HIMANSHU VINODCHANDRA SHAH, AHMEDABAD V. ACIT CIRCLE 3(3), AHMEDABAD

ITA 307/AHD/2022

AI Insights

The case revolves around an appeal by Himanshu Vinodchandra Shah against the order of the Ld. Commissioner of Income Tax (Appeals), which upheld the addition of Rs.25,74,138 as unexplained cash deposit under Section 68 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer during the assessment for the year 2017-18, noting that the cash deposit occurred during the demonetisation period. The assessee contended that the amount represented advances for a land purchase, which were returned in cash upon cancellation of the agreement. The Tribunal, after considering the submissions and evidence presented, including bank statements and affidavits, concluded that the assessee had adequately explained the source of the cash deposits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125645 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-08-2022
• Other Referred Cases: Sapnaben Patel 73 Taxman.com 288
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133(6); 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o . 3 0 7/ A h d /2 0 2 2 ( A s s e s s me nt Y ea r s : 2 0 17 -1 8) H i ma ns hu Vi n o dc h a nd r a S ha h, C - 1, 1 s t Fl oo r , S ur ya C o m pl ex , G ur u k ul R oa d, G uj a ra t- 38 0 0 52 Vs . A s sis ta nt C o m mi s s i o ne r o f I n c o m e Ta x, C ir c l e- 3( 3) , A h m ed ab a d [P A N N o .AC ZP S 3 7 6 8 E] (Appellant) .. (Respondent) Appellant by : Ms. Urvashi Sodhan, A.R. Respondent by: Shri Ashok Kumar Suthar, Sr. D.R. D a t e of H ea r i ng 17.07.2023 D a t e of P r o no u n ce me nt 05.09.2023 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the assessee 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 vide order dated 24.06.2022 passed for Assessment Year 2017-18. 2. The assessee has taken the following grounds of appeal:- “1. 1. General: 1.1 The learned CIT(A), National Faceless Appeal Centre, Delhi (NFAC) has erred in law and on facts in passing the order. 1.2 The learned CIT(A) have erred in law and on facts in upholding the order of the learned Assessing Officer, NFAC (A.O.), whereby the learned A.O. has made an addition u/s 68 of the Income Tax Act, 1961 (the Act) by ITA No. 307/Ahd/2022 Himanshu Vinodchandra Shah vs. ACIT Asst. Years –2017-18 - 2 - considering deposit of cash of Rs.25,74,138/- in his bank account during demonetization period as unexplained income of the Appellant. 1.3 Without prejudice to the above, the following are the grounds of appeal against the addition u/s 68 of the Act made by the learned A.O. and upheld by the learned CIT(A). 2. 2. Addition u/s 68 of the Act: 2.1 The learned Commissioner of Income Tax (Appeals), NFAC, has erred in confirming action of the learned Assessing Officer in making addition of Rs. 25,74,138/- u/s 68 of the Act, treating cash deposited as unexplained cash credit. 2.2 The learned Commissioner of Income Tax (Appeals), NFAC, ought to have taken into consideration facts of the Appellant as well as all documentary evidences submitted by the Appellant in its right perspective. 2.3 The learned Commissioner of Income Tax (Appeals) NFAC, has erred in concluding that “Survey Nos. mentioned therein and corresponding amount mentioned against the same do not match with the claim of advance.” In this respect he ought to have given an opportunity to the Appellant to explain the same during the course of appeal proceedings. 3. 2.4 The learned Commissioner of Income Tax (Appeals) NFAC, has also erred in holding that, “The appellant did not come out with any reasoning as to why the said amount which was received as advance for sale of plot was returned in cash which constitute violation of the provisions of section 269SS”. In this ITA No. 307/Ahd/2022 Himanshu Vinodchandra Shah vs. ACIT Asst. Years –2017-18 - 3 - respect he ought to have taken into consideration the written submission and all documentary evidences furnished by the Appellant during assessment proceedings as well as appeal proceeding. 2.5 The learned Commissioner of Income Tax (Appeals) NFAC erred in confirming the order of the learned Assessing Officer by treating that transaction entered into by Appellant is in violation of provision of section 269SS. In this respect he ought to have considered that the learned A.O. has made addition u/s68 of the Act treating transaction as unexplained cash credit and not considering it as in violation of provision of section 269SS of the Act. 4. 2.6 The Appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.” 4. The brief facts of the case are that the assessee filed his return of income on 12.09.2017 declaring total income of Rs.1,69,43,900/- for Assessment Year 2017-18. The assessee is engaged in the business of hiring of vehicles. During the assessment, the Assessing Officer made an addition of Rs.25,74,138/- as unexplained cash deposit it in the bank account under Section 68 of the Act. The Assessing Officer observed that during the demonetisation period the assessee had made cash deposit in his bank account amounting to Rs.25,74,130/-. The assessee was asked to explain the source of the same. Vide letter dated 25.10.2019, the assessee submitted that the assessee had entered into an agreement for purchase of ITA No. 307/Ahd/2022 Himanshu Vinodchandra Shah vs. ACIT Asst. Years –2017-18 - 4 - land with Shri Rajendrasinh Zala, and the assessee had paid an amount of Rs.8 lakhs on 09.04.2013, Rs.5 lakhs on 04.07.2012 and Rs.12.74 lakhs on 10.10.2012 through cheques. However, the aforesaid “agreement to purchase” the land was subsequently cancelled and the assessee received back in cash, the aforesaid amounts which had been given by way of cheques to Shri Rajendrasinh Zala. The assessee filed a copy of Banachithi and copy of cancellation of Banachithi dated 10.09.2016, bank statement reflecting the advance payment to Shri Rajendrasinh Zala and ledger account in support of the aforesaid contention. Further, an affidavit on Stamp Paper was also furnished by the assessee by Shri Rajendrasinh Zala admitting the receipt of advance payment of Rs.25.74 lakhs by cheque for sale of property at Survey Nos. 912 and 921. The assessee submitted that the transaction of purchase of property could not take place because the seller could not give title clearance with respect to the aforesaid properties. Therefore, the Banakhat was cancelled on 09.01.2016. However, the amount received through cheque by Shri RajendraSinh Zala was returned to the assessee on 19.09.2016 in cash, which is the source of deposit of Rs.25,74,130/- made by the assessee during the demonetisation period. However, the Assessing Officer was not satisfied with the explanation of the assessee and added a sum of Rs.25,74,130/- as unexplained income of the assessee under Section 68 of the Act. 5. In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee the following observations: ITA No. 307/Ahd/2022 Himanshu Vinodchandra Shah vs. ACIT Asst. Years –2017-18 - 5 - “During appellate proceedings, the appellant filed copies of books of account maintained in TALLY system and claimed that the advance is reflected in the books of account. Appellant relied upon the break up sundry creditors and claimed the debit side of the said folio includes advance of Rs.25,74,138. Verification shows that the survey nos. mentioned therein and the corresponding amount mentioned against the same do not match with the claim of advances. The appellant did not come out with any reasoning as to why the said amount which was received as advance for sale of plot was returned in cash which constitutes a violation of the provisions of Sec.269Ss for the transaction is covered under the definition of specified advance. For the above reasons the addition is upheld. In the result the appeal is “Dismissed”.” 6. The assessee is in appeal before us against the aforesaid additions confirmed by Ld. CIT(Appeals). Before us, the assessee submitted that Ld. CIT(Appeals) has dismissed the appeal only on the basis of presumptions. The Counsel for the assessee drew our attention to Page 47 of the Paper Book (ledger account of sundry creditors) and submitted that there are debit balances of Rs.25.74 lakhs in the aforesaid account. Further, the Counsel for the assessee drew our attention to letter dated 19 th November 2018 submitted before the Assessing Officer in which Shri Rajendrasinh Zala had admitted that he had received a sum of Rs.17.74 lakhs and 8 lakhs respectively as advance from Shri Himanshu Shah at time of entering Banachithi with the assessee. Copy of Banachithi dated 10.10.2012 and 09.04.2013 for the said lands, which ITA No. 307/Ahd/2022 Himanshu Vinodchandra Shah vs. ACIT Asst. Years –2017-18 - 6 - was agreed to be sold to the assessee was also enclosed vide the aforesaid submission. Further, the Counsel for the assessee drew our attention to Pages 27-28 of the Paper Book and submitted that all the amounts towards purchase of land were advanced to Shri Rajendrasinh Zala by way of cheques and bank statement of Indian Overseas Bank was also produced before us for our perusal. The Agreement to Sell entered between Shri Rajendrasinh Zala and the assessee was also furnished before us for our perusal in support of the contentions put forth by the Counsel for the assessee. Further, the Counsel for the assessee also submitted balance sheet with sundry creditors from the year of purchase to substantiate that impugned land formed part of the fixed assets for which payments had been advanced by cheques by the assessee to Shri Rajendrasinh Zala. Accordingly, the balance sheets with list of sundry creditors highlighting survey number of the impugned lands from 01.04.2012 to 31.03.2016 were submitted before us for our records. The Counsel for the assessee also placed reliance on the decision of Sapnaben Patel 73 Taxman.com 288 for the proposition that registration of agreement to sale as per Indian Registration Act, though mandatory is not invalid and non-genuine. 7. In response, the Ld. DR submitted that both the agreements on which reliance has been placed by the assessee in appeal cannot be relied upon since no Stamp Duty has been paid by the assessee on such agreements. ITA No. 307/Ahd/2022 Himanshu Vinodchandra Shah vs. ACIT Asst. Years –2017-18 - 7 - 8. We have heard the rival contentions and perused the material on record. Looking into the instant facts, there are certain things which are noteworthy. Firstly, it is seen that in the instant case, the assessee had entered into agreement for sale with Shri Rajendrasinh Zala, in which it was mentioned that an amount of Rs.5 lakhs was received by cheque dated 04.07.2012 and another amount of Rs.12.74 lakhs was received by cheque dated 10.10.2012. Further, the assessee has also submitted the bank statement of Indian Overseas Bank in support of the fact that the amount had been transferred by way of cheque to Rajendrasinh Zala as advance for purchase of property. Further, it is also not disputed that the aforesaid agreement to sell did not fructify and there is no evidence to the effect that the agreement to sell, in fact, had materialized. Further, the assessee also furnished affidavit by Shri Rajendrasinh Zala to the Assessing Officer in response to notice under Section 133(6) of the Act wherein Shri Rajendrasinh Zala submitted that he had received an advance from the assessee for the sum of Rs.17.74 lakhs Rs.8 lakhs respectively, which were later returned by him to the assessee in cash on cancellation of Banachitthi i.e. on cancellation of the agreement. Further, Shri Rajendrasinh Zala also submitted before the Assessing Officer that so far as a source of Rs.25 lakhs in cash is concerned, the same was out of agricultural income and past savings as well as out of cash withdrawal in past from the bank account held by Shri Rajendrasinh Zala with Federal Bank. Accordingly, looking into the totality of the instant facts, in our considered view, the assessee has been able to reasonably explain the source of deposits of Rs.25.74 lakhs made by him during the ITA No. 307/Ahd/2022 Himanshu Vinodchandra Shah vs. ACIT Asst. Years –2017-18 - 8 - demonetisation period. The Department has not brought forth any specific evidence to rebut the assertions made by the assessee. 9. In the result, looking into the instant facts, we are here by directing that the additions confirmed by Ld. CIT(Appeals) may be deleted. 10. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 05/09/2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 05/09/2023 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 1. Date of dictation 28.08.2023 (Dictation given by Hon’ble Member on his Dragon Software on 27.08.2023) 2. Date on which the typed draft is placed before the Dictating Member 28.08.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 29.08.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .08.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 05.09.2023 7. Date on which the file goes to the Bench Clerk 05.09.2023 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..........................................