Rajeshkumar Rajivbhai Patel, Anand V. Income Tax Officer, Ward-2(1)(4), Vadodara

ITA 283/AHD/2022

AI Insights

The case involves Rajeshkumar Rajivbhai Patel, a partner in Mahalaxmi Cold Storage, who appealed against the order of the CIT(A) confirming additions made by the Assessing Officer regarding unexplained cash deposits and income from other sources for the Assessment Year 2017-18. The Assessing Officer had added Rs.10,70,500 as unexplained money under Section 69A due to unexplained cash deposits during the demonetization period and Rs.26,16,777 as income from other sources. The CIT(A) upheld these additions. However, the Tribunal found that the assessee had adequately explained the source of the cash deposits and that the agricultural income claimed was legitimate, thus reversing the CIT(A)'s decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129348 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-09-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 18-07-2022
• Other Referred Cases: Dhakeshwari Cotton Mills. Ltd. vs. CIT, Dhananjaykumar Singh vs. ACIT, Chaitanya Bansibhai Nagori vs. PCIT, Shri Narendrakumar Rameshbhai Patel vs. DCIT, Shri Sarvamangal Cooperative Credit Society Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 69A

Judgement Text

ITA No.283/Ahd/2022 Assessment Year: 2017-18 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.283/Ahd/2022 Assessment Year: 2017-18 Rajeshkumar Rajivbhai Patel, C/o. Mahalaxmi Cold Storage, Boriavi – 387 310. [PAN – CSQPP 4498 H] Vs. The Income Tax Officer, Ward – 2(1)(4), Vadodara. (Appellant) (Respondent) Assessee by Shri Sanjay R. Shah, CA Revenue by Ms. Saumya Pandey Jain, Sr. DR Da te o f He a r in g 05.09.2023 Da te o f P ro n o u n ce m e n t 18.10.2023 O R D E R This appeal is filed by the Assessee against order dated 21.06.2022 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18. 2. The Assessee has raised the following grounds of appeal :- “1. The Learned Commissioner of Income Tax (Appeals) has erred in law and on facts of the case by confirming the addition on account of unexplained cash deposits treating it as unexplained money u/s.69A of Rs.10,70,500/-. 2. The Learned Commissioner of Income Tax (Appeals) has erred in law and on facts of the case by confirming the addition on account of income from other sources of Rs.26,16,777/-.” 3. The assessee was a partner in partnership firm M/s. Mahalaxmi Cold Storage. The assessee filed return of income on 06.01.2018 declaring total income at Rs.3,19,970/-. The return was duly processed u/s.143(1) of the Income Tax Act, 1961. The case was selected for limited scrutiny with the reasons “Large cash deposits during demonetization period as compared to returned income”. Notice u/s.143(2) of the Act was issued on 22.09.2018, which was duly served upon the assessee. In response to the statutory notices, the assessee submitted various details and the same was verified by the Revenue Authority. The Assessing Officer observed that during the demonetization period, the assessee ITA No.283/Ahd/2022 Assessment Year: 2017-18 Page 2 of 4 deposited cash of Rs.10,15,500/- with Central Bank of India and Rs.50,000/- as well as Rs.55,000/- in two accounts held in Bank of Baroda. The two accounts of the Bank of Baroda was not shown in the Return of Income filed for A.Y. 2017-18 by the assessee. Therefore, notice u/s.133(6) of the Act was issued to Bank of India and Central Bank of India. Both the Banks furnished the bank statements of the bank account held by the assessee as per the observations of the Assessing Officer. The assessee was asked to explain the source of cash deposits for which the assessee did not file any reply or explanation. Therefore, the Assessing Officer made addition of Rs.10,70,500/- u/s.69A as unexplained money. The Assessing Officer also made addition in respect of income from other sources amounting to Rs.26,16,777/-. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that as regards to Ground No.1, the assessee filed detailed reply dated 17.12.2019 before the Assessing Officer. The Ld. AR submitted that the Assessing Officer totally ignored the said submission of the assessee and the details filed therein. The Ld. AR submitted that the bank statements of Central Bank of India gives the detail trail of Rs.10,00,000/- which was earlier withdrawn from the said account itself. Even the bank statement of Bank of Baroda explains the trail of cash withdrawals and the deposit within the particular period. Thus, the Ld. AR submitted that the addition made by the Assessing Officer and confirmed by the CIT(A) is not justifiable. 6. The Ld. DR submits that the evidences given by the assessee are new and therefore, the CIT(A) has rightly confirmed the addition. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the bank statement of Central Bank of India and Bank of Baroda clearly shows that there was withdrawal of cash from these two accounts by the assessee and the same was deposited during the demonetization period. The assessee is having cash prior to demonetization, it was rightly deposited during the said period. Therefore, it cannot attract Section 69A of the Act as unexplained money, in fact, the assessee has explained the trail of ITA No.283/Ahd/2022 Assessment Year: 2017-18 Page 3 of 4 withdrawal and its co-relation with the deposits in the respective bank accounts. Ground No.1 is allowed. 8. As regards to Ground No.2, the Ld. AR submitted that the explanation letter dated 28.02.2019 filed before the Assessing Officer, states the fact that the agricultural land is ancestral land being HUF property and the consequential agricultural income earned from it exclusively pertains to HUF status and therefore, assessee did not declare the same in his return filed in individual status. The Ld. AR further submitted that the finding of the Assessing Officer that the assessee is not cultivating agricultural produce but doing only trading is not correct. The Ld. AR submitted that the assessee submitted the statement showing in nutshell cash flow of agricultural income and expenses alongwith complete copy of sale invoices. The Ld. AR submitted that there is ancestral agricultural income of Rs. 26,16,777/- on sale of potato and agricultural expenditure incurred at Rs. 08,09,459 to earn agricultural income on sale of potato production. Thus, the addition is not proper. The Ld. AR relied upon the following decisions: i. Dhakeshwari Cotton Mills. Ltd. vs. CIT 26 ITR 775 (SC) ii. Dhananjaykumar Singh vs. ACIT 402 ITR 91 (Patna) iii. Chaitanya Bansibhai Nagori vs. PCIT (ITA No.377/Ahd/2020 order dated 23.05.2022) iv. Shri Narendrakumar Rameshbhai Patel vs. DCIT (ITA No.981/Ahd/2019 order dated 20.03.2020) v. Shri Sarvamangal Cooperative Credit Society Ltd. vs. ACIT (ITA No. 1787/Ahd/2019 order dated 29.03.2023) 9. The Ld. DR relied upon the Assessment order and the order of the CIT(A). 10. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has produced the evidences related to the sale of agricultural produce before the Revenue authorities and therefore, the claim of the assessee that the assessee received income from agricultural activities cannot be denied. Thus, the treatment given by the Assessing Officer to the said income as income from other sources is not justifiable. Hence, Ground No.2 is allowed. 11. At the time of hearing, the Ld. AR submitted that appeal filing fees had been paid for A.Y. 2022-23 instead of A.Y. 2017-18 by mistake on the part of the assessee and paid double court fees. But after verifying, it appears that the ITA No.283/Ahd/2022 Assessment Year: 2017-18 Page 4 of 4 assessee has paid twice the court fees. Therefore, the Ld. AR requested/prayed that the excess court fee be refunded. After verifying the challans the assessee has paid thrice the court fees for filing the appeal. Therefore, it is directed to the Registry to refund the excess fees to the Assessee. 12. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 18 th October, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 18 th October, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad