Income Tax: Section 68/69 Additions Fail When Proper Books, Returns and Bank Records Exist

Furnish Home has filed the present appeal in the ITAT Ahmedabad, challenging an order dated June 10, 2025, passed by the CIT(A)/NFAC Delhi under Section 250 of the Income Tax Act, 1961. The case is related to the Assessment Year 2017-18.

The assessee, Furnish Home, is a partnership firm that filed its income tax return (ITR) for the year in consideration, declaring a total loss amounting to Rs. 200,985. The Assessing Officer (AO) selected the case for scrutiny and completed the assessment, making an addition of about Rs. 1.20 Crore to the assessee’s income. These included unexplained cash deposits, cheque credits, and import payments. In conclusion, the assessee’s loss was converted into taxable income.

The aggrieved assessee filed an appeal before the CIT(A), who partially favoured the assessee by deleting most additions but sustained an addition of about Rs. 6.96 lakh concerning cash deposits. Neither the assessee nor the tax department was satisfied with this order; hence, both appealed before the ITAT Ahmedabad.

The assessee stated that the disputed deposits were made out of cash sales and withdrawals from the bank. To support this argument, the assessee furnished relevant documents, including audited books, VAT returns, and a bank certificate. When the tribunal examined the facts of the case and the ruling of the CIT(A), it found this partial addition unreasonable because the records and documents already supported the assessee’s explanation. In conclusion, the tribunal deleted the completed addition related to cash deposits and allowed the assessee’s appeal.

The second issue was related to cheque credits of Rs. 51 lakh. The assessee proved that these were partner contributions, customer payments, and refunds of advances and also submitted relevant documents (PAN details, bank records, invoices, and confirmations) proving the same. Since the tax officer did not raise any solid argument disproving the same and also did not bring any contrary evidence, both the CIT(A) and ITAT held that the credits were genuine and deleted the addition completely.

The third issue concerned import payments and customs duty, which were treated as unexplained investments by the Assessing Officer (AO). The assessee explained them all, supporting relevant documents including invoices, bills of entry, bank remittances, and audited accounts proving genuine imports. As the AO could not object to these documents, the tribunal admitted the ruling of the CIT(A) and deleted the related addition.

Finally, the tribunal accepted the genuine business loss for the year but confirmed that the loss could not be carried forward because the return was filed late. Overall, the tribunal allowed the assessee’s appeal in full and dismissed the tax department’s appeal.