, Sr.DR submitted that the explanation of the assessee for the cash deposit during the demonetization period was high cash sales in the month of October-2016. He explained that Printed from counselvise.com ITA No.1060/Ahd/2025 Vasudev Hargundas Tejwani vs. ACIT Asst. Year : 2017-18 4 the AO had examined this issue and found that the assessee was maintaining two types of sale bill books for the month of October-2016, the reason for which was not explained. In fact, similar high cash sales were also appearing in the months of April and May-2016, but no two separate bill books were utilized for those months. The conduct of the assessee in maintaining two bill books for the month of October-2016 was rightly adversely taken by the AO and for that reason, he had correctly treated the cash deposit of Rs.14,42,000/- during the demonetization period, as unexplained. 7. We have considered the rival submissions. There is no dispute to the fact that cash sales were regular feature of the business of the assessee. The assessee had filed a month-wise details of cash sales and total sales in the paper-book, which is found to be as under: SHREE OM FABRICS 2016-17 Month Total Sales Cash Sales Credit Sales April 2,335,587.85 852,592.65 1,482,995.20 May 2,497,651.93 819,574.00 1,678,077.93 June 2,248,212.45 557,621.95 1,691,590.50 July 3,103,492.95 529,655.50 2,573,837.45 August 2,984,147.34 314,651.00 2,669,496.34 September 3,200,879.40 713,199.00 2,487,680.40 October 3,856,588.50 1,328,779.25 2,527,809.25 November 2,178,368.70 674,285.00 1,504,083.70 December 3,629,622.36 113,321.25 3,516,301.11 January 4,277,790.00 136,605.00 4,141,185.00 Printed from counselvise.com ITA No.1060/Ahd/2025 Vasudev Hargundas Tejwani vs. ACIT Asst. Year : 2017-18 5 February 2,088,025.00 244,401.00 1,843,624.00 March 1,816,165.00 131,550.00 1,684,615.00 TOTAL 34,217,531.48 6,416,235.60 27,801,295.88 7.1. It is found that the assessee had shown cash sales of Rs.13,28,779/- in the month of October-2016 which was quite high compared to the cash sales of other months. The contention of the assessee is that this was for the reason that Navaratri and Diwali festival fell in the month of October-2016. We are not convinced with the explanation of the assessee. The total sales in the month of October-2016 was Rs.38.56 lakhs as compared to total sales of Rs.32 lakhs in the month of September-2016. However, the cash sales in the month of October-2016 was shown at Rs.13.28 lakhs as against cash sales of Rs.7.13 lakhs only in September-2016. Thus, the cash sales in October’16 was too high vis-à-vis the total sales. Further, the assessee has not explained for the reason for maintaining two sale bill books in the month of October-2016. No such two sale bill books were utilized in other months. In view of these facts, the cash sales of Rs.13.28 lakhs as shown in the month of October-2016 cannot be held as genuine and correct. At the same time, the AO was not correct in treating the entire cash deposit of Rs.14,42,000/- made during the demonetization period as unexplained. Considering the fact that the assessee was having cash sales regularly during the entire year and also that the cash lying with family members in the old currency notes might have been deposited in the bank account during the demonetization period, it will be reasonable to consider the cash deposit of Rs.10 lakhs during the demonetization period as explained and accordingly the addition to that extent is deleted. The addition made on account of unexplained cash deposit during the demonetization period is sustained to the extent of balance Printed from counselvise.com ITA No.1060/Ahd/2025 Vasudev Hargundas Tejwani vs. ACIT Asst. Year : 2017-18 6 amount of Rs.4,42,000/- only. Thus, the grounds taken by the assessee are partly allowed. 8. The grounds in respect of levy of interest and initiation of penalty proceedings u/s.271AAC of the Act, being consequential, are dismissed. 9. In the result, the appeal of the assessee is allowed in part. Order pronounced in the Open Court on 22nd July, 2025 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (NARENDRA PRASAD SINHA) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 22/07/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की \"ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. \"%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT 4. आयकर आयु& ) अपील ( / The CIT(A)- (NFAC), Delhi 5. िवभागीय \"ितिनिध , अिधकरण अपीलीय आयकर , अहमदाबाद /DR,ITAT, Ahmedabad, 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स%ािपत \"ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad Printed from counselvise.com "