ASST. COMMISSIONER OF INCOME TAX, CIVIC CENTRE VS. RAJ BAJWA, ASHOK VIHAR, ITA 4830/DEL/2024
The respondent-assessee filed their Income Tax Return for A.Y. 2017–18 declaring income of ₹23.23 lakhs. The case was selected for limited scrutiny to verify cash deposits of ₹1.33 crore made during the demonetization period.
Despite multiple opportunities granted by the Assessing Officer (AO), the assessee failed to respond, resulting in ex parte assessment under Section 144, wherein the entire cash deposit was added as unexplained income under Section 69A and taxed under Section 115BBE.
First Appeal: CIT(A) Ruling
On appeal, the CIT(A) admitted additional evidence under Rule 46A as the assessee cited genuine reasons for earlier non-compliance (illness, system errors, lack of e-filing familiarity). The CIT(A) found:
- The assessee was engaged in a trucking business and owned 10 trucks.
- Cash deposits were receipts from freight services, part of gross business turnover of ₹2.10 crore.
- ₹1.33 crore was deposited in 34 tranches, each ranging between ₹3 to ₹6 lakhs.
- The cash deposits matched with entries in the books of accounts and were part of disclosed business income.
The CIT(A) concluded that the AO’s addition amounted to double taxation—once as business income and again as unexplained cash—and deleted the addition.
Tribunal’s Verdict: Key Takeaways
The Revenue appealed the CIT(A)’s order, but the ITAT dismissed the appeal, affirming:
- Freight income from truck operations is often received in cash and regularly deposited in bank accounts.
- The AO had accepted the business income in the return but also taxed part of the same receipts as unexplained, which is legally unsustainable.
- The AO failed to reject the books of accounts or prove that the receipts were bogus or fictitious.
- No material evidence was provided by the Revenue to contradict the assessee’s version or to justify invoking Section 69A.
The Tribunal held that the entire addition of ₹1.33 crore was uncalled for, and confirmed that taxing the same income twice under different heads violates the principle of fair assessment.
Conclusion
This ruling reaffirms a critical principle: tax authorities must avoid duplicative taxation, especially when the source of cash deposits is transparently disclosed and verifiable. The decision strengthens taxpayer rights where legitimate business income is routed through banking channels, even in cash.