Sureka Ashokkumar Mohanlal, Ahmedabad V. The ITO, Ward-3(3)(5), Ahmedabad

ITA 377/AHD/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0664 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-07-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 28-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HRISHIKESH HEMANT PATKI
• Assessee Lawyers: ASHOK DHARIWALA
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 68; 143(3); 250

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद यायपीठ अहमदाबाद यायपीठअहमदाबाद यायपीठ अहमदाबाद यायपीठ ‘SMC’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.377/Ahd/2024 Asstt.Year :2017-18 Sureka Ashokkumar Mohanlal HUF, 57, Amrakunj Gokuldham Sanathal Ahmedabad. PAN : AACHS 8569 L Vs ITO, Ward-3(3)(5) Ahmedabad. (Applicant) (Responent) Assessee by : Shri Ashok Dhariwala, AR Revenue by : Shri Hrishikesh Hemant Patki, Sr.DR सुनवाई क तारीख/D a t e o f He a r in g : 25 / 0 7 / 2 0 2 4 घोषणा क तारीख /D a t e o f P r o no u nc e me nt : 3 0 / 0 7 / 2 0 2 4 आदेश आदेशआदेश आदेश/O R D E R The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals), National Faceless Appeal Centre, Delhi [in short referred to as ld.CIT(A)] under section 250 of the Income Tax Act, 1961 dated 29.12.2023 pertaining to Asst.Year 2017-18. 2. The following grounds are raised in the appeal: “1. Addition on account of unexplained cash credit u/s 68 of opening cash balance of Rs.12,05,000/- The learned Commissioner of Income Tax (Appeals) ["CIT(A)"] Income-Tax Department has erred in making an addition of Rs.12,05,000/- on account of unexplained cash credit. To the extent of availability of cash of Rs. 12,05,000/- being opening cash balance which was duly reflected in the books of account of the appellant for the year under consideration as well as in the earlier year, the same cannot be rejected and the consequential addition is not sustainable. As appellant had duly proved source of cash deposit in bank account to be opening cash balance, no addition could be made under section 68. ITA No.377/Ahd/2024 2 2. Ld CIT(A) has erred in calculating tax liability as per Section 115BBE. Under the facts and circumstances of the case the order u/s 143(3) of the Income Tax Act 1961 passed for A.Y. 2017-18 is wholly illegal, unlawful and against the principles of natural justice which deserves to be quashed. Hence, Ld CIT(A) has erred in invoking the provisions of Section 115BBE in case of appellant. The learned CIT(A) has erred in charging interest u/s 234A, 234B, 234C and 234D of the Act,1961. The Ld CIT(A) has erred in initiating penalty proceedings u/s. 271AAC(1) of the Act,1961 and the same requires to be dropped. The appellant craves to add, alter and amend any of the grounds of appeals before or at the time of hearing. 3. The solitary issue in the present appeal relates to addition made to the income of the assessee of cash found deposited in his bank account during demonetization period amounting to Rs.12,05,000/-, source of which remained unexplained to the satisfaction of the AO. The addition was confirmed by the ld.CIT(A). 4. The contention of the ld.counsel for the assessee before us was that the source of cash deposited was opening balance available with the assessee at the beginning of the year i.e. 1.4.2016. He drew our attention to the order of the AO at page no.2 wherein, it was pointed to the AO that the cash deposited was sourced from opening cash in hand available with the assessee of Rs.13,78,890/- which remained as such on the date demonetization was declared. He pointed out that the copy of the cash book was also filed to the AO. But both the authorities rejected this explanation of the assessee stating that there was no point in the assessee’s keeping, as such, a huge amount of money on hand; that while the assessee has declared NIL income in his return, such huge amount of money would ideally have been invested in FDRs., mutual funds etc. where the assessee would get good return rather than keeping cash on hand. My attention was drawn to the finding of the AO in this regard at para 3.3 of his order, which was confirmed by the ld.CIT(A) at para 6.4 of his order. ITA No.377/Ahd/2024 3 4. At this juncture, the ld.counsel for the assessee was asked, whether the assessee had reflected this opening cash in hand in the return of income filed for the preceding assessment year, to which, the ld.counsel for the assessee responded by stating that the same was reflected in his return filed for the immediately preceding year. The ld.counsel for the assessee was directed to file copy of his ITR for the preceding year reflecting the closing cash on hand, and the ld.DR was asked to verify the said facts from the records of the Department. Order sheet entry to this effect was passed on 23.7.2024. On 25.7.2024, when the matter was ultimately heard, copy of the ITR of the assessee for immediately preceding year was filed before me, and it was pointed thereform that the assessee had reflected cash on hand in Part-A-BS of the ITR reflecting the details of the balance sheet of the assessee as on 31.3.2016 of the proprietary business of the assessee showing cash on hand in Column-(iii) (Column-3 of Current assets, loans and advances) (a)(iii)of cash in bank balance, and (A) cash in hand of Rs.13,78,891/-. The ld.DR stated that he had duly verified this fact from the records of the department. 5. Considering that the assessee has duly evidenced before me the facts of having sufficient opening cash in hand for explaining the cash deposited during the demonetization period, and the Revenue has not found the same utilized elsewhere, the orders of the authorities, holding that cash deposited during the demonetization remained unexplained, is not tenable. What the assessee should or should not have done with this cash balance cannot be a factor for determining availability of cash with the assessee before deposit in bank. ITA No.377/Ahd/2024 4 Therefore, the addition so made and confirmed by the ld.CIT(A) is deleted. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 30 th July, 2024 at Ahmedabad. Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 30/07/2024