Hiteshkumar Naginbhai Parmar, Ahmedabad V. The ITO, Ward-5(3)(3), Ahmedabad

ITA 107/AHD/2023

AI Insights

The case revolves around an appeal by Hiteshkumar Naginbhai Parmar against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, which upheld the addition of Rs. 11,21,000 as unexplained money under Section 69A due to cash deposits in the assessee's bank account during the assessment year 2017-18. The Assessing Officer had initially made this addition after observing substantial cash deposits. The assessee contested this addition, providing evidence of regular business activities involving cash transactions, particularly noting that these deposits occurred during the demonetization period and were comparable to pre-demonetization periods. The Tribunal, after reviewing the evidence, concluded that the assessee had sufficiently justified the source of the cash deposits, leading to the allowance of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299915 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 21-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 250; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . N o . 1 0 7/ A h d /2 0 23 ( A s se ss m e nt Y e a r : 20 17- 18 ) Hit e s hk u ma r N a g in b ha i P a r ma r 59 1 /3 74 1, G uj . H o u sin g B o a r d , Op p. P o li ce S ta tio n B a p u na ga r , Ah me da bad-3 80 02 4 V s . I T O War d - 5 ( 3) ( 3 ) , A h me da ba d [ P AN N o. A N XP P 1 47 3G ] (Appellant) .. (Respondent) Appellant by : Shri S. N. Divetia & Shri Samir Vora, A.Rs. Respondent by : Shri Urjit Shah, Sr. D.R. D a t e of H ea r i ng 28.06.2023 D a t e of P r o no u n ce me nt 05.07.2023 O R D E R The appeal filed by the assessee is 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 on 04.01.2023 for A.Y. 2017-18. 2. The grounds of appeal raised by the assessee are as under: “1.1 The order passed u/s.250 on 03.01.2023 for A.Y. 2017-18 by NFAC (CIT(A), Delhi upholding the addition of Rs.11,21,000/- towards cash deposits in bank account as unexplained money u/s 69A is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. NFAC (CIT(A) has failed to appreciate that there was sufficient cause for the failure to respond to the notices of hearing issued u/s 250 and therefore the appeal ought not to have been decided ex-parte. 1.3 The Ld. NFAC (CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned addition before AO and passed a non- speaking, unreasoned order ignoring material placed before AO. ITA No. 107/Ahd/2023 Hiteshkumar Naginbhai Parmar vs. ITO Asst.Year–2017-18 - 2 - 1.4 The Ld. NFAC (CIT(A) has failed to appreciate that since the AO had not issued show cause notice cum draft assessment order so that it was illegal and unlawful. 2.1 The Ld. NFAC (CIT(A) has grievously erred in law and on facts in confirming addition of Rs.11,21,000/- towards cash deposits in bank account as unexplained money u/s 69A. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. NFAC [CIT(A)] ought not to have upheld the addition of Rs.11,21,000/- towards cash deposits in bank account as unexplained money u/s 69A.” 3. The assessee filed return of income for A.Y. 2017-18 on 18.10.2017 declaring total income of Rs. 5,91,170/-. The case was selected for scrutiny assessment and accordingly notice under Section 143(2) of the Income Tax Act, 1961 dated 22.09.2018 was issued and served to the assessee. The Assessing Officer after taking cognizance of the details and documents filed by the assessee observed that the assessee has made huge cash deposit during the year under consideration. The Assessing Officer made addition of Rs. 11,21,000/- as unexplained money under Section 69A of the Act. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. The Ld. A.R. submitted that he could not furnish explanation to the notices of the CIT(A) mainly for the reason that the assessee was not accustomed to check his Email ID. After the reason tax consultant has located the said notices by that time the CIT(A) passed the order. The Ld. A.R. further submitted that before the Assessing Officer sales register, purchase register, cash books and all purchase party related to the transactions were attached and reply was filed, but the same was not ITA No. 107/Ahd/2023 Hiteshkumar Naginbhai Parmar vs. ITO Asst.Year–2017-18 - 3 - considered by the CIT(A). The Ld. A.R. submitted that the cash sales as per the description of the Assessing Officer was a regular activity of the business as the assessee in the past also has deposited amount in the account for day-to-day business activities. The Ld. A.R. submitted that the assessee has submitted the cash deposits during the demonetization period compare to pre-demonetization period. In fact, prior to demonetization period also the assessee has made cash deposits amounting to Rs. 75,29,000/-. Thus, the Ld. A.R. submitted that the cash withdrawn and the cash deposited prior to demonetization period for the business activity were justifiable through the cash bills and the other relevant documents before the Assessing Officer. Thus, the Ld. A.R. submitted that the addition made by the Assessing Officer may be deleted. 6. The Ld. D.R. submitted that the assessee has not given the explanation in respect of the cash withdrawn and cash deposited prior to demonetization as well as during the pre-demonetization period. Thus, the Ld. D.R. relied upon the assessment order. 7. Heard both the parties and perused all the relevant material available on record. Before the Assessing Officer the assessee has filed the cash book of the Yogi Hosiery as well as purchase register, sales register and ledger account with Vijaya Cooperative Bank Ltd. The assessee has also submitted details of cash deposits withdrawn from Vijaya Cooperative Bank Ltd. as well as bank statement of the said bank. From the perusal of the records it appears that the month wise opening ITA No. 107/Ahd/2023 Hiteshkumar Naginbhai Parmar vs. ITO Asst.Year–2017-18 - 4 - cash in hand and cash sales as well as cash deposited in bank and cash withdrawal from bank from May 2015 till October 2015 was summarized and it appears that the assessee was regularly depositing cash in the banks account. The business of the assessee was not disputed by the Assessing Officer as well as the cash transactions and the sales books as well as purchase books were also not disputed by the Assessing Officer. Thus, the addition made by the Assessing Officer amounting to Rs. 11,21,000/- on account of unexplained money under Section 69A does not sustain as the assessee has explained in entirety all the amounts through various documents. 8. In result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 05/07/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 05/07/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad