Smitaben Anantkumar Patel, Ahmedabad V. The Income Tax Officer, Ward- 3(3)(5), Ahmedabad

ITA 400/AHD/2022

AI Insights

The case involves Smitaben Anantkumar Patel, the proprietor of M/s. Fulchand Khodidas, who appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, which upheld the addition of Rs. 15,50,000 as unexplained money under Section 69A of the Income Tax Act. The addition was initially made by the Assessing Officer following the observation of substantial cash deposits in the assessee's bank account during the demonetization period. The assessee contended that these deposits were from the sale proceeds of agricultural equipment and products, which were recorded in the books of accounts. The Tribunal, after reviewing the books and bank statements, concluded that the additions made by the Assessing Officer and upheld by the CIT(A) were not sustainable.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299975 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-04-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 19-10-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 144; 250; 143(2); 69A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . No .4 00 /A h d / 20 22 ( A s se ss m e nt Y e a r : 20 17- 18 ) S mita be n A n a n tk u ma r P at e l Pr op. M /s . F u lc h a n d K h od i da s , 47- 4 8 N ir m a n i T en a me n t, Sa r k h ej , Ah me da bad-3 82 21 0 V s . I T O War d - 3 ( 3) ( 5 ) , A h me da ba d [ P AN N o. A B C P P 20 55 M ] (Appellant) .. (Respondent) Appellant by : Shri S. N. Divatia, & Shri Samir Vora, A.Rs. Respondent by: Shri R. R. Makwana, Sr. D.R. D a t e of H ea r i ng 27.04.2023 D a t e of P r o no u n ce me nt 03.05.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals), National Faceless Appeal Centre (in short “NFAC”), Delhi on 31.08.2022 for A.Y. 2017-18. 2. The grounds of appeal raised by the assessee are as under: “1.1 The order passed U/s. 250 passed on 31-8-2022 by NFAC Delhi upholding the addition of Rs.15,50,000/- towards cash deposits in SB A/c. with Mehsana Urban Co.op. Bank as unexplained money u/s 69A is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. NFAC has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned addition. The ld. NFAC ought to have asked for details/explanation in so far as the same were required for the purpose of appeal by it. 2.1 The Ld. NFAC has grievously erred in law and on facts in confirming addition of Rs.15,50,000/- towards cash deposits in SB A/c. with Mehsana Urban Co.op. Bank, as unexplained money u/s 69A. ITA No. 400/Ahd/2022 Smitaben Anantkumar Patel vs. ITO Asst.Year–2017-18 - 2 - 2.2 That in the facts and circumstances of the case as well as in law, the Ld. NFAC ought not to have upheld the addition of Rs.15,50,000/- towards cash deposits in SBA/c. with Mehsana Urban Co.op. Bank, as unexplained money u/s 69A. 2.3 The observations made by NFAC in upholding the impugned addition are not admitted and contrary to the fats of the case as well as law. 2.4 Without prejudice to above and in the alternative, the ld.NFAC has failed to appreciate that the appellant had produced evidence to prove that the impugned cash included Rs.5,50,000/- which were not SBN but new currency of Rs.1000/- so that no addition was warranted to that extent. It is, therefore, prayed that the addition of Rs.15,50,000/- upheld by the NFAC may kindly be deleted.” 3. The assessee is a proprietor of M/s. Fulchand Khodidas. The assessee filed return of income on 01.11.2017 declaring total income of Rs. 1,53,777/-. The notice was issued under Section 143(2) of the Income Tax Act on 27.09.2018. The Assessing Officer observed that as per the Individual Transaction Statement / Statement of Financial Transactions, during the demonetization period in F.Y. 2016-17 the assessee deposited cash of Rs. 15,50,000/- in saving bank account of Mehsana Urban Cooperative Bank. Despite issuing notice the assessee did not file any reply, therefore, the Assessing Officer passed assessment order under Section 144 of the Act thereby making addition of Rs. 15,50,000/- as unexplained money under Section 69A of the Act. 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. A.R. submitted that the assessee deposited Rs. 4,00,000/- on 09.12.2016 and has given the denomination of notes of 2000, Rs. 100. The explanation given by the assessee was this deposit was from the sale ITA No. 400/Ahd/2022 Smitaben Anantkumar Patel vs. ITO Asst.Year–2017-18 - 3 - proceeds of agricultural equipments duly recorded in the books of account of the assessee. On 16.12.2016 the assessee deposited Rs. 1,50,000/- in denomination of Rs. 2,000/- notes and the same is also sale proceeds which were duly recorded in the books of accounts. Thus, the Ld. A.R. submitted that the cash on hand / cash deposited in the bank was in respect of agricultural products, proceeds which was sold by the assessee and therefore, cash deposits are justified. The Ld. A.R. submitted that the assessee in F.Y. 2014-15, 2015-16, 2016-17 as well as 2018-19 has also deposited cash in respect of cash sale. Therefore, the CIT(A) as well as the Assessing Officer was not right in making the additions under Section 69A of the Act. 6. The Ld. D.R. submitted that the assessee has not filed any details before the Assessing Officer as well as before the CIT(A). The Ld. D.R. 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 cash sales and cash balance were properly recorded in the books of accounts of each and every year and the assessee’s cash balance was duly deposited from F.Y. 2014-15 to F.Y. 2018-19 continuously. During the demonetization period as well the assessee has deposited the amount in that sequence itself and therefore, the observation made by the CIT(A) is contrary and the books of accounts and bank statement appears to be not taken into consideration as the evidences filed by the assessee during the appellate proceedings before the CIT(A). From the perusal of the books of ITA No. 400/Ahd/2022 Smitaben Anantkumar Patel vs. ITO Asst.Year–2017-18 - 4 - accounts as well as bank statements the assessee has given the details about the cash deposits of Rs. 15,50,000/- in detail wise related to the cash sales of agricultural produce and relevant business. Therefore, the addition made by the Assessing Officer as well as the CIT(A) does not sustain. 8. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 03/05/2023 Sd/- /- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 03/05/2023 TANMAY, Sr. PS TRUE COPY आदेश आदेशआदेश आदेश क क क क ितिलिप ितिलिप ितिलिप ितिलिप अ ेिषत अ ेिषतअ ेिषत अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबंिधत आयकर आयु / Concerned CIT 4. आयकर आयु (अपील) / The CIT(A)- 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, उप उपउप उप/सहायक सहायकसहायक सहायक पंजीकार पंजीकारपंजीकार पंजीकार (Dy./Asstt.Registrar) आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद / ITAT, Ahmedabad