SHRIKANT RATILAL PATEL, Mumbai V. CIT, PUNE-11, THANE

ITA 3042/MUM/2022

AI Insights

The case involves Shrikant Ratilal Patel, a proprietor of M/s Cosmos Trading Company, who appealed against the order of the Commissioner of Income Tax Appeals/NFAC, which confirmed the addition of Rs. 13,93,000 as unexplained money under section 69 of the Income Tax Act, 1961. The cash was seized during a search of the assessee's locker, and the assessee claimed it was accumulated from his trading business of American Diamond. The Assessing Officer (AO) rejected this explanation, leading to the appeal. The Tribunal, after reviewing the evidence, including cash books, sales invoices, and a marriage invitation, concluded that the assessee had sufficiently explained the source of the cash, leading to the deletion of the addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299344 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 23-01-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 30-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV RANJAN
• Section: 69; 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM AND SHRI OM PRAKASH KANT, AM आयकर अपील सं/ I.T.A. No.3042/Mum/2022 (निर्धारण वर्ा / Assessment Years: 2020-21) Shrikant Ratilal Patel 303 Sai kutir, Narayan Nagar Road Bhayandar (W)-401101 बिधम/ Vs. Commissioner of Income Tax Pune- 11 स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AHKPP2076Q (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 24/01/2023 घोषणा की तारीख /Date of Pronouncement: 26/04/2023 आदेश/ORDER PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax Appeal/NFAC dated 31.10.2022 for AY 2020-21. 2. The main grievance of the assessee is against the action of the Ld.CIT(A) in confirming the addition made by AO of Rs. 13,93,000/- as unexplained money u/s 69 of the Income Tax Act, 1961 (herein after “the Act”). 3. Brief facts are that the assessee is proprietor of M/s Cosmos Trading Company, which is into business of trading in Precious, and Semi-Precious Stone. He had a locker No. 960 at M/s Shri Mumbadevi Safe Deposit Vault at 127/129, Bhagat Building, 3 rd Agiary Lane, Jhaveri Bazar, Mumbai which was searched by the department on 17.10.2019 and cash of Rs. 13,93,000/- was retrieved/seized. At the Assessee by: Shri Vimal Punmiya Revenue by: Shri Sanjeev Ranjan (Sr. AR) ITA No.3042/Mum/2022 A.Y. 2020-21. Shrikant Ratilal Patel 2 time of search, the investigation team had recorded the statement of the assessee, which has been reproduced, which is as under:- Q.12 on opening the locker No. 960 which is in the name of Shrikant R. Patel (Yourself), located of M/s Shree Mumbadevi Safe Deposit Vault at 127/129, Bhagat Building, 3 rd Agiary Lane, Zaveri Bazar, Mumbai, Cash of Rs, 13,93,000/- has been found. Pleased confirm the same and provide the details of owner of cash. Ans. Sir, I confirm the same that an opening of locker No. 960 which is in the name of me i.e. Shrikant R. Patel located of M/s Shree Mumbadevi Safe Deposit vault at 127/129, Bhagat Building, 3 rd Agiary Lane, Zaveri Bazar, Mumbai, Cash of Rs. 13,93,000/- has been found. Sir, this cash belongs to me and has been accumulated from my trading business of American Diamond. Q.13 Please explain the source of cash of Rs. 13,93,000/- and reconcile the same with supporting documents. Ans. Sir, this cash is generated through my trading business of American Diamond through my company Cosmos Trading Company. Supporting documents for the same are not readily available with me. I will provide the same in due course of time. 4. Thereafter, the AO notes that he issued notice u/s 143(2) of the Act; and show caused assessee as to why this amount should not be treated as the un-explained income in his hands. According to the AO, the assessee vide submission dated on 11.11.2019 produced the cashbook and sales book of M/s Cosmos Trading Company, from which it revealed that huge cash sales were made in the previous six (6) months before seizure of cash as compared to its regular business. ITA No.3042/Mum/2022 A.Y. 2020-21. Shrikant Ratilal Patel 3 And the AO noted that the cash sale bills produced by the assessee do not contain the Name, Pan, Address, GSTN and Mobile Numbers of the parties to whom sales were made as recorded in cash book. According to him, such bills were only created to prove the source of cash and he did not accept the explanation of the assessee and made the addition of Rs.13,93,000/- u/s 69A of the Act. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to dismiss the same. 5. Aggrieved, the assessee is before us. 6. We have heard both the parties and perused the records. We note that the assessee is in the business of trading in Semi-Precious Stone and Synthetic Stone. During the year under consideration, the assessee has sold part of his stock of Semi-Precious Stones to various customers. During search of his locker on 17.10.2019, cash of Rs. 13,93,000/- was found and seized and the search team asked the assessee to explain the source of the cash and to reconcile the same with supporting documents. Pursuant to which, [the assessee at the time of search itself] has submitted that the cash has been generated through trading/business of American Diamond through his concern viz Cosmos Trading Company and also said that supporting documents for the same are not readily available but will be provided in the due course before the AO. In this regard, the Ld.AR brought to our notice the reason for keeping such an amount in locker. According to him, the marriage of assessee’s daughter was fixed/scheduled on 25.11.2019 (search on 17.10.2019) and the assessee had kept the sale consideration from the trading, in the locker for purpose of the meeting ITA No.3042/Mum/2022 A.Y. 2020-21. Shrikant Ratilal Patel 4 the expenditure for conducting the marriage. As proof of the marriage of her daughter on 25.11.2019, assessee had filed marriage invitation card which is found placed at page no. 58 to 59 of the Paper book; and the assessee has filed the cash book which is found placed at page no. 112 of the Paper book which is noted to be cash book from 1 st Sep, 2019 to 17 th Oct, 2019 (date of search) from which it is discerned that the assessee had an opening balance of Rs. 47,507/- on 01.09.2019 and on 17.10.2019 he had closing balance of Rs.12,88,220/-. Thus assessee has been able to show that assessee has cash to the tune of Rs. 12,88,220/- on the date of search. Assessee in order to show that the cash was generated from the sales of diamonds has filed vouchers which is found placed at page no. 118 to 129 (sale invoices) which has been reflected in the cashbook. We note that the assessee has remitted GST on the purchases of American diamonds; and from a perusal of invoices it is noted from page no 130 to 143 of the PB that the assessee has given the details of sales; and the details of purchase parties are found placed from page no.115-116 of the PB. Thus the assessee has been able to bring prima facie evidence to show the source of the cash to the extent of Rs. 12,88,220/- [ out of Rs. 13,93,000/- seized on the date of search]. It was also brought to our notice that even though the daughter of assessee was supposed to get married on 25.11.2019 i.e. [after a month from the date of search] un-fortunately marriage could not take place because cash which had been kept for the marriage, had been seized by the department. According to us, the assessee has explained source of Rs. 12,88,220/- and the balance amount of Rs. 1,04,780/- can be persumed to have been accumulated by the assessee ITA No.3042/Mum/2022 A.Y. 2020-21. Shrikant Ratilal Patel 5 from the profits which assessee had been dealing from business of the trading in diamonds for the last 10 months. It is further noted that the assessee has included the sale of Rs. 13,93,000/- in its profit and loss account and it has become part of the turnover and has offered the same to tax while returning an income of Rs. 10,75,040/-. Therefore, we are of the view that in the facts and circumstances discussed (supra) the addition of the u/s 69 of the Act was not warranted in the facts and circumstances discussed supra. Therefore, the addition made by the AO stands deleted. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this 26/04/2023. Sd/- Sd/- (OM PRAKASH KANT) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 26/04/2023. Shubham P. Lohar आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai