Raju Mohanlal Mehta (HUF), Pune V. ITO, Ward6(1), Pune, Pune

ITA 813/PUN/2022

AI Insights

The case involves an appeal by Raju Mohanlal Mehta (HUF) against the order of the CIT(A) which confirmed the addition of Rs.29,10,000 to the assessee's income for the assessment year 2017-18. This amount represented cash deposits made in HDFC bank during the demonetization period. The Assessing Officer (AO) had initially added this amount to the assessee's income, suspecting it was unexplained. However, the Tribunal, after reviewing the detailed particulars of the assessee's financial activities, including cash sales and realization from debtors, concluded that the source of the deposits was legitimate and related to the assessee's business operations before it was closed on 31-10-2016.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124169 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-03-2023
• Assessment Year: misc
• Appeal Filed On: 09-11-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. /ITA No.813/PUN/2022 नधा रण वष / Assessment Year : 2017-18 Raju Mohanlal Mehta (HUF), M/s. Mehta Sales Corporation, 67, Somwar Peth, Pune – 411 011 Maharashtra PAN : AALHR2350H Vs. ITO, Ward-6(1), Pune Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 19-09-2022 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2017-18. 2. The only issue raised in this appeal is against the confirmation of addition of Rs.29,10,000/- towards cash deposited in the bank account during demonetization period. 3. Briefly stated, the facts of the case are that the assessee filed its return declaring total income at Rs.5,62,410/-. During the course of assessment proceedings, the Assessing Officer (AO) observed that Assessee by Shri Pramod Shingte Revenue by Shri Mahesh Jasnani Date of hearing 16-03-2023 Date of pronouncement 16-03-2023 ITA No. 813/PUN/2022 Raju Mohanlal Mehta (HUF) 2 the assessee deposited cash of Rs.29,10,000/- in HDFC bank on 13-11-2016 and 19-11-2016, being, part of the demonetisation period. On being called upon to explain the source of the such cash deposits, the assessee submitted that it was out of cash sales made and debtors realized during the year. The assessee furnished the requisite details. The AO was not convinced. He, therefore, made an addition of Rs.29,10,000/-. During the course of the first appellate proceedings, the assessee furnished detailed particulars of its last three financial years, which have been summarised at pages 4 and 5 of the impugned order. The assessee submitted that the cash deposited in the bank was out of cash sales made during the year, which was to the tune of Rs.31,15,114/- out of total sales of Rs.43,06,145/-. Not convinced, the ld. CIT(A) sustained the addition, against which the assessee has come up in appeal before the Tribunal. 4. Having heard the rival submissions and gone through the relevant material on record, it is seen that the assessee closed down its business operations on 31-10-2016. From the tabulation made at pages 4 and 5 of the impugned order, it can be seen that the assessee’s profit on total sales of Rs.43.06 lakh for the year comes to Rs.5,62,405/-. As the assessee closed down its business on 31-10-2016, all the outstanding debtors were realised, creditors were ITA No. 813/PUN/2022 Raju Mohanlal Mehta (HUF) 3 paid off and the stock in hand was liquidated. That is the reason that the figure of sundry debtors, sundry creditors and stock in trade as at the end of the year have been reflected at Nil. Opening cash balance has been shown in such tabulation at Rs.5,29,870/-. Figures of cash sales and opening debtors realised along with payment to all the creditors and other expenses are also depicted on page 5 of the impugned order. Since the business was closed down on 31-10-2016, the assessee, after realising all the debtors, had cash of Rs.30,60,000/- that was deposited in the bank account, against which the AO made the addition of Rs.29,10,000/-. In my considered opinion, source of cash deposits in the bank is fully substantiated by the cash sales and realization from debtors. In such circumstances, there can be no warrant for making or sustaining any addition. I, therefore, order to delete the addition. 5. In the result, the appeal is allowed. Order pronounced in the Open Court on 16 th March, 2023. Sd/- ( R.S.SYAL) VICE PRESIDENT पुणे Pune; िदनांक Dated : 16 th March, 2023 सतीश ITA No. 813/PUN/2022 Raju Mohanlal Mehta (HUF) 4 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The Respondent 3. 4. 5. The Pr.CIT concerned DR, ITAT, ‘SMC’ Bench, Pune गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 16-03-2023 Sr.PS 2. Draft placed before author 16-03-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *