DCIT, CIRCLE-2(1)(1), AHMEDABAD, VEJALPURA AHMEDABAD V. DEEPAK SANGHVI, SHEOGANJ

ITA 1923/AHD/2024

AI Insights

The case involves appeals by the Deputy Commissioner of Income Tax against the order of the Ld. Commissioner of Income Tax (Appeals), which had deleted the additions made on account of unexplained cash credits in the assessee's bank account. The primary contention was whether the cash deposits in the bank account of M/s. Greendiam Exim Pvt. Ltd., where the assessee was a director, could be attributed to the assessee personally. The Tribunal found that the additions constituted double taxation as the same amounts had already been assessed in the hands of M/s. Greendiam Exim Pvt. Ltd., and there was no substantial evidence to prove that the assessee had deposited the cash himself.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126835 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Other Referred Cases: M/s. Greendiam Exim Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. NANDAKUMAR; KAVAN
• Assessee Lawyers: PARTH MEHTA
• Keywords: Set aside; Unexplained cash credit; Grounds of appeal; Dismissed; National Faceless Appeal; Commissioner; Commissioner of Income Tax; AMP; A.Y. 2011-12; Restored; Deleted; Department
• Section: 147; 13

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. Nos.1923&1924/Ahd/2024 (Assessment Years: 2011-12 & 2012-13) Deputy Commissioner of Income Tax, Circle-2(1)(1), Ahmedabad Vs. Deepak Sanghvi, Patthar Gali, Sheoganj, Rajasthan-307027 [PAN No.AMVPS7923D] (Appellant) .. (Respondent) Appellant by : Shri V. Nandakumar, CIT D.R. & Shri Kavan Limbasiya, Sr. D.R. Respondent by: Shri Parth Mehta, C.A. Date of Hearing 07.04.2025 Date of Pronouncement 22.04.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: These appeals have been filed by the Department against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide orders dated 13.09.2024 passed for A.Ys. 2011-12 & 2012-13. Since common facts and issues for consideration are involved for both the years under consideration, both appeals filed by the Department are being taken up together. 2. The Department has taken the following grounds of appeal:- ITA No. 1923/Ahd/2024 (A.Y. 2011-12) “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,37,29,197/- on account unexplained ITA Nos. 1923&1924/Ahd/2024 DCIT vs. Deepak Sanghvi Asst. Years –2011-12 & 2012-13 - 2– cash credit, without appreciating the fact that the assessee failed to furnish any substantial documentary evidence during the assessment stage to prove source of the cash deposits? 2. The appellant craves leave to amend or alter any ground or add a new grounds, which may be necessary. 3. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored?” ITA No. 1924/Ahd/2024 (A.Y. 2012-13) “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 5,11,32,700/- on account of unexplained cash credit, without appreciating the fact that the assessee failed to furnish any substantial documentary evidence during the assessment stage to prove source of the cash deposits? 2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 3. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored?” We shall first deal with the Department’s appeal for A.Y. 2011-12 in ITA No. 1923/Ahd/2024 3. The brief facts of the case are that the assessee filed return of income on 29.03.2012 declaring total income of Rs. 9,03,800/-, which was processed by CPC. Subsequently, the Assessing Officer found that the assessee had made huge cash deposits amounting to Rs. 2,37,29,197/- in HDFC Bank Account, during the impugned assessment year. The Assessing Officer observed that the details of the aforesaid deposits were not reflecting in the assessee’s accounts. Accordingly, the case of the assessee was reopened under Section 147 of the Act. During the course of assessment proceedings, the assessee submitted that the aforesaid bank account did not belong to the assessee but it belonged to M/s. Greendiam Exim Pvt. Ltd. and the assessee had nothing to do with the cash deposits made in this bank account. However, the Assessing Officer did not concur with the objections taken by the assessee ITA Nos. 1923&1924/Ahd/2024 DCIT vs. Deepak Sanghvi Asst. Years –2011-12 & 2012-13 - 3– and was of the view that the cash was substantively deposited by the assessee himself, since the company M/s. Greendiam Exim Pvt. Ltd. belonged to the assessee as the assessee was the Director in the said company, together with his father, Shri Champat Sanghvi. Therefore, in the above circumstances, the Assessing Officer was of the view that the assessee was under a legal obligation to explain the genuineness of the funds so deposited in cash by him. Further, the Assessing Officer noted that the assessee had not claimed that these funds were disclosed and considered in the said company’s case. Accordingly, the Assessing Officer added a sum of Rs. 2,37,29,197/- as unexplained income of the assessee. 4. In appeal, Ld. CIT(A) noted that the assessee has submitted copy of assessment order in the case of M/s. Greendiam Exim Pvt. Ltd. for A.Y. 2011- 12, wherein an addition of Rs. 3,50,39,050/- was made by the Assessing Officer on account of cash deposits in the above mentioned HDFC Bank account. Further, assessee also furnished copy of order passed by Ld. CIT(A) for the same assessment year in the case of M/s. Greendiam Exim Pvt. Ltd., in which Ld. CIT(A) deleted the additions made by the Assessing Officer. From the documents placed on record, Ld. CIT(A) observed that evidently the said bank account belonged to M/s. Greendiam Exim Pvt. Ltd. and not to the assessee. Further, a regular assessment was completed in the case of M/s. Greendiam Exim Pvt. Ltd. in which cash deposit of Rs. 3,50,39,050/- (which included cash of Rs. 2,37,29,197/- allegedly deposited by the assessee) had also been added as income of M/s. Greendiam Exim Pvt. Ltd. The Ld. CIT(A), in the case M/s. Grendiam Exim Pvt. Ltd. had deleted the aforesaid addition by accepting the contention that the said cash was deposited out of ITA Nos. 1923&1924/Ahd/2024 DCIT vs. Deepak Sanghvi Asst. Years –2011-12 & 2012-13 - 4– cash sales made by the aforesaid company. Accordingly, Ld. CIT(A) was of the view that since the addition for the aforesaid amount had already been made in the hands of the M/s. Greendiam Exim Pvt. Ltd. towards cash deposited in HDFC Bank acount, the addition of the same amount in the hands of the assessee would amount to double taxation, which is not justifiable. Accordingly, Ld. CIT(A) deleted addition in the hands of the assessee with the following observations: “7.2 During the appellate proceedings, the appellant has submitted a copy of bank statement for the bank account number 00482320003512 maintained by M/s. Grendiam Exim Pvt. Ltd. in HDFC Bank, Vejalpur Branch. The appellant has also submitted copy of assessment order in the case of M/s. Greendiam Exim Pvt. Ltd. for assessment year under reference wherein an addition of Rs. 3,50,39,050/- was made by the AO on account of cash deposit in the above mentioned bank account; and CIT(A) order in the same case wherein Ld. CIT(A) has deleted the addition made by the AO. 7.3 The documents submitted by the appellant have been perused and considered carefully. From the bank statement, it is evident that the said bank account M/s Greendiam Exim Pvt. Ltd, not to the appellant. A regular assessment was completed in the case of M/s Greendiam Exim Pvt. Ltd. for the assessment year under reference. A perusal of the assessment order in the case of M/s Greendiam Exim Pvt. Ltd. shows that cash of Rs. 3,50,39,050/- (which includes cash Rs. 2,37,29,197/- allegedly deposited by the appellant) in the bank account number 00482320003512 maintained in the HDFC Bank. The Ld. CIT(A) has deleted the above addition accepting the contention of the A/R of the M/s Greendiam Exim Pvt. Ltd. that the said cash was deposited out of cash sales made by the appellant. Even in the assessment order in para no. 9 the AO himself has mentioned that the bank account number 00482320003512 with HDFC Bank does not belong to the appellant still the AO made addition in the hands of the appellant alleging that the entire amount was deposited by him in the above mentioned bank account. But the AO has not referred any documentary evidence demonstrating that the appellant had deposited the amount under reference out of his own undisclosed income. Even the AO could not prove by referring any documentary evidence that the cash was actually deposited by the appellant in the bank account maintained by M/s Greendiam Exim Pvt. Ltd. 7.4. Since, the addition in the hands of M/s Greendiam Exim Pvt. Ltd. has already been made on account of the same cash deposit, the addition in the hands of appellant tantamount to double addition, which is not justified. During the appellate proceedings, the remand report was called from the AO on this issue, but despite issuing of several reminders and after laps of more than 7 months the AO did not furnish the requisite remand report. On the basis of the information available on record and documents filed by the appellant, I am of the considered opinion that ITA Nos. 1923&1924/Ahd/2024 DCIT vs. Deepak Sanghvi Asst. Years –2011-12 & 2012-13 - 5– addition of Rs. 2,37,29,197/- on account of cash deposit is not justified as the bank account wherein cash deposited does not belong to the appellant. Therefore, the AO is hereby directed to delete the impugned addition of Rs. 2,39,29,197/-. Accordingly, ground no. 3 of the appeal is allowed. 8. In result, the appeal of the appellant is allowed partly.” 5. On going through the facts of the instant case, we are of the considered view that Ld. CIT(A), looking into the instant facts, has correctly deleted the additions in the hands of the assessee by noting that firstly, the HDFC Bank account did not belong to the assessee but belonged to M/s. Greendiam Exim Pvt. Ltd. Secondly, similar addition with respect to cash deposits in the aforesaid bank account had already been made in the regular assessment in the case of M/s. Greendiam Exim Pvt. Ltd., which was subsequently deleted by Ld. CIT(A) on satisfying himself that the said cash deposit was from the cash sales made by the company. Accordingly, in our considered view Ld. CIT(A) has correctly noted that the additions of the same cash deposit in the hands of the assessee, would amount to double taxation since similar addition with respect to the aforesaid cash deposits made in HDFC Bank had already been added in the hands of M/s. Greendiam Exim Pvt. Ltd. to whom the aforesaid bank account belonged. Thirdly, in our view Ld. CIT(A) has correctly observed that the Assessing Officer has not referred to any documentary evidence to demonstrate that the assessee had deposited the amount under reference, out of his own undisclosed income. Accordingly, in view of the aforesaid facts, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. 6. In the result, the appeal of the Department is dismissed. ITA Nos. 1923&1924/Ahd/2024 DCIT vs. Deepak Sanghvi Asst. Years –2011-12 & 2012-13 - 6– Now we shall come to Department’s appeal for A.Y. 2012-13 in ITA No. 1924/Ahd/2024 7. We observe that the facts and issues for consideration are identical for both the years under consideration. Accordingly, in view of our observations in the preceding paragraphs, we are of the considered views that there is no infirmity in the order of Ld. CIT(A) so as to call for any interference. 8. In the result, the appeal of the Department is dismissed for A.Y. 2012- 13 as well. 9. In the combined result, the appeals of the Department are dismissed for both the Assessment Years 2011-12 and 2012-13. This Order is pronounced in the Open Court on 22/04/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 22/04/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "