HITESH JAGAT PAREKH,MUMBAI V. INCOME TAX OFFICER WARD 25(2)(4), MUMBAI

ITA 4429/MUM/2024

AI Insights

The case involves Hitesh Jagat Parekh, the appellant, who challenged the order of the Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi, which confirmed the additions made by the Assessing Officer under section 69A of the Income Tax Act, 1961. The additions were based on cash deposits totaling Rs. 46,09,000 made by the assessee during the demonetization period, which were considered unexplained. The Tribunal examined the arguments and evidence presented by both parties, including the assessee's claim that the deposits were from personal savings and business withdrawals, and the revenue's reliance on the lack of substantiating evidence.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470801 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2017-2018
• Other Referred Cases: Shri Bhagwati Farms Vs. DCIT, Leela Devi vs. ITO, Smt. S. Sakunthala Sivam, Karan Bhalla vs. ITO, Manoj Aggarwal Vs. DCIT, Praveen Garg vs. ITO, K.V. Mathew vs. ITO, CIT vs. Sarwan Kumar Sharma, Sanjay Kapur Vs ACIT, Ravinder Kumar Vs ITO, Rajiv Jain Vs ITO, Roshan Di Hatti V. CIT, Rakesh Kumar Gupta vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASIF KAR MALI
• Assessee Lawyers: GOVIND JAVERI
• Keywords: Business income; Corroborative evidences; Onus to prove; Principle of natural justice; Reason to believe
• Section: 143(3); 250; 68; 44AD; 113; 69A; 207; 101

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “J-SMC” BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER ITA No. 4429/Mum/2024 (Assessment Year: 2017-18) Hitesh Jagat Prekh 2-3, Ground Floor, Shivam Hatkesh Society, N.S. Road, No.8, Vile Parle (W) Mumbai – 400 056. Vs. ITO, Ward 25(2)(4) R No. 218, Kautilya Bhavn, C-41 to C-43, G Block, BKC, Bandra (E), Mumbai – 400 051. PAN/GIR No. AGQPP9134J (Applicant) (Respondent) Assessee by Shri Govind Javeri Revenue by Shri Asif Karmali, Sr. DR सुनवाई क\u0002 तारीख/Date of Hearing 12.12.2024 घोषणा क\u0002 तारीख/Date of Pronouncement 23.12.2024 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order dated 27.07.2023, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi (‘Ld. CIT(A)’), for the assessment year 2017-18. 2. The brief facts of the case are that the assessee is the individual and derived income from business and income 2 ITA No. 4429/Mum/2024 Hitesh Jagat Parekh, Mumbai from other sources. On the basis of information received by the AO that assessee had made cash deposits of Rs. 46,09,000/- in various banks during the demonetization period. Therefore, after providing opportunity of hearing and seeking explanation of the assessee order of assessment was framed u/s 143(3) of the Act thereby assessing the income of the assessee at Rs. 20,18,748/- thereby making addition u/s 69A of the Act of Rs. 14,75,000/-. 3. The said additions were sustained and confirmed on appeal by Ld. CIT(A) as well. 4. Now aggrieved by the said decision the assessee has preferred present appeal before us on the grounds mentioned herein above: 1. The Ld. CIT (A) has erred in confirming the addition Rs. 14,75,000/- made by the Learned Assessing officer u/s 69A read with section 115BBE of the Income tax Act, 1961 ('the Act') In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not holding that there being no other source of income of the Appellant, the deposits of Rs 14,75,000/- represented unaccounted business receipts and as such, only net income arising therefrom could be added to the income of the Appellant as 'business income'. 3. The Ld. CIT(A) has erred in confirming the levy of interest charged and penalty initiated under the Act. 4. The order passed by the Assessing Officer is as not as per the provisions of the Income Tax Act and illegal and bad in law. 5. The order passed by the CIT(A) is in violation of principles of natural justice and the provisions of the Act. 3 ITA No. 4429/Mum/2024 Hitesh Jagat Parekh, Mumbai 6. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal. 5. All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the additions sustained and confirmed by Ld. CIT(A) u/s 69A of the Act and consequential effect thereof. Therefore we have decided to dispose off these grounds through the present consolidated order. 6. The Ld. AR appearing on behalf of the assessee reiterated the same arguments as were raised by him before the revenue authorities and also relied upon the decision of the Hon’ble ITAT Jaipur Bench in the case of Shri Bhagwati Farms Vs. DCIT in ITA No. 452/JP/2024. 7. Whereas, on the contrary, Ld. DR relied upon the orders passed by the revenue authorities. 8. We have heard the counsels for both the parties and we have also perused the material placed on record, judgment cited before us and also the orders passed by the revenue authorities. From the records, we noticed that as far as the fact of depositing Rs. 14,75,000/- in cash in bank account of the assessee is concerned, in this regard, it was reiterated by the assessee that the amount in question was deposited out of personal savings (which was kept for emergency) and withdrawal from proprietary business during the earlier years and savings of laborers for safe keeping with him. 4 ITA No. 4429/Mum/2024 Hitesh Jagat Parekh, Mumbai 9. The Ld.AO disbelieve the version of the assessee and found contradictory in nature as the assessee vide letter dated 23.07.2019 had stated that amount of Rs. 14,86,850/- was received by him as cash from business activities. 10. Now, even if we take into consideration that assessee has actually received cash of Rs. 14,75,000/- from its business activities, but in our view still for discharging his initial burden to prove this fact, the assessee was under legal obligation to submit all sale or purchase bills or delivery challans raised by him on the third parties for supporting his claim. 11. The only arguments to support his version by the assessee is that he has filed his return of income u/s 44AD of the Act and offered 8% of the receipts as income without maintaining any books of account. The assessee has neither produced any details regarding the sale and purchases parties along with their name, address and PAN nor produced any of the sample bills or delivery challans raised by him. The assessee has only provided sales / VAT return which does not justify the source of cash deposited in the bank account during the relevant previous year. Since the assessee has not provided the required details even after availing multiple opportunities which goes to show that asessee has not discharged his burden. In our view, just citing applicability of Sec. 44AD of the Act is not enough but 5 ITA No. 4429/Mum/2024 Hitesh Jagat Parekh, Mumbai assessee should have furnished cogent supporting documentary evidences of previous savings. Therefore, we do not find any justification to interfere into the orders passed by the revenue sustaining the additions u/s 69A of the Act. 12. Although, assessee has referred to the decision of the Shri Bhagwati Farms Vs. DCIT in ITA No. 452/JP/2024 but the parameteria contained in the said order is different from the facts of the present case and is thus not applicable on the facts of the present case. Rather for reaching to our above conclusion reliance is placed on the ratio held in the cases mentioned herein below: 1. Leela Devi vs. ITO ( ITAT-Delhi)(2021)ENT Assessee failed to satisfactorily explain source of cash deposits during demonetization period, addition was to be confirmed. 2. Smt. S. Sakunthala Sivam (Madras High Court) (2022) - Source of cash deposits could not be satisfactorily explained by the assessee, hence the appeal was dismissed. 3. Karan Bhalla vs. ITO (ITAT-Delhi) ITA No. 4862/Del/2014 dated 16/2017 - i) Addition for cash deposit in Bank justified if assessee fails to explain the source of deposit; ii) Assessee concocted the story just to explain the source of cash deposited by him in the bank account - hence, benefit of opening cash balance cannot be given, iii) Regarding cash deposit out of cash withdrawals from the same account- no urgency in making further withdrawals if having sufficient cash balance with him. 4. Manoj Aggarwal Vs. DCIT 113 ITD 377 assessee not maintaining books of account, though Section 68 will not be applicable, yet cash deposit accank should be explained by assessee u/s 69/69B - unless angit in bang evidence, shows nature and source of money deposited in clinchiank account, same should be added as his unexplained income - yes 6 ITA No. 4429/Mum/2024 Hitesh Jagat Parekh, Mumbai 5. Praveen Garg vs. ITO 132 taxmann.com 142 (Delhi-ITAT) (2021)- Appellant failed to explain the source of cash deposits - CIT(A) justified in upholding entire cash deposits as unexplained u/s 69A. 6. K.V. Mathew vs. ITO 42 taxmann.com 571 (Kerala High Court) (2014) Where the amount in SB account remained unexplained, addition u/s 69A was justified. 7. CIT vs. Sarwan Kumar Sharma 49 taxmann.com 101 (Gujarat) Addition u/s 69A was confirmed in the absence of documentary proof that deposits is from business/ trading in clothes. 8 Sanjay Kapur Vs ACIT [2022] 138 taxmann.com 207 (SC) wherein it was held that High Court upheld reassessment in case where assessee had made a deposit of cash in bank during demonetization period, which was reflected in his return of income, but no supporting evidences were available to prove source of such deposit leading to 'reason to believe' that income otherwise chargeable to tax had escaped assessment, SLP filed against High Court's judgment dismissed as withdrawn. 9. Ravinder Kumar Vs ITO [2020] 118 taxmann.com 166 (Delhi)/[2020] 273 Taxman 369 (Delhi) wherein it was held that where assessee had failed to produce any material to authenticate his contention that cash deposits in his account were on account of sales being made by him from Kirana business, tax authorities were justified in making addition of unexplained cash entries in bank account in hands of assessee. 10. Rajiv Jain Vs ITO [2019] 101 taxmann.com 92 (Delhi)/[2019] 410 ITR 179 (Delhi) wherein it was held that where assessee challenged addition made to its income under section 68 in respect of amount deposited in bank contending that said amount came from sale of wearing apparel and traditional silver utensils, since there was no evidence and material to establish sale or inheritance, etc., impugned addition made by authorities below was to be confirmed. 11. Roshan Di Hatti V. CIT [1992] 2 SCC 378 (SC) wherein it was held that i the assessee fails to discharge the onus by 7 ITA No. 4429/Mum/2024 Hitesh Jagat Parekh, Mumbai producing cogent evidence and explanation, the AO would be justified in making the additions back into the income of the assessee. 12. Rakesh Kumar Gupta vs. CIT 115 taxmann.com 38 (Allahabad) (2020) cash deposit claimed it from agricultural income prove to cultivation of agricultural produce by Khasra source of irrigation - cold storage evidence - Addition u/s 68 as undisclosed income - upheld. 13. Kee[ing in view, the above discussion as well as legal proposition we dismiss the grounds of appeal raised by the assessee. 14. In the result, the appeal filed by the assessee stands dismissed. Order pronounced in the open Court on 23/12/2024 Sd/- Sd/- (OMKARESWAR CHIDARA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 23/12/2024 KRK, PS 8 ITA No. 4429/Mum/2024 Hitesh Jagat Parekh, Mumbai आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u000eथ / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मु\u0003बई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, स\u000eािपत ित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai "