CUMIN INFOTECH PRIVATE LIMITED,NEW DELHI V. ITO WARD 6(4), NEW DELHI

ITA 3838/DEL/2023

AI Insights

The case involves Cumin Infotech Private Limited appealing against the order of the CIT(Appeals)-NFAC, Delhi, which sustained the addition of Rs.24,06,635 as unexplained cash deposits for the assessment year 2017-18. The Assessing Officer initially treated these deposits as unexplained money, despite the assessee's explanation that they were from sale proceeds. The CIT(Appeals) upheld this addition, changing the applicable section from 68 to 69A of the Income Tax Act. The Tribunal, however, found that the Assessing Officer had not adequately rejected the explanation provided by the assessee nor disputed the entries in the audited books, leading to the decision to allow the appeal and delete the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 43522 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Toffee Agricultural Farms Pvt. Ltd. Vs. ITO, PCIT Vs. Akshit Kumar, ACIT Vs. Ram Lal Jewellers Pvt. Ltd., Mahesh Kumar Gupta Vs. ACIT, Gopal Jaiswal Vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: NAMAN GUPTA
• Keywords: Rejection of books of accounts; Income from undisclosed sources
• Section: 143(3); 68; 69A

Judgement Text

"I.T.A.No.3838/Del/2023 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ.अ.सं/.I.T.A No.3838/Del/2023 िनधा\tरणवष\t/Assessment Year: 2017-18 Cumin Infotech Private Limited 987, Ground Floor, Rani Bagh, Shakur Basti, New Delhi. बनाम Vs. ITO Ward 6(4), C.R. Building, New Delhi. PAN No.AAFCC4779G अपीलाथ\u0012 Appellant \u0014\u0015यथ\u0012/Respondent िनधा\u0007\bरतीक\rओरसे /Assessee by Shri Naman Gupta, CA राज\u0012वक\rओरसे /Revenue by Shri Sanjay Kumar, Sr. DR सुनवाईक\rतारीख/ Date of hearing: 24.01.2025 उ\u0018ोषणाक\rतारीख/Pronouncement on 07.02.2025 आदेश /O R D E R This appeal is filed by the assessee against the order of the Ld. CIT(Appeals)-NFAC, Delhi dated 26.10.2023 for the AY 2017-18 in sustaining the addition of Rs.24,06,635/- being cash deposits as an unexplained money of the assessee. 2. Brief facts are that the assessee for the assessment year under consideration i.e. 2017-18 filed its return of income on 16.09.2017 declaring Nil income. The assessment was completed u/s 143(3) on 23.12.2019 determining the income of the assessee at I.T.A.No.3838/Del/2023 2 Rs.24,06,040/-. While completing the assessment the Assessing Officer treated cash deposits of Rs.24,06,635/- out of Rs.33 lakhs as unexplained money of the assessee. The explanation of the assessee that the cash deposits were made out of sale proceeds during the period 01.10.2016 to 05.03.2016 was not accepted. On appeal the CIT(A) sustained the addition. 3. Before me the Ld. Counsel for the assessee submitted that the Assessing Officer simply made addition treating the cash deposits as unexplained money ignoring the explanation of the assessee. Ld. Counsel submits that the Assessing Officer did not doubt the audited books of accounts, did not doubt the purchases, sales, cash in hand, opening stock and further the AO did not point out any defects in the books of accounts nor the books of accounts were rejected to treat the cash deposits as unexplained money of the assessee. 4. Ld. Counsel further submits that the Assessing Officer made addition u/s 68 and the Ld. CIT(A) changed the section to 69A of the Act. Ld. Counsel submits that the CIT(A) has no power to change the section to 69A from 68 as applied by the Assessing Officer for this proposition he places reliance on the decision of the Delhi Bench in the case of Toffee Agricultural Farms Pvt. Ltd. Vs. ITO in ITA No.4903/Del/2019 dated 18.04.2022. I.T.A.No.3838/Del/2023 3 5. The Ld. Counsel for the assessee further submits that since the Assessing Officer did not dispute the purchases, sales, opening stock, closing stock, cash in hand and did not point out any defects in the books of accounts and in the absence of rejection of books of accounts there is no justification in treating the cash deposits as an unexplained money of the assessee. Reliance was placed on the decision of the Delhi High Court in the case of PCIT Vs. Akshit Kumar (124 taxmann.com 123), ACIT Vs. Ram Lal Jewellers Pvt. Ltd. (154 taxmann.com 584) (Mum. Trib.), Mahesh Kumar Gupta Vs. ACIT (104 ITR 519) (Jaipur Trib.), Gopal Jaiswal Vs. ITO (156 taxmann.com 398) (Kol. Trib.). 6. On the other hand, the Ld. DR strongly supported the orders of the authorities below. 7. Heard rival submissions, perused the orders of the authorities below. On reading of the assessment order it is noticed that the Assessing Officer did not give any reasons for rejecting the explanation of the assessee that the cash deposits were made out of sale proceeds. The Assessing Officer neither disputed the purchases, sales, stocks nor pointed out any defects in the audited books of accounts. In the absence of rejection of books of accounts and pointing out any defects in the books of accounts, not disputing I.T.A.No.3838/Del/2023 4 the purchases, sales, stocks and cash in hand there is no justification in treating the cash deposits as unexplained money of the assessee ignoring the explanation of the assessee that the cash deposits made in the bank account are from sale proceeds only. 8. The Mumbai Bench of the Tribunal in the case of ACIT Vs. Ram Lal Jewellers Pvt. Ltd. (supra) held that addition u/s 68 on account of cash deposits cannot be made simply on the reasons that during the demonetization period cash deposits viz-a-viz cash sale ratio is higher. If the parties during the period of demonetization has purchased huge quantity of jewellery on cash which has been duly recorded in the books of accounts of the assessee and also tally with the quantity of stock, then simply because there was a huge cash sale in a particular month cannot be a reason for treating it as an undisclosed income from undisclosed sources. 9. In the case on hand it is not even the case of the Assessing Officer that cash deposits viz-a-viz cash sales ratio is higher. Nothing has been stated by the AO as to why the explanation of the assessee was rejected. Therefore, in the circumstances, the addition made by the Assessing Officer u/s 68 which was treated as addition u/s 69A by the Ld. CIT(Appeals) cannot be sustained. Thus, the AO is directed to delete the addition of Rs. 24,06,635/- I.T.A.No.3838/Del/2023 5 made towards unexplained money. Grounds raised by the assessee are allowed. 10. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 07/02/2025 Sd/- (C.N. PRASAD) JUDICIAL MEMBER Dated: 07.02.2025 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi I.T.A.No.3838/Del/2023 6 1. Date of dictation of Tribunal Order 06.02.2025 2. Date on which the typed draft Tribunal Order is placed before the dictating Member 07.02.2025 3. Date on which the typed draft Tribunal Order is placed before the Other Member - 4. Date on which the approved draft comes to the Sr. PS/PS 07.02.2025 5. Date on which the fair Tribunal order is placed before the Dictating Member for pronouncement 07.02.2025 6. Date on which the signed order comes back to the Sr. PS/PS 07.02.2025 7. Date on which the final Tribunal order is uploaded by the Sr. PS/PS on the official website 07.02.2025 8. Date on which the file goes to the Bench Clerk along with Tribunal Order 07.02.2025 9. Date of killing off the disposed of files on the JudiSIS portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Dispatch of the Order "