Sonalben Dineshbhai Thakkar, Ahmedabad V. The ITO, Ward-5(2)(4), Ahmedabad

ITA 587/AHD/2022

AI Insights

The case revolves around an appeal by Sonalben Dineshbhai Thakkar against the order of the CIT(Appeals), National Faceless Appeal Centre, which upheld the addition of Rs. 15,00,000 as unexplained income for the Assessment Year 2017-18. The Assessing Officer had initially made this addition under Section 69A of the Income Tax Act, 1961, following the observation of large cash deposits during the demonetization period. The Tribunal examined the evidence presented, including the assessee's cash books and bank statements, and concluded that the cash deposits were from the assessee's own funds, thus reversing the earlier decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299990 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 3 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: 29-12-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice
• Section: 142(1); 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 .5 87 /A h d / 20 22 ( A s se ss m e nt Y e a r : 20 17- 18 ) So n al be n D i ne sh bh a i Th a k ka r 10, E llip ha nta S oc i e t y, N r . D . K. Pat e l H al l, N a r a np u ra , A h m ed a b a d V s . I T O War d - 5 ( 2) ( 4 ) , A h me da ba d [ P AN N o. A B I P T3 7 4 3 N ] (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 02.12.2022 for A.Y. 2017-18. 2. The grounds of appeal raised by the assessee are as under: “1.1 The order passed by U/s.250 passed 02.12.2022 by NFAC, Delhi for A.Y. 2017-18 upholding the addition of Rs.15,00,000/- made by A.O. is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. NFAC has grievously erred in law and or on facts in observing and thereby rejecting the explanation & evidence on presumption & surmise. 3.1 The ld. NFAC has grievously erred in law and or on facts in upholding the cash deposits to the extent of Rs. 15,00,000/- was unexplained income u/s.69A and thereby making addition of Rs.15 lacs. 3.2 That the in the facts and circumstances of the ld. NFAC ought not to have upheld the addition of Rs.15,00,000/-. It is, therefore, prayed that the addition of Rs. 15,00,000/- upheld by the NFAC CIT(A) may kindly be deleted.” 3. The Assessing Officer observed that name of the assessee was populated under cash transaction 2016 and the assessee submitted remarks as out of cash available on 08.11.2016. Notice under Section 142(1) of the ITA No. 587/Ahd/2022 Sonalben Dineshbhai Thakkar vs. ITO Asst.Year–2017-18 - 2 - Act was issued on 26.12.2017. The assessee filed return of income for A.Y. 2017-18 on 31.03.2018 declaring total income at Rs. 5,78,400/-. The case was selected for limited scrutiny under CASS with the reason large value cash deposits during demonetization period, as compared to returned income. Accordingly, notice under Section 143(2) of the Income Tax Act, 1961 was issued on 11.08.2018 which was duly served upon the assessee. The Assessing Officer observed that the assessee made cash deposit of Rs. 15,00,000/- on 16.11.2016 and 15,00,000/- on 13.12.2016 in bank account and on verification the Assessing Officer held that the return of income for A.Y. 2017-18 was filed in ITR-2 wherein declaration of cash on hand was not required and therefore, the opening balance of Rs. 30,85,448/- as on 01.04.2016 was not considered and therefore, treated the amount of Rs. 15,00,000/- as unexplained investment under Section 69A of the Income Act and made addition thereto. 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 was having opening balance as on 01.04.2016 to the extent of Rs. 30,85,448/- and this cash was generated out of business income, withdrawal from the bank etc. When the cash available is deposited in the bank it does not bear the character of income. The Ld. A.R. submitted that the Assessing Officer failed to prove that the cash was spent for any other purpose by the assessee with any cogent evidence. The Ld. A.R. further submitted that the cash was required to be deposited on account of cancellation of currency notes and therefore, the assessee was forced to deposit the cancelled notes. The Ld. A.R. ITA No. 587/Ahd/2022 Sonalben Dineshbhai Thakkar vs. ITO Asst.Year–2017-18 - 3 - submitted that the assessee was regularly filing her return but due to her husband demise in the year 2014 return for A.Y. 2015-16, 2016-17 and 2017-18 was filed belatedly. The Ld. A.R. further submitted that the amount deposited by cheque was also withdrawn from the bank and which was converted into cash. The Ld. A.R. submitted that all the details about the cash books as well as bank statements were before the authorities but the Assessing Officer as well as CIT(A) has overlooked the same. 6. The Ld. D.R. submitted that the cash balance for A.Y. 2015-16 and 2016-17 was lesser than in the A.Y. 2017-18. The Ld. D.R. further submitted that the details were not given as relates to cash deposits during the demonetization period. Therefore, the Ld. CIT(A) as well as the AO was right in confirming the addition. 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the CIT(A) has clearly made observation that the assessee deposited cash in the form of SBNs of Rs. 30,00,000/- during the demonetization period. Neither the AO nor the CIT(A) at any point of time disputed that the amount deposited by the assessee was not derived from the assessee’s withdrawal and from the bank as the amount deposited by cheque was also withdrawn from the bank and converted into cash. The observations of the AO that the return was not filed in time appears to be not justifiable as the assessee has presented the cash book and the bank statement before the AO as well before the CIT(A). In fact, the AO in para 6(vi) has mentioned that return of income for A.Y. 2017-18 was filed in ITR-2 wherein declaration of cash on hand is not required. The assessee was always having cash on hand since A.Y. 2015- ITA No. 587/Ahd/2022 Sonalben Dineshbhai Thakkar vs. ITO Asst.Year–2017-18 - 4 - 16, 2016-17 and the present assessment year and the cash on hand whereas from time to time. But the opening balance of the cash book was not disputed by any of the Revenue authorities. Thus, the addition made by the AO in respect of unexplained investment under Section 69A does not sustain as the assessee has explained the cash deposit through cash books as well as through bank statements. The assessee has also explained the source of the cash on hand and therefore, the AO was not right in making addition under Section 69A of the Act. 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