Shri Jigar Jagdish Doshi, Bhuj-Kutch V. The Income Tax Officer Ward-1, Bhuj-Kutch, Bhuj-Kutch

ITA 149/RJT/2021

AI Insights

The case involves Shri Jigar Jagdish Doshi, an individual and partner in M/s Mayur Jewellers, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which confirmed the addition of Rs. 19,22,000 to his income under section 69 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer (AO) due to unexplained cash deposits in the assessee's bank account, which the AO believed were routed through the books of M/s Doshi Investments, a partnership firm. The CIT(Appeals) upheld the AO's decision, finding the partnership firm and its deed invalid and the transactions suspicious. The ITAT, however, found that the CIT(Appeals) did not adequately address the peak cash balance argument presented by the assessee and thus restored the matter for re-examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124031 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 15-11-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Peak credit; Capital Gains
• Section: 69; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH VIRTUAL COURT ] Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Shri Jigar Jag dish Doshi, Opp . Bho jak Street, Waniawad , Bhu j, Gujarat PAN: AHEP D79 68H (Appellant) Vs The ITO, Ward-1, Bhuj (Resp ondent) Asses see by : Shri Astha Ma niar, A. R. Revenue by : Shri B. D. Gupta, Sr. D. R. Date of hearing : 19-04 -2 023 Date of pronouncement : 25-04 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This assessee’s appeal for A.Y. 2013-14, arises from order of National Faceless Appeal Centre (NFAC), Delhi dated 15-09-2021, in proceedings under section 250 of the Income Tax Act, 1961; in short “the Act”. ITA No. 149/Rjt/2021 Assessment Year 2013-14 I.T.A No. 149/Rjt/2021 A.Y. 2013-14 Page No Shri Jigar Jagdish Doshi vs. ITO 2 2. The assessee has taken the following grounds of appeal: “1. The Ld. CIT(A), NFAC, Delhi has erred in law and on facts in confirming the addition of Rs.19,22,000/- made u/s. 69 of the Act by the AO 2.The assessee craves leave to add, amend, delete or alter one or more grounds of appeal.” 3. The brief facts of the case are that the assessee is an individual and partner in the firm, namely M/s Mayur Jewellers. During the year under consideration, the assessee earned income from job work, income from the partnership firm and capital gains. The return of income was filed on 13-03- 2014 declaring total income of 2,05,850/-for the year under consideration. During the course of assessment proceedings, the AO observed that the assessee had made cash deposits amounting to 19,22,000/-in the savings bank account. On being requisitioned, the assessee submitted before the AO that the source of the aforesaid cash deposits were from the withdrawals made from M/s Doshi Investments, wherein the assessee was a partner. Since the arguments of the assessee were not found to be convincing to the AO, and the entire amount of cash deposits of 19, 22,000/ -was added to the total income of the assessee. 4. The assessee filed appeal before Ld. CIT(Appeals), who dismissed the appeal of the assessee on the ground that from the facts it is apparent that assessee has routed his unexplained cash through the books of the firm M/s Doshi investments since firstly, cash introduction was done and then there were cash withdraws from the firm and subsequently cash deposits in the savings banks account of the assessee. Ld. CIT(Appeals) further held that I.T.A No. 149/Rjt/2021 A.Y. 2013-14 Page No Shri Jigar Jagdish Doshi vs. ITO 3 partnership firm was not genuine and same was formed by the assessee to introduce unaccounted cash in the firm and then the same was routed towards his savings bank account. While dismissing the assessee’s appeal, the Ld. CIT(Appeals) made the following observations: “5.1 It is seen from the assessment order that the appellant during the year under consideration had made cash deposits in his savings account cited supra with an amount of Rs. 19,22,000/-. As regards to the source of cash deposits, it is submitted that the appellant had made withdrawals from the partnership firm namely M/s Doshi Investments for various investment transactions and demonstrated the cash withdrawals on various dates with that of ledger extracts of M/s. Doshi Investments for FY 2012-13. However, it is also seen that despite the withdrawals made from the firm, the same was deposited in the personal savings account of the appellant. Further, on close perusal of the ledger account, it is, visible that entire transactions reflected in the ledger account is only through cash and out of the total cash withdrawals of Rs. 19,15,000/- almost equal amount of cash at Rs. 18,26,700/- were shown as receipt of the firm. Therefore, from this fact, it cannot be ruled out that the appellant has routed his unexplained cash through the books of the firm, firstly cash introduction then cash withdrawals from the firm and subsequently cash deposits in savings bank account. It is further seen from the copies of the Partnership Deed submitted by the appellant that the same was made in non judicial stamp paper only, without the same even being notarized. Therefore, the partnership firm as well as the deed cannot be considered valid. It is nothing but after though that the appellant has formed a partnership firm, introduced his unaccounted cash in the form and then routed to the bank account. The appellant further relied on various case laws in his favor but the same cannot rescue him from the ambit of the taxation on account of unexplained investments u/s 69 of the Act. In view of the aforesaid facts and discussion made, I find no reason to interfere in the decision of the AG and accordingly the addition made of Rs. 19,22,000/- is sustained and the ground no. 2 of the appeal is dismissed.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) confirming the additions made by the AO. The counsel for the assessee drew our attention to pages 13-14 of the paper book, to the working of the peak cash negative balance. The counsel for the assessee submitted that the AO erred in law in adding the entire cash I.T.A No. 149/Rjt/2021 A.Y. 2013-14 Page No Shri Jigar Jagdish Doshi vs. ITO 4 credit/deposit of 19.22 lakhs in the hands of assessee and he further submitted that only the peak credit of 4.24 may be sustained and balance may be deleted. Further, the counsel for the assessee submitted that the Ld. CIT(Appeals) has failed to analyse the working of the cash balance for the impugned assessment year, which was submitted before him during the course of appellate proceedings and has proceeded to add the entire credits in the bank account, which is not permissible in law. The counsel for the assessee drew our attention to page 2-3 of the paper book (written submissions filed before the ld. CIT(A)) and submitted that the Ld. CIT(Appeals) did not appreciate the fact that the entire cash deposits had been duly explained by the assessee and the Ld. CIT(Appeals) simply upheld the order of AO by treating the entire cash deposits as unexplained income of the assessee. The assessee submitted before us that the Ld. CIT(Appeals) failed to appreciate that the entire amount had come from M/s Doshi investments, in which the assessee is a partner. Accordingly, only the peak rate of 4.24 lakhs may be added and balance amount is not liable to be sustained in the hands of the assessee. In response, the DR placed reliance on the observations made by the AO and Ld. CIT(Appeals) in their respective orders. 6. We have heard the rival contentions and perused the material on record. On going through the records the case, we observe that Ld. CIT(Appeals) has not given any finding on the working of the peak cash balance submitted before him during the course of appellate proceedings. Accordingly, in the interest of justice, we are restoring the matter to the file of Ld. CIT(Appeals) to analyse the working of the cash balance submitted I.T.A No. 149/Rjt/2021 A.Y. 2013-14 Page No Shri Jigar Jagdish Doshi vs. ITO 5 before him during the course of appellate proceedings, and then decided the matter in accordance with law, after giving due opportunity of hearing to the assessee. The DR has also not objected to the matter being restored to the file of Ld. CIT(Appeals) in interest of justice. 7. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 25-04-2023 Sd/- Sd/- (WASEEM AHMED) (SIDHHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 25/04/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Rajkot