ASSISTANT COMMISSIONER OF INCOME TAX, KALYAN V. ISHWARLAL HOLARAM MULCHANDANI, ULHASNAGAR

ITA 3883/MUM/2023

AI Insights

The case involves the Asst. Commissioner of Income Tax as the appellant and Ishwarlal Holaram Mulchandani as the respondent. The dispute arose from the addition of Rs.4,60,09,541 to the assessee's income, which was treated as unexplained money under section 69A of the Income Tax Act, due to substantial cash deposits made during the demonetization period. The assessee, a proprietor of M/s Swamini Fashions until March 31, 2016, claimed that these deposits were from collections made from sundry debtors, which were later deposited during the demonetization period. The CIT(A) initially deleted the addition based on the assessee's explanations and the financial records of the preceding year, which showed substantial cash deposits and balances with sundry debtors and creditors. However, the ITAT found that the CIT(A)'s decision was based on probabilities without concrete evidence, leading to the remand of the case to the AO for further investigation.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 32170 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 31-10-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: SURESH OTWANI
• Keywords: Set aside; Onus to prove
• Section: 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “C” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 3883/Mum/2023 Assessment Year 2017-18 Asst. Commissioner of Income Tax, 1st Floor, Mahan Plaza, Wayle Nagar, Khadakpada, Kalyan West. vs. Ishwarlal Holaram Mulchandani, Shop No. 3 and 4, Prakash Shopping Complex, Baba Dhani Ram Marg, Opp: Bank of Baroda Road, Ulhasnagar, Thane. PAN : AAPPM4148L (Appellant) (Respondent) Assessee by : Shri Suresh Otwani, Revenue by : Shri Krishnakumar, Sr.DR Date of Hearing : 19/09/2024 Date of Pronouncement : 21/10/2024 PER B.R. BASKARAN, A.M : The Revenue has filed this appeal challenging the order dated 24-08-2023 passed by Ld CIT(A) for AY 2017-18, wherein he has deleted the addition of Rs.4,60,09,541/- pertaining cash deposits made into the bank account of the assessee during demonetization period. 2. The assessee filed his return of income for the year under consideration declaring total income of Rs.33,90,790/-. The same was 2 ITA No. 3883/Mum/2023 taken up for scrutiny. It was noticed that the assessee has made cash deposit of Rs.4,60,09,541/- into his bank account during demonetization period. With regard to the sources for making the above said deposits, the assessee explained that he was proprietor of a concern named M/s Swamini fashions upto 31.3.2016. It was having sundry debtors and sundry creditors balance as on that date. It was submitted that the above said concern was converted into a Partnership Concern w.e.f. 1.4.2016. It was submitted that the assessee had collected money from sundry debtors outstanding as on 31.3.2016 and the same was deposited into the bank account during demonetization period. Even though the assessee furnished above said explanation with regard to the nature and source of deposits, yet he did not furnish any evidence to support the above cited explanation. Hence, the AO treated the above said deposit as unexplained money u/s 69A of the Act and added the same to the total income of the assessee. 3. In the appellate proceedings, the ld CIT(A) noticed that the assessee had deposited cash to the tune of Rs.15.15 crores in the financial year 2015-16, i.e., immediately preceding financial year. The above cash deposit was more than three times of deposit of Rs.4.60 crores made during the year. He also noticed that the proprietary concern was showing sundry debtors balance of Rs.10.46 crores and sundry creditors balance of Rs.13.47 crores. Based on these information, the Ld CIT(A) concluded that the sources of deposits cannot be doubted with. Accordingly, he deleted the addition and hence the revenue is aggrieved. 4. We heard rival contentions and perused the record. We notice that the Ld CIT(A) has deleted the addition on the basis of probabilities. However, the fact would remain that the assessee did not furnish copy of books of accounts of the proprietary concern for the financial year 3 ITA No. 3883/Mum/2023 1.4.2016 to 31.3.2017 in order to substantiate its claim that the collections made from sundry debtors were deposited into the bank account. There should not be any doubt that the initial onus to prove the deposits made into the bank account would lie upon the assessee only, which the assessee has failed to discharge. Hence, we are of the view that the Ld CIT(A) was not justified in deleting the impugned addition on the basis of probabilities. 5. The Ld A.R submitted that the assessee is having books of accounts of the proprietary concern for the financial year 1.4.2016 to 31.3.2017. He further submitted that the same could be produced before the AO, if an opportunity is given to the assessee. Accordingly, in the interest of substantial justice, we are of the view that the assessee may be provided with one more opportunity to present his case properly before the AO. Accordingly, we set aside the order passed by Ld CIT(A) and restore this issue to the file of the AO for examining it afresh. We also direct the assessee to furnish all the information and explanation to prove the nature and source of cash deposits made into the bank account. After hearing the assessee, the AO may take appropriate decision in accordance with law. 6. In the result, the appeal filed by the Revenue is treated as allowed. Order pronounced in the open court on 21-10-2024 Sd/- Sd/- [SUNIL KUMAR SINGH] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 21-10-2024 TNMM 4 ITA No. 3883/Mum/2023 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, “C” Bench, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "