DARSHI A. SHAH,AHMEDABAD V. THE ITO, WARD-1 (INTL. TAXATION), AHMEDABAD

ITA 1857/AHD/2024

AI Insights

The case involves an appeal by Darshi A Shah against the order of the National Faceless Appeal Centre, Delhi, which confirmed the addition of Rs. 13,00,000 to the assessee's income for the Assessment Year 2017-18, under section 69A of the Income Tax Act, 1961, as unexplained money. The addition was initially made by the Assessing Officer (AO) due to non-compliance in providing explanations for cash deposits in the bank account during the demonetization period. The Tribunal examined the evidence presented, including the opening cash balance accepted in the previous assessment year and the reconciliation of cash available on the date of demonetization, and concluded that the addition was unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126013 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ATUL PANDEY
• Assessee Lawyers: PARIN SHAH
• Keywords: Additional evidence; Corroborative evidences
• Section: 144; 142(1); 69A; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1857/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year : 2017-18) Darshi A Shah 17, Haveli Apartment, Ambawadi, Ahmedabad- 380006 बनाम/ Vs. The ITO Ward-1(intl. Taxation), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : BZWPS8361J (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Parin Shah, A.R. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Atul Pandey, Sr. DR Date of Hearing 22/04/2025 Date of Pronouncement 24/04/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre, Delhi, (in short ‘the CIT(A)’), dated 30/08/2024 for the Assessment Year (A.Y.) 2017-18. 2. The brief facts of the case are that the assessee had filed his return of income for A.Y. 2017-18 on 22.07.2017 declaring total income of Rs.4,61,850/-. The case was selected for scrutiny to examine the cash deposits in the bank account. In the course of assessment, no compliance was made by the assessee. Therefore, the assessment was completed ex-parte under section 144 of the Income Tax Act, 1961 (in short ‘the Act’) on 25.11.2019 at total income of ITA No. 1857/Ahd/2024 [Darsi A Shah] A.Y. 2017-18 - 2 – Rs.17,61,850/-, wherein addition of Rs.13 Lakhs was made on account of unexplained cash deposit in the bank account. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which has been decided by the ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. Now, the assessee is in second appeal before us and has taken the following grounds in this appeal: “(1) The order passed by lower authorities is bad in law and required to be quashed. (2) Ld. CIT(A) erred in law and on facts in confirming addition of Rs.13,00,000 made u/s 69A as unexplained money ignoring submission of the appellant. (3) Ld. CIT(A) ought to have considered submission of the appellant and allow the appeal as closing cash balance has been accepted by revenue in A.Y. 2016-17. (4) Initiation of penalty u/s 271AAC is unjustified. (5) Charging of interest u/s 234B and 234C are unjustified.” 5. All the grounds taken by the assessee pertain to addition of Rs.13,00,000/- made u/s 69A of the Act on account of cash deposits. Sri Parin Shah, ld. AR of the assessee explained that though there was no compliance before the AO, the source of cash deposits in the bank account was duly explained by the assessee before the ld. CIT(A). Further that additional evidences in respect of source of cash deposits was also filed before the CIT(A) on which remand report of the AO was called for. However, the ld. CIT(A) did not correctly appreciate the evidences brought on record by the assessee to explain the source of cash deposits and ITA No. 1857/Ahd/2024 [Darsi A Shah] A.Y. 2017-18 - 3 – confirmed the addition. The ld. AR explain that the assessee had opening cash balance of Rs.13,32,598/- which was utilized for making cash deposits in the bank account during demonetization period, as the cash in hand was in the demonetized old currency notes. He submitted that in the course of assessment proceeding for AY 2016-17, the AO had made a specific inquiry about cash in hand of Rs.13,32,598/- which was available as opening balance in the next year. Further the assessee had also furnished reconciliation of the cash available with the assessee on the date of demonetization i.e. on 08.11.2016 which was in excess of the cash deposits. The ld. AR, therefore, submitted that no addition was called for in respect of cash deposit of Rs.13,00,000/-. 6. Per contra, Sri Atul Pandey, the ld. Sr. DR relied on the order of the lower authorities. 7. We have carefully considered the rival submissions. The assessee has brought on record a copy of notice under section 142(1) dated 8.10.2018 for the A.Y. 2016-17 wherein a specific query was made by the AO in respect of cash in hand of Rs.13,32,598/-. The AO had required the assessee to furnish cashbook which supporting evidences. It is thus found that the closing cash balance of Rs.13,32,598/- as on 31.03.2016 was duly examined and accepted by the AO in the course of assessment proceeding for the A.Y. 2016-17, as no addition was made in this regard. This closing balance was available with the assessee as opening cash balance in the current year. The ld. CIT(A) had rejected the opening cache balance for the reason that in the remand report the AO had commented that the cast book furnished by the assessee was fabricated and could not be relied upon. The ld. CIT(A) was not correct in rejecting the opening cash balance only on the basis of remand report, without verifying as to what was the cash balance disclosed by the assessee in the income tax returns. From the evidences brought on record it is evident that the assessee had opening cash balance of ITA No. 1857/Ahd/2024 [Darsi A Shah] A.Y. 2017-18 - 4 – Rs.13,32,598/- the correctness of which was duly verified in the assessment proceeding of the preceding year. Further, the assessee had also submitted the reconciliation of cash statement as on 08.11.2016 as per which the available cash balance was in excess of Rs.13 lakhs, which was not controverted by the Revenue. In view of these facts, the addition of Rs.13,00,000 made by the AO on account of unexplained cash deposits in the bank account of the assessee during demonetization period can’t be sustained. The assessee had duly explained the source of cash deposits and, therefore, no addition was called for. Accordingly, the addition Rs.13,00,000 in respect of cash deposits in the bank account is deleted and the ground taken by the assessee is allowed. 8. The other grounds taken by the assessee are only consequential in nature and needn’t be adjudicated. 9. In the result, the appeal of the assessee is allowed. This Order pronounced on 24/04/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 24/04/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "