Nishraj Holding Pvt. Ltd, Ahmedabad V. The ITO, Ward-3(1)(1), Ahmedabad

ITA 487/AHD/2020

AI Insights

Nishraj Holding Pvt. Ltd. appealed against the order of the CIT(A)-9, Ahmedabad, which upheld the addition of Rs.5,60,000 as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The assessee argued that the CIT(A) erred in law and fact by not considering the evidence and submissions made regarding the cash deposits. The Assessing Officer had initially made the addition due to the absence of specific show cause notice and rejection of the evidence provided. The Tribunal, after reviewing the submissions and evidence, including the confirmation from Vatsal Parikh regarding the cash deposits, ruled in favor of the assessee, stating that the onus of proof regarding the cash deposits was satisfactorily discharged by the assessee.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 129420 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-11-2022
• Assessment Year: misc
• Appeal Filed On: 04-06-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice; CHAPTER IV
• Section: 147; 68; 148; 133(6); 139(1); 139(4)

Judgement Text

ITA No.487/Ahd/2020 A.Y. 2011-12 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.487/Ahd/2020 Assessment Year: 2011-12 Nishraj Holding Pvt. Ltd., vs. Income Tax Officer, 501, 5 th Floora, Belvedere Flats, Ward – 3(1)(1), Ahmedabad. Opp. Stara Bazar, Stellite Road, Ahmedabad – 380 015. [PAN – AAACN 5268 N] (Appellant) (Respondent) Assessee by : Shri S.N. Divatia, Advocate Respondent by : Shri Vidhyut Trivedi, Sr. DR Date of hearing : 10.11.2022 Date of pronouncement : 23.11.2022 O R D E R This appeal is filed by the Assessee against the order dated 23.07.2020 passed by the CIT(A)-9 Ahmedabad for the Assessment Year 2011-12. 2. The assessee has raised the following grounds of appeal :- “1.1 The order passed u/s.250 on 23.07.2020 for A.Y. 2011-12 by CIT(A)-9, Abad upholding the addition of Rs.5,60,000/- towards cash deposits in Bank account as unexplained cash accredit u/s. 68 is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) 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 CIT(A) had failed to appreciate that the AO had not issued any specific show cause notice in this regard before rejecting the evidence produced/collected and thus there was gross violation of principles of natural justice. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming addition of Rs.5,60,000/- towards cash deposits in Bank account as unexplained cash credit u/s.68, though the appellant had fully ITA No.487/Ahd/2020 A.Y. 2011-12 Page 2 of 4 discharged the burden cast upon it to prove the cash deposits in Bank account. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the addition of Rs.5,60,000/- towards cash deposits in Bank account as unexplained cash credit u/s.68. 3.1 The Ld. CIT(A) has failed to appreciate that when the said creditor was assessed to tax and information were called from him wherein he had confirmed to have deposited cash the appellant is not supposed to explain the source of the source as per well settled position in law. It is, therefore, prayed that the addition of Rs.30,65,000/- upheld by the CIT(A) may kindly be deleted.” 3. The assessee did not file the original return of income under Section 139(1) of the Income Tax Act, 1961 on or before 30.09.2011 or even upto 31.03.2013 i.e. within the time allowed under Section 139(4) of the Act. The assessment was reopened under Section 147 of the Act after recording reasons. Thereafter, notice under Section 148 of the Act was issued and served to the assessee. In response to the notices, the assessee company filed return of income on 08.08.2018 declaring the returned income at Rs. Nil without claiming current year’s loss. The Assessing Officer after taking cognisance held that no confirmation of cash deposit from the cash provided by Vatsal Parikh has been furnished and hence made addition of Rs.5,60,000/- as cash deposit under Section 68 of the Act. Further, the Assessing Officer observed that the business loss available after inter-head adjustment against dividend income is also not set off against the income taxed under Section 68 of the Act as the same is not falling under any of the heads prescribed under Chapter IV of the Act but falling in Chapter VI of the Act. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted that the reasons for reopening the assessment were not supplied to the assessee. The Ld. AR further submitted that the Director has paid to the assessee certain amount of cash to overcome liquidity problem. As the matter being eight years old, the Director of the assessee company is unable to find the ITA No.487/Ahd/2020 A.Y. 2011-12 Page 3 of 4 details. The Ld. AR further submitted that Shri Vatsal N. Parikh has categorically confirmed that he has paid cash to the company and confirmed his accounts in the books of the company as correct. The assessee thus discharged his obligation by bringing the confirmation from Vatsal Parikh who was assessed to tax and he has declared income of Rs.3,30,39,680/- in the A.Y. 2015-16. Thus, the capacity of Vatsal Parikh cannot be doubted. The Ld. A.R. further submitted, the onus related to cash deposits were established by the assessee through the evidences and the source of the source should have not been called upon by the Assessing Officer which was also taken into account while making the addition by the Assessing Officer. 6. The Ld. DR submitted that the genuineness of the cash deposits were not established by the assessee as well as purpose of funds were also not explained by the assessee. Hence, the Assessing Officer as well as the CIT(A) has rightly confirmed the addition. 7. Heard both the parties and perused all the relevant material available on record. From the perusal of the response to notice under Section 133(6) of the Act, Vatsal Parikh has confirmed the amount of cash saying that the same was related to liquidity problem which was also appearing in the books of the company and therefore, the genuineness, identity and the credit worthiness was already established by the assessee before the Assessing Officer thereby filing the books of the company, confirmation as well the capacity of the person to pay the said amount. Thus, the assessee has established the onus and, therefore, the Assessing Officer has not rightly made the addition. Hence, appeal of the assessee is allowed. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 23 rd day of November, 2022. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 23 rd day of November, 2022 ITA No.487/Ahd/2020 A.Y. 2011-12 Page 4 of 4 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