INCOME TAX OFFICER, WARD-1, PALANPUR, PALANPUR V. NEESARGA TRACTORS, PALANPUR

ITA 686/AHD/2025

AI Insights

The case revolves around an appeal by the Income Tax Officer, Ward-1, Palanpur against Neesarga Tractors concerning the assessment year 2017-18. The primary issue was the addition of Rs. 3,49,42,000 as unexplained cash deposits in a bank account of the assessee, which the AO treated as unexplained under Section 69A of the Income Tax Act. The CIT(A) reversed this addition, noting discrepancies in the AO's figures and affirming that the transactions were accounted for in the assessee's books. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775305 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 31-03-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEHUL K PATEL
• Assessee Lawyers: MAMTA SINGH
• Keywords: Additional evidence
• Section: 148; 143(3); 142(1); 44AD

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER I.T.A. No. 686/Ahd/2025 (Assessment Year: 2017-18) Income Tax Officer, Ward-1, Palanpur Vs. Neesarga Tractors, Deesa Highway, Palanpur, Gujarat-385001 [PAN No.AAKFM9470E] (Appellant) .. (Respondent) Appellant by : Shri Mehul K Patel, AR Respondent by : Smt. Mamta Singh, Sr. DR Date of Hearing 03.09.2025 Date of Pronouncement 08.09.2025 O R D E R PER: ANNAPURNA GUPTA - AM: The present appeal has been filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 21.01.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2017-18. 2. The grounds of appeal are raised as under: “(i) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 3,49,42,000/- made by AO on account of unexplained cash deposit in bank account u/s. 69A of the Act, despite the fact that: a) the bank account no. 30480200000034 is neither mentioned in books nor disclosed in ITR. b) the then Ld. AO has clearly mentioned in the assessment order that the assessee has not submitted specific details as per notices u/s 142(1) of Act Printed from counselvise.com ITA No.686/Ahd/2025 ITO vs. Neesarga Tractors Asst.Year –2017-18 - 2 - dated 18.04.2023 and show cause notice issued on 26.04.2023 during E- assessment proceedings and the assessee clearly failed to give any explanation about the nature and source of cash deposits. (ii) The appellant craves leave to add, alter and / or to amend all or any the ground before the final hearing of the appeal.” 3. Briefly stated the case of the assessee was reopened noting high value suspicious transaction in his bank account amounting to Rs. 3,49,42,000/-. The assessee submitted copy of its ITR and computation of income, Balance Sheet, Profit & Loss Account. However, in absence of any submission regarding the genuineness of the transaction the Assessing Officer held that cash deposits appearing in the bank account of the assessee amounting to Rs. 3,49,42,000/- remained unexplained and accordingly, added the same to the income of the assessee under Section 69A of the Act. The said addition was taxed under Section 115BBE of the Act @ 60%. The Ld. CIT(A), however, noted that the bank account of the assessee in which this high value suspicious transaction was noted to have taken place was accounted in the books of the assessee, that the cash deposited in the said account amounted to only Rs. 1,18,27,000/- and not Rs. 3,49,42,000/- as noted in the assessment order. He further noted that even as per the ITS information relating to the assessee available in the system the cash deposited in the bank account was only Rs. 1,18,27,000/-. He further noted that the total deposit / credits in the bank account to the amount of Rs. 2,36,42,570/- and found the balance in the bank account of the assessee to be appearing in the Balance Sheet of the assessee. He noted the assessee to have shown a turnover of 10.01 crores during the year and total cash receipts in the cash book to be 5,23,85,241/-. Basis the above facts the Ld. CIT(A) held that the transactions in the impugned bank account of the assessee stood reflected in its books and accordingly, the entire credit in the bank account including the cash deposited therein stood duly explained. As for the findings of the Assessing Printed from counselvise.com ITA No.686/Ahd/2025 ITO vs. Neesarga Tractors Asst.Year –2017-18 - 3 - Officer that the assessee did not furnish information during assessment proceedings,he noted that as per the data available the assessee did submit Income Computation, Tax Audit Report, Balance Sheet, Profit & Loss Account and its cash book and that the books of the assessee was audited and Audit Report was filed along with Return of Income. Noting that the Assessing Officer neither pointed out any mistake in the accounts nor rejected the books of the assessee, he deleted the addition under Section 69A of the Act. His findings in this regard are contend at Para 6 to 6.3 of the order as under: “6. The appellant is a dealer of tractors. The return of income for AY 2017-18 was filed on 30.10.2017 returning total income of Rs.2,68,550. This case was selected for scrutiny and the scrutiny assessment was completed u/s 143(3) on 13-12.2019 accepting the returned income. Later the assessment was reopened by issuing notice u/s 148 on 28.08.2022. The assessment was reopened on the basis of information about cash deposit of Rs.3,49,42,000 in Bank of Baroda Account Number 30480200000034. The AO completed the assessment treating the cash deposit in the said account as unexplained money. 6.1 The appellant has explained that A/c No. 30480200000034 with Bank Of Baroda is part of the books of account and the transactions therein are duly accounted. ln support of this claim the appellant furnished, Balance sheet, profit and loss account, cash book and bank books. 6.2 As per the assessment order, the cash deposits in A/c No. 30480200000034 during previous year amount to Rs.3,49,42,000. However as per ITS information related to the appellant available in the system, the cash deposit in this bank account is Rs.1,18,27,000. The appellant has furnished the bank book of this account which tallies with the reported cash deposit. As per the bank book of A/c no. 30480200000034 the total credits (cash and other) in this account amounts to Rs.3,36,41,517. The balance of this account ts reflected in the balance sheet. The appellant shows turnover of Rs.10,01,67,885 during the year. As per the cash book, the total cash receipts during the year amounts to Rs.5,13,85,241. Therefore it is evident that transactions in account number 30480200000034 is reflected in the books of account. 6.3 The AO has held that during assessment, appellant failed to furnish the necessary information and hence the addition was made. However as per the data available, income computation, tax audit report, balance sheet, profit and loss account, profit and loss account, cash books were submitted. The appellant's books are audited and the audit report is filed along with the return of income. The AO has not pointed out any mistake in the accounts nor has rejected the books. Therefore addition made u/s 694 is not sustainable and is deleted. Ground 2 is allowed.” Printed from counselvise.com ITA No.686/Ahd/2025 ITO vs. Neesarga Tractors Asst.Year –2017-18 - 4 - 4. Before us, Ld. DR was unable to controvert the factual findings of the Ld. CIT(A) that the bank account of the assessee was duly accounted for in the books of the assessee ,that the cash deposited in the said bank account was only 1.18 crores and not 3.49 crores as noted by the Assessing Officer and that the books of the assessee were duly audited and no discrepancy was pointed out either by the Assessing Officer or by the Tax Auditor. However, Ld.DR contended that the assessee had offered no explanation of the source of cash deposit in the bank account during assessment proceedings and all evidences now appreciated by the Ld. CIT(A) ,while giving relief to the assessee, tantamounted to additional evidences which the Ld. CIT(A) had entertained in violation of Rule 46A of the Income Tax Rules, 1962.She stated that the Ld.CIT(A) could not have admitted the said evidences in the absence of any reason given by the assessee for not submitting the same during assessment proceedings and further that even otherwise the Ld. CIT(A) ought to have sought a report from the Assessing Officer on the additional evidences before admitting and appreciating them while granting relief to the assessee. 5. Ld. Counsel for the assessee on the other hand, relied on the findings of the Ld. CIT(A) and stated that all necessary evidences were filed during the assessment proceedings as noted by the Ld. CIT(A). He further pointed out that in the case of the assessee in regular scrutiny assessment proceedings also the case of the assessee was picked up for scrutiny on account of huge cash deposit during the demonetization period. The assessee during the assessment proceedings had furnished his entire books of accounts duly audited under Section 44AD of the Act along with Tax Audit Report with Profit & Loss Account, Balance Sheet, Month Wise Purchase and Sale Register, Ledger of Expenses etc. and after considering which no addition had been made in the Printed from counselvise.com ITA No.686/Ahd/2025 ITO vs. Neesarga Tractors Asst.Year –2017-18 - 5 - hands of the assessee. A copy of the order passed under Section 143(3) of the Act in the case of the dated 13.12.2019 was placed before us pointing out the above facts. The Ld. Counsel for the assessee therefore, stated all records of the assessee with all necessary documents, as noted by the Ld. CIT(A), for explaining the source of deposit in the bank account of the assessee were part of the records available with the Assessing Officer and therefore, the contention of the Ld. DR that the assessee had filed additional evidences before the Ld. CIT(A) was grossly incorrect. 6. Having heard both the parties, we do not find any merit in the contention of the Ld. DR. The solitary reason for the AO making addition of deposits to the tune of Rs. 3.42 crores in the bank account of the assessee, treating them to be cash deposits source of which remained unexplained, was the absence of any evidence furnished by the assessee explaining their source. 7. It is a fact on record that the assessee had submitted its entire books of accounts and financial statements which included the cash book of the assessee to the AO. The financial statements, admittedly, were duly audited under Section 44AB of the Act. The Ld. CIT(A) has noted from these records itself that the bank account in which the impugned credits were noted by the AO to have been deposited were accounted for in the books of the assessee. He has noted the balance outstanding in the Bank to be reflected in the Balance Sheet of the assessee. Further, he has noted that the cash deposited in the said bank account was not Rs. 3.42 crores, as noted by the AO, but was only Rs. 1.18 crore and this information was available in the ITR system of the Department also. In light of the above facts, the findings of the CIT(A) that the entire credits in the bank account including the cash deposits were duly explained as accounted for in the books of the assessee, we hold, is correct. The Ld. CIT(A) has rightly rejected Printed from counselvise.com ITA No.686/Ahd/2025 ITO vs. Neesarga Tractors Asst.Year –2017-18 - 6 - the basis with the Assessing Officer for making the impugned addition of Rs. 3.42 crores holding that the entire records of the assessee were available with the Assessing Officer. 8. In light of the above we seen no reason to interfere in the order of the CIT(A) deleting the addition made in the hands of the assessee to Rs. 3.42 crores under Section 69A of the Act. 9. The grounds raised by the Revenue are, therefore, dismissed. 8. In the result, appeal of the Revenue is dismissed. This Order pronounced in Open Court on 08/09/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA) (JUDICIAL MEMBER) ACCOUNTANT MEMBER Ahmedabad; Dated 08/09/2025 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 1. Date of dictation 03.09.2025 2. Date on which the typed draft is placed before the Dictating Member 04.09.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 04.09.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement .09.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 08.09.2025 7. Date on which the file goes to the Bench Clerk 08.09.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order…………………………………… Printed from counselvise.com "