Nileshkumar Maganlal Shah, Vapi V. Income Tax Officer, Ward - 6, Vapi

ITA 563/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8733 (ITAT-SURAT)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-01-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 13-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 69; 142(1); 234B; 133(6); 143(1); 274; 143(2); 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT (SMC) BENCH BEFORE SHRI DR. A. L. SAINI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.563/SRT/2023 Assessment Year: (2017-18) (Physical Hearing) Nileshkumar Maganlal Shah, 101-B, Surya Kiran Apartment, Chharwada Road, GIDC, Vapi, Gujarat – 396195 Vs. Income Tax Officer, Ward No. 6, Vapi, Room No.808, 8 th Floor, Fortune Square-II, Above TBZ, Chala, Vapi-396191 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ADIPS 59550 N (Assessee) (Respondent) Assessee by Shri P. M. Jagasheth, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 11/01/2024 Date of Pronouncement 14/02/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2017-18, is directed against the order passed by the National Faceless Appeal Centre (in short ‘the NFAC’), Delhi, [in short “NFAC/ld. CIT(A)”], dated 15.06.2023, which in turn arises out of an assessment order passed by Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 27.12.2019. 2. The grounds of appeal raised by the assessee are as follows: “1. On the facts and in the circumstances of the case, the Ld. AO has grossly erred in making addition of Rs.7,00,000/- by invoking the provisions laid under section 69 of the Income Tax Act and considering the explanation given with respect to cash deposition in Page | 2 ITA No.563/SRT/2023/AY.2017-18 Nileshkumar Maganlal Shah bank account during demonetization period, arbitrarily as bogus and held as accommodation entry without appreciating the submissions made during the course of assessment proceedings. Thus, the addition of Rs.7,00,000/- deserves to be deleted ; 1.1 That, the Ld. AO has further erred in holding that the submission of cash book of previous 3 years from the year under consideration by the assessee is fake and bogus without any basis and solely on the basis that there were only cash deposit entries and no cash withdrawals entries in the cash book submitted. Thus, the impugned Assessment Order passed in the backdrop of such illegality deserves to be quashed and the consequent addition be deleted. 1.2 That, the Ld. AO has further erred in ignoring the fact that during the year under consideration the assessee was also engaged in carrying business of manufacturing of corrugated Boxes & Printing with the partnership firm in; the name and Style of M/s. Akash Offset Print. The details submitted in relation to the same were turned down arbitrarily, without assigning any reason, thus the addition made deserves to be deleted. 1.3 That, the Ld. AO has further erred in applying the provisions laid under section 234A, 234B & 234C of the Income Tax Act, 1961 arbitrarily, and solely on the basis of assumptions and presumptions. Thus, the action of Ld. AO deserves to be held bad in law. 2. On the facts and in the circumstances of the case, the Ld. AO has grossly erred in initiating penalty proceedings u/s 274 r.w.s.271AAC of the Income Tax Act, 1961. 3. The appellant craves the right to add, delete or amend any of the grounds of appeal either before or at th9etime of hearing of appeal.” 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual. The assessee has filed his return of income on 06.10.2017 declaring total income of Rs.4,15,420/- after claiming deduction under Chapter-VI of Rs. 15,54,389/-. The return of income was processed u/s 143(1) of the Income-Tax Act, 1961 on 08.09.2017. Later on, the assessee`s case was selected for Limited Scrutiny through CASS. Accordingly, a notice u/s 143(2) of the Income-Tax Act, 1961 Page | 3 ITA No.563/SRT/2023/AY.2017-18 Nileshkumar Maganlal Shah was issued on 21.09.2018 by ITBA system and duly served upon the assessee. Thereafter, notice u/s 142(1) of the Income-Tax Act, 1961 dated 8.02.2019, along with detailed questionnaire calling for various details was issued in electronic mode and served upon the assessee. In response to the aforesaid statutory notices, Authorized Representative (AR) of the assessee submitted the required details by E-Mode from time to time during the course of assessment proceedings. The details received from the assessee were verified by the Assessing Officer. 4. During the year under consideration, the assessee was in employment with M/s Mahavir Trading Co. In addition to that he was engaged in carrying business of manufacturing of corrugated Boxes & Printing with the partnership firm in the name and Style of M/s. Akash Offset Print. During the year under consideration, assessee has deposited cash during the demonetization period. On perusal of information available, it was noted by the Assessing Officer that assessee has deposited Rs.7,00,000/- in bank account during demonetization period. During the course of assessment proceedings, vide notice u/s 142(1) of the Act the information of cash deposited in bank account during the demonetization was called for. In the meantime; information was also; obtained by the Assessing Officer from the Central Bank of India u/s 133(6) of the Act. On perusal of bank details, it was observed by the Assessing Officer that assessee has deposited 700 DBN notes of Rs.1000/- amounting to Rs.7,00,000/- on 16.11.2016. Therefore, Assessing Officer issued a show cause- notice to the assessee to explain the deposits made in the bank account. 5. In response, the assessee submitted written submission and assessee has explained the source of cash deposit as follows: Page | 4 ITA No.563/SRT/2023/AY.2017-18 Nileshkumar Maganlal Shah “The assessee is an individual and during the year under consideration he was in employment with M/s.Mahavir Trading Co. In addition to that he was engaged in carrying business of manufacturing of corrugated Boxes & Printing with the partnership firm in the name and Style of M/s.Akash Offset Print. During the year under consideration, the assessee filed his return of income on 06.10.2017 declaring total income of Rs.4,15,420/- after claiming deduction under chapter- VIA of the Act. During the year under consideration the assessee has deposited Rs.1,10,000/- in saving bank account which consists of Rs.7,00,000/- in Central bank of India and Rs.10,000/- was deposited in HDFC Bank. The brief summary of cash deposited along-with bank details is attached herewith. In respect of cash deposit made during the demonetization period, it is submitted that the assessee has made deposit of Rs.7,00,000/- on 16.11.2016 in Central Bank of India. The said cash deposit was made out of cash balance available on hand. The assessee was engaged in providing technical services to paper industries and derives professional income, which he shown in his past RETURN OF INCOME To prove our contention, we submit herewith the copy of cash book for last three years. During the A.Y.2015-16 the assessee has earned professional income of 6,97,203/- which was duly booked and offer for taxation in return of income filed. The copy of ITR and computation for the A.Y.15-16 is attached herewith for your ready reference. Part of this professional income was received in cash, which was shown as cash in hand in books of account of the assessee. Secondly, the assessee is a partner in partnership firm. The assessee put cash on hand for any urgency required in business. The nature of business is such kind that for labour or day to day requirement, he not deposit cash into the bank. On verification of cash book for three years it is clear that the assessee hold cash in hand of Rs.9 lacs approx. till the demonetization period. As the announcement was made on 08.11.2011 that the currency note of Rs.1000/- and Rs.500/- will discontinued, the assessee deposited Rs.7,00,000/- on 16.11.2016 consist of 700 notes of Rs.1000/- in the bank account maintained with Central Bank of India The confirmation of same from the bank has been attached herewith. The balance cash in hand amount consist of notes which were still valid and acceptable in old note currency. Therefore, it is clear that the Page | 5 ITA No.563/SRT/2023/AY.2017-18 Nileshkumar Maganlal Shah cash deposit made during demonetization period is but of balance available on hand.” 6. However, the Assessing Officer rejected the contention of the assessee and observed that in absence of any satisfactory explanation with respect to nature and source of cash deposit made during the demonetization period to the extent of Rs.7,00,000/- remains unexplained and constitutes income of the assessee for the year under consideration, the same was treated/assessed as unexplained money u/s.69A of the Act. 7. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the action of the Assessing Officer. The ld CIT(A) held that assessee has failed to substantiate that the cash aggregating to Rs.7,00,000/-, was cash in hands, from withdrawals made in earlier years, which was subsequently used to deposit cash, in his bank accounts during the period of demonetization, therefore, ld CIT(A) dismissed the appeal of the assessee. Aggrieved by the order of ld. CIT(A), the assessee is in further appeal before this Tribunal. 8. Shri P. M. Jagasheth, Learned Counsel for the assessee, pleaded that assessee was having opening cash balance in the cash book at Rs.9,00,000/- and out of that cash balance, the assessee has deposited the amount in the bank account, therefore the assessee has explained the source of source by submitting the cash book, bank book, bank statement. The opening balance in the cash book was coming from last three years hence genuineness of the cash book should not be doubted. Therefore, ld Counsel contended that addition made by the Assessing Officer may be deleted. Page | 6 ITA No.563/SRT/2023/AY.2017-18 Nileshkumar Maganlal Shah 9. On the other hand, Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 10. I have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. I note that during the assessment state, the assessee submitted the following documents and evidences, viz: (1) Response to notice u/s 143(2) of the I.T. Act, 1961 along with submission and attachment dated 27.09.2019 (vide Pb.3-12), (2) Response to notice u/s 142(1) of the I.T. Act, 1961 along with submissions and attachments dated 27.09.2019 and explained the source of cash deposit (vide Pb.13 – 38), (3) Response to notice u/s 142(1) of the I.T. Act, 1961 along with submissions and attachments dated 05.12.2019 and explained the source of cash deposit (vide Pb.39 – 45). (4) Cash Book, Bank book and Bank statement and balance in the cash book was coming since last three years. I find that Assessing Officer has not refuted or discredited these evidences and documents. The Assessing Officer does not mention why he is not accepting these evidences. On the contrary, the Assessing Officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. It is true that the Assessing Officer is not bound to accept as true any possible explanation which the assessee may put Page | 7 ITA No.563/SRT/2023/AY.2017-18 Nileshkumar Maganlal Shah forth, the Assessing Officer cannot also arbitrarily rejects the assessee's explanation. (Shree Ram Jhawarmal (kalimpong) Ltd us. CIT 64 ITR 314 (Cal.), Homi Jahangir Gheesta us. CIT 41 ITR 135 (SC). Lal Mohan Krishna Lal Paul Vs. CIT 12 ITR 441 (Cal.). Anil Kumar Singh Vs. CIT 84 ITR 307 (Cal.). Based on these facts addition made by the Assessing Officer needs to be deleted. 11. Moreover, the issue under consideration is squarely covered by the order of ‘SMC’ Bench, ITAT, Surat in the case of Hashmukh Kanjibhai Tadhani vs ITO, in ITA No.19/SRT/2023, order dated 04.09.2023, wherein it was held as follows: “14. I note that assessee has submitted cash book, cash flow statement and cash book, which shows that assessee has sufficient opening cash balance at the beginning of 01.04.2016. Apart from this, the assessee is a partner in M/s Shivam Polishing LLP and from the partnership firm, the assessee has received remuneration to the tune of Rs.10,70,000/- and profit to the tune of Rs.12,73,620/-. The assessee has submitted the cash deposited during the demonetization and the summary thereof which is placed at paper book page nos.18 to 19 and hence it is quite clear from the cash book, cash flow statement and cash withdrawal from the bank, that assessee has explained the source of cash deposit in bank account in a satisfactorily manner. Hence, I am not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed. 12. Thus, I find that ld Counsel for the assessee has practically submitted all possible evidences in support his claim. “When the evidence available with the assessee, which support the claim of the assessee, the AO was not right in suspecting the same on the basis of mere surmises and conjectures. (Om Prakash K Jain and Ors. (322 ITR 362). The Assessing Officer has not discussed any of the evidences submitted by the assessee. No word as to why these documentary evidences furnished by assessee are not acceptable to the Assessing Officer. The Assessing Officer has not found any defect / irregularities Page | 8 ITA No.563/SRT/2023/AY.2017-18 Nileshkumar Maganlal Shah in the documents and evidences submitted by the assessee. Therefore, based on the factual position narrated above, I delete the addition made by the Assessing Officer. 13. In the result, the appeal filed by the assessee is allowed. Order is pronounced on 14/02/2024 in the open court. Sd/- (Dr. A.L. SAINI) ACCOUNTANT MEMBER स ू रत /Surat Ǒदनांक/ Date: 14/02/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat