TaxTMI 
TaxTMI 
2026 (9) TMI 1799
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....rted by an affidavit of Shri Jaswinder Singh Bajaj, Director of the assessee-company. It has been stated in the affidavit that the impugned appellate order was passed on 31.10.2025 and was uploaded on the income-tax portal on the same day. During the relevant period, the deponent was at Kolhapur looking after the factory of the assessee-company. According to the deponent, the income-tax portal had last been accessed on 28.07.2025, as evidenced by the portal activity log annexed to the affidavit. It is further stated that when the bank account of the assessee-company was attached on 01.02.2026, the deponent accessed the portal and became aware of the impugned appellate order. He thereafter immediately contacted the Chartered Accountant, Shri K.K. Lalkaka, sought professional guidance and took steps for filing the present appeal. 3. The learned Departmental Representative (DR) has not raised any objection to the condonation of the delay. We have considered the explanation furnished by the assessee. The explanation is supported by the sworn affidavit of its director and the portal activity log placed on record. The material indicates that the delay was not deliberate or actuated by....
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....spite notice under section 142(1) and show-cause notice dated 12.12.2019. He, therefore, disallowed 25 per cent of the aggregate expenditure, amounting to Rs. 2,74,98,710/-, under section 37 of the Act for want of verification. 8. In appeal, the learned CIT(A) compared the ratio of other expenses to turnover for the year under consideration with that of the preceding and succeeding years. By adopting the average ratio of 13.75 per cent as against 16.02 per cent claimed by the assessee, the learned CIT(A) computed the allowable other expenses at Rs. 7,10,39,454/- and restricted the disallowance to Rs. 1,17,47,135/-, thereby granting partial relief to the assessee. Addition relating to deposits of Specified Bank Notes 9. During the period from 09.11.2016 to 30.12.2016, the assessee deposited aggregate cash of Rs. 3,35,43,515/- in its bank accounts, comprising Rs. 2,33,23,794/- in Bank of Baroda Rs. 97,15,401/- in Punjab and Maharashtra Co-operative Bank Limited and Rs. 5,04,320/- in Kotak Mahindra Bank. The Assessing Officer issued notices under section 133(6) of the Act to the banks to ascertain the amount deposited in SBNs. Kotak Mahindra Bank reported that no SBNs had bee....
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....d cash sales generated before 08.11.2016 and that time was necessarily required for collection of cash from the various outlets and its deposit in the respective bank accounts. The assessee disputed the inference drawn merely from the staggered pattern of deposits. 14. The assessee further submitted that there was no statutory obligation to maintain denomination-wise particulars of the currency deposited. It was pointed out that, in respect of Bank of Baroda, details were not available for cash deposits aggregating to Rs. 19,08,724/- made between 10.11.2016 and 13.11.2016, and that the Assessing Officer had presumed the entire amount to consist of SBNs. The assessee relied upon its cash book containing 468 pages, purchase register, sales records, product-wise details, sales-tax returns, bank statements and bank reconciliation statements. It also contended that the aggregate cash sales, card sales and credit sales were Rs. 53,03,61,570/- and that the cash deposited during November and December 2016 was lower than the cash deposited in the preceding months. It was also submitted that the cash sales had already been recorded in the books and offered to tax as business receipts. Acc....
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.... 02.12.2016 and Rs. 10,00,000/- on 09.12.2016. 19. In response to the notice under section 142(1) dated 29.10.2019, the assessee furnished loan confirmations from both lenders. The assessment order also records that PAN particulars were furnished. The Assessing Officer, however, observed that no sufficient material was produced to establish the creditworthiness of the lenders and the genuineness of the transactions. The assessee was again called upon by notices dated 03.12.2019 and 12.12.2019 to furnish the relevant evidence, but, according to the Assessing Officer, no further details or explanation were submitted. 20. The Assessing Officer held that furnishing PAN particulars and confirmations or routing the amounts through banking channels was not, by itself, sufficient to prove the creditworthiness of the lenders and the genuineness of the transactions. He further observed that both loans were long-term, interest-free and unsecured. The Assessing Officer consequently treated the aggregate amount of Rs. 31,91,622/- as unexplained cash credit under section 68 of the Act and subjected it to tax under section 115BBE of the Act. 21. Aggrieved by the order of the learned CIT(....
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....ection 68 - Cash Deposits (SBNs) 8. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 66,66,264/- made by the AO under section 68 of the Act treating the deposits of Specified Bank Notes ('SBNs') during the demonetization period as unexplained cash credits. 9. The CIT(A) failed to appreciate that the source of the cash deposits was the cash sales generated from the Appellant's 32 outlets prior to 8th November 2016, which were duly recorded in the books of accounts and offered to tax as business income. 10. The CIT(A) erred in rejecting the Appellant's explanation merely on the ground of "piecemeal deposits", failing to appreciate the logistical reality of collecting cash from multiple outlets across different cities. 11. Without prejudice to the above, the CIT(A) erred in not appreciating that taxing the cash deposits under section 68, when the corresponding sales have already been offered to tax, amounts to double taxation of the same income, which is impermissible in law. Addition under section 68 - Unsecured Loans 12. On the facts and circumstances of the case and in....
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....nd the lender, the lender's income-tax return and capital account had not been produced. The learned CIT(A) also referred to the fact that the loan was advanced during the demonetization period. He consequently held that the identity and creditworthiness of the lender and the genuineness of the transaction had not been established by primary evidence. The addition of Rs. 31,91,622/- under section 68 was accordingly confirmed. 25. At the time of hearing, the learned Authorised Representative (AR) submitted that the assessee did not wish to press ground Nos.2 and 3 challenging the validity of the notice issued under section 143(2) of the Act and ground No.4 alleging violation of the principles of natural justice. In view of the specific statement made by the learned AR, ground Nos.2 to 4 are dismissed as not pressed. Consequently, we refrain from expressing any opinion on the merits of the contentions raised in these grounds. 26. Regarding Ad-hoc disallowance of expenses, the learned AR drew our attention to paragraphs 6.6.7 to 6.6.14 of the impugned order and submitted that, although the learned CIT(A) found the disallowance made by the Assessing Officer at 25% to be ad hoc an....
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.... Delhi High Court reported in [2018] 99 taxmann.com 283 (Delhi) was dismissed. The learned AR also relied upon Anupam Industries Ltd. v. Assistant Commissioner of Income-tax [2025] 180 taxmann.com 678 (Ahmedabad - Trib.) 29. Regarding cash deposits, the learned AR submitted that the assessee had deposited aggregate cash of Rs. 3,35,43,515/- in its three bank accounts during the period from 09.11.2016 to 30.12.2016. Out of the same, the Assessing Officer determined the deposits in Specified Bank Notes at Rs. 78,69,914/-. The learned AR pointed out that Punjab and Maharashtra Co-operative Bank Limited had reported SBN deposits of Rs. 39,34,500/-, whereas no SBNs were deposited with Kotak Mahindra Bank. In respect of Bank of Baroda, the bank was unable to furnish denomination-wise particulars of deposits aggregating to Rs. 19,08,724/- made between 10.11.2016 and 13.11.2016. The Assessing Officer nevertheless presumed the entire amount to represent SBNs and determined the SBN deposits in that account at Rs. 39,35,414/-. It was contended that there was no statutory obligation upon the assessee to maintain denomination-wise particulars of currency notes. 30. The learned AR further ....
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....ection 142(1) dated 29.10.2019, the assessee had furnished loan confirmations, copies of the income-tax returns for the assessment year 2017-18 and the relevant bank statements of both lenders. The Assessing Officer had acknowledged and verified the confirmations but rejected the assessee's explanation merely on the ground that the creditworthiness of the lenders had not been established. 35. It was further submitted that the identity of the lenders and genuineness of the transactions were supported by documentary evidence and the loans were routed through banking channels. If the Assessing Officer entertained any doubt regarding the creditworthiness of the lenders, the same could have been verified from their respective jurisdictional Assessing Officers. 36. The learned AR also placed on record copies of the respective ledger accounts for the relevant and succeeding financial years to substantiate the subsequent repayment of the loans. The ledger account of Shri Baljit Singh Gandhi reflected receipt of loans aggregating to Rs. 25,00,000/- through banking channels during the relevant year and repayment of Rs. 10,00,000/- through Bank of Baroda on 09.06.2017. The ledger accoun....
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....red during the year was excessive, non-genuine or not incurred wholly and exclusively for business purposes. 42. The assessee had furnished the details of the expense heads and the corresponding amounts as Annexure "T", an extract of the cash book and the audited financial statements. The accounts were subjected to statutory audit and tax audit without any qualification concerning the expenditure in question. Neither the Assessing Officer nor the learned CIT(A) rejected the books of account under section 145(3) of the Act or pointed out any specific defect in the entries recorded therein. Although the initial burden to establish the admissibility of expenditure rests upon the assessee, the absence of some supporting vouchers could warrant verification of the specific items concerned; it cannot, without anything further, justify a blanket disallowance by applying an estimated percentage to the entire expenditure. 43. In Principal Commissioner of Income-tax v. R.G. Buildwell Engineers Ltd. [2018] 99 taxmann.com 283 (Delhi), the Hon'ble Delhi High Court found no infirmity in the deletion of an ad hoc disallowance where the books had not been rejected and the historical treatment....
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....ontroversy is not merely about the denomination of the currency deposited but about its source. The assessee consistently explained that the deposits represented cash sales effected before 08.11.2016 and collected from its 32 outlets situated at different places. In support of the explanation, it furnished the cash book, purchase register, product-wise sales and stock particulars, sales-tax returns, bank statements, bank reconciliations and audited financial statements. The aggregate cash, card and credit sales of Rs. 53,03,61,570/- stood recorded in the regular books. The learned CIT(A) also accepted, while deleting the separate addition of Rs. 1,37,10,999/-, that the difference between gross sales and the sales disclosed in the profit and loss account represented VAT and discount and not undisclosed sales. 49. No specific defect has been pointed out in the recorded sales, purchases, stock particulars or sales-tax returns. The books of account have not been rejected. Nor has any material been brought on record to show that the recorded cash sales were fictitious or that unaccounted money was introduced in the guise of sales. 50. The principal reason given by the Assessing Of....
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....e that explanation. Once the corresponding sales are already included in the business receipts, treating the same money again as an unexplained cash credit would amount to taxing the same receipt twice. 56. We accordingly direct the Assessing Officer to delete the addition of Rs. 66,66,264/- made under section 68 read with section 115BBE of the Act. Ground Nos. 8 to 11 are allowed. Addition relating to unsecured loans-Ground Nos. 12 and 13 57. The remaining substantive issue concerns the addition of Rs. 31,91,622/- representing the closing loan balance of Rs. 6,91,622/- in the name of Smt. Bhupender Kaur Bajaj and the loan of Rs. 25,00,000/- received from Shri Baljit Singh Gandhi. 58. For a credit to be accepted under section 68, the assessee is required to establish the identity of the creditor, the creditworthiness of the creditor and the genuineness of the transaction. The confirmations and PAN particulars of the lenders were admittedly furnished before the Assessing Officer. The learned CIT(A) also accepted the identity of Smt. Bhupender Kaur Bajaj. The entries in the assessee's cash book show that the amounts from Shri Baljit Singh Gandhi were received through bank....