DIPTI ANUJ PATHAK,AHMEDABAD V. THE ITO, WARD-5(2)(2), AHMEDABAD

ITA 1680/AHD/2024

AI Insights

The case involves Dipti Anuj Pathak, who appealed against the order of the National Faceless Appeal Centre (NFAC), which upheld the addition of Rs.71,56,500 as unexplained cash deposits under section 69A of the Income Tax Act, 1961. The assessee argued that non-compliance with notices was due to her spouse's failure to check his email regularly, and that the cash deposits were from her travel business. The Tribunal found that the assessee had not satisfactorily explained the non-compliance and directed a re-examination of the cash deposits in relation to business transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25321 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: S.N. DIVATIA; SAMIR VORA
• Keywords: Set aside; Business income; Additional evidence; Principle of natural justice
• Section: 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1680/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year : 2017-18) Dipti Anuj Pathak A-801, Sanskaar, B/h. Shalby Hospital, Satellite, Ahmedabad, Gujarat - 380051 बनाम/ Vs. Income Tax Officer Ward-5(2)(2), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : ABEPP0722D (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri S. N. Divatia & Shri Samir Vora, A.Rs. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Rignesh Das, Sr. DR Date of Hearing 19/12/2024 Date of Pronouncement 06/01/2025 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 (NFAC), Delhi, (in short ‘the CIT(A)’), dated 04.09.2024 for the Assessment Year 2017-18. 2. The brief facts of the case are that the return of income for A.Y. 2017-18 was filed on 26.03.2018 showing total income of Rs.4,45,260/-. The case was selected for compulsory scrutiny. In the course of assessment, it was found that the assessee has made cash deposit of Rs.71,56,500/- in the bank account with The Co- operative Bank of Rajkot Ltd. during the F.Y. 2016-17. In the course of assessment, the AO required the assessee to explain the ITA No. 1680/Ahd/2024 [Dipti Anuj Pathak vs. ITO] A.Y. 2017-18 - 2 – source of cash deposits. However, no details/documentary evidences in respect of cash deposits were filed by the assessee in spite of numerous opportunities provided by the AO. Therefore, the AO treated the entire cash deposit of Rs.71,56,500/- as unexplained and made addition u/s.69A of the Income Tax Act, 1961 (in short ‘the Act’). The assessment was completed u/s.144 of the Act on 26.11.2019 at total income of Rs.76,01,760/-. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was 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. The following grounds have been taken by the assessee in this appeal: “1.1 The order passed by U/s.250 passed on 04.09.2024 for AY 2017-18 by NFAC, [CIT(A)], Delhi (for short CIT(A)\" upholding the addition of Rs.71,56,500/- made by A.O. towards cash deposits in bank A/c. No.2579 with The Co.Op. Bank of Rajasthan Ltd. as unexplained money u/s 69A rws 1158BE is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in not appreciating that there could not be compliance to the notices claimed to be issued by AO mainly on account of failure of her spouse to browse regularly the email id [e-mail], to which the appellant was unaware. Thus, there was a sufficient cause for failure to comply with the notices claimed to be issued by AO and the cash book, bank book etc, should not have been rejected. 3.1 The ld.CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.71,56,500/- made by A.O. towards cash deposits in bank A/c. No.2579 with The Co.Op. Bank of Rajasthan Ltd. as unexplained money u/s 69A rws 115BBE. ITA No. 1680/Ahd/2024 [Dipti Anuj Pathak vs. ITO] A.Y. 2017-18 - 3 – 3.2 That the in the facts and circumstances of the Id. CIT(A), ought not to have upheld the addition of Rs.71,56,500/- made by A.O. towards cash deposits in bank A/c. No.2579 with The Co.Op. Bank of Rajasthan Ltd. as unexplained money u/s 69A rws 115BBE.” 5. Shri S. N. Divatia, the Ld. AR appearing for the assessee explained that no compliance could be made before the AO for the reason that primary email address on which all the notices were received belonged to the spouse of the assessee who was not regularly verifying his email. Thus, there was an inadvertent lapse on the part of the spouse of the assessee which resulted in non-compliance before the AO. The Ld. AR further submitted that the assessee had filed documents/evidences before the Ld. CIT(A) and had requested for admitting the same as additional evidence under Rule 46A. In the remand report, the AO had objected to the admission of additional evidences and, therefore, the Ld. CIT(A) did not consider the evidences brought on record by the assessee in the course of appellate proceeding. The Ld. AR further submitted that the Ld. CIT(A) had confirmed the addition considering the non-compliance made by the assessee before the AO. The Ld. AR further submitted that the assessee was running a tour & travel business and used to receive cash from the clients for booking of tickets and packages which were deposited in the bank account. The addition in respect of entire cash deposits has caused great injustice to the assessee and, therefore, it is necessary to examine the source of cash deposits in the right perspective. The Ld. AR, therefore, requested that the matter may be set aside to the file of the AO with a direction to allow another opportunity to the assessee to explain the source of cash deposits. ITA No. 1680/Ahd/2024 [Dipti Anuj Pathak vs. ITO] A.Y. 2017-18 - 4 – 6. Per contra, Shri Rignesh Das, Ld. Sr. DR supported the order of the AO and the Ld. CIT(A). He submitted that the AO had allowed eight opportunities to the assessee in the course of assessment proceedings, but no compliance was made on any of the dates. In the absence of any explanation for the cash deposits, the AO had rightly made the addition. The Ld. SR. DR further submitted that even before the Ld. CIT(A) the source of the cash deposits was not properly explained. 7. We have carefully considered the rival submissions. It is found from the assessment order that the AO had allowed eight opportunities to the assessee but no compliance was made on any of the dates. The assessee cannot escape by passing on the blame to her spouse. It is found that in response to the notice u/s.142(1) of the Act dated 02.09.2019, a letter requesting for adjournment was filed by the assessee. Thus, the assessee was well aware of the facts about the enquiries being made in the course of assessment proceeding. It is not the case that the assessee was totally unaware about the queries made by the AO in the assessment proceeding. Since, the assessee has not satisfactorily explained the reason for non-compliance before the AO, we deem it proper to impose a cost of Rs.10,000/- (Rupees Ten thousand only) on the assessee which should be paid with Income Tax Department within 15 days of receipt of this order. 8. Before the Ld. CIT(A), it was explained that assessee was engaged in the business of tour & travel agency offering travel packages and ticket booking facilities and that the cash deposits represented normal business receipts. Under the circumstances, ITA No. 1680/Ahd/2024 [Dipti Anuj Pathak vs. ITO] A.Y. 2017-18 - 5 – the Ld. CIT(A) should have examined the nexus of the cash deposits with the business receipts of the assessee. Considering the nature of business being carried out by the assessee, the addition in respect of the entire cash deposits cannot be held as correct. The assessee should have been allowed a proper opportunity to explain the source of cash deposits vis-à-vis the actual business receipts. It should also have been examined whether the cash deposits in the bank accounts were utilized towards booking of Hotels/buying Air tickets etc. as contended by the assessee. 9. The assessee has filed a paper book containing 221 pages. From the P&L account filed by the assessee in the paper book, it is found that the business income on account of commission as disclosed in the P&L account was Rs.6,35,403/- only. The assessee has also filed a cash book for the period 01.04.2016 to 31.03.2017, wherein cash received from clients had been mentioned. However, neither the name of the clients has been mentioned in the cash book nor any other evidence is available in the paper book to co-relate the cash receipts with the booking of tickets and packages on behalf of the various clients. Until and unless such evidences are brought on record and the nexus of the cash deposits with the business transactions is examined, the correctness of the addition made by the AO in respect of cash deposit cannot be ascertained. In the interest of justice, we are, therefore, of the considered opinion that the matter be set aside to the file of the Jurisdictional AO with a direction to allow another opportunity to the assessee to explain the source of the cash deposits. The AO should call for evidences in respect of cash ITA No. 1680/Ahd/2024 [Dipti Anuj Pathak vs. ITO] A.Y. 2017-18 - 6 – deposits from clients as mentioned in the cash book and examine the nexus of the cash deposits with the business transactions of the assessee. The assessee is also directed to make necessary compliance before the AO and not to seek any adjournment without any compelling reason. In case, the assessee doesn’t comply, the AO will be free to decide the matter in the manner as deemed fit. The AO will proceed in the matter after verifying that the cost as imposed is paid by the assessee. 10. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced on 06/01/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 06/01/2025 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 "