Ace Construction, Pune V. Income-Tax Officer, Ward 2(4), Pune

ITA 916/PUN/2022

AI Insights

The case involves Ace Constructions, a partnership firm engaged in property development, which appealed against the order of the CIT(A) confirming an addition of Rs.9,81,000 to its income for the assessment year 2017-18. This addition was initially made by the Assessing Officer (AO) due to unexplained cash deposits totaling Rs.16.81 lakh in two bank accounts during the demonetization period. The assessee argued that these deposits were from normal business operations. The Tribunal examined the financial records, including the cash book and balance sheet, and concluded that the deposits were indeed from the assessee's business activities, leading to the deletion of the addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124180 (ITAT-PUNE)
• Duration Of Justice: 3 month(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: 2017-2018
• Appeal Filed On: 15-12-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVIV THAKKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. /ITA No.916/PUN/2022 नधा रण वष / Assessment Year : 2017-18 Ace Constructions, 201, Sai Siddhi, Behind Congress Bhawan, Shivaji Nagar, Pune 411005 Maharashtra PAN : AALFA1454D Vs. ITO, Ward-2(4), Pune Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee is directed against the order dated 19-10-2022 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 herein is against the confirmation of addition of Rs.9,81,000/- towards the cash deposited during demonetization period. 3. Briefly stated, the facts of the case are that the assessee is a partnership firm engaged in the business of development of properties. Return was filed declaring total income at Rs.71,690/-. During the Assessee by Shri Raviv Thakkar Revenue by Shri Mahesh Jasnani Date of hearing 16-03-2023 Date of pronouncement 16-03-2023 ITA No. 916/PUN/2022 Ace Constructions 2 course of assessment proceedings, the Assessing Officer (AO) observed that the assessee deposited a sum of Rs.5,25,000/- in HDFC bank and Rs.11,56,000/- in Corporation bank during demonetisation period. On being called upon to explain the source of the cash deposits, the assessee submitted that such deposits were made out of cash available from business operations. Considering the totality of the facts, the AO accepted the availability of cash to the tune of Rs.2.00 lakh and made addition of Rs.14,81,000/-. The ld. CIT(A) allowed further relief of Rs.3.00 lakh, which led to sustaining the addition at Rs.9,81,000/-. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 4. I have heard the rival submissions and gone through the relevant material on record. The assessee admittedly deposited Rs.16.81 lakh in two bank accounts during the demonetization period. Source of such cash was explained to be from normal business operations. It is seen that opening cash in hand as on 01-04-2016 stood at Rs.13,64,991/-. The assessee furnished its return for the immediately preceding assessment year 2016-17 on 16-10-2016, i.e. much prior to the demonetization scheme effective from 09-11-2016. Such return was accompanied by audited financial accounts. A copy of balance sheet for such preceding year has been placed on record, which shows ITA No. 916/PUN/2022 Ace Constructions 3 the closing balance of cash in hand at Rs.13.64 lakh, which become opening balance for the current financial year. Date-wise cash book from 01-04-2016 has been placed on record, which was admittedly before the AO as well. From such cash book, it can be seen that the opening cash balance is Rs.13.62 lakh. Thereafter, a sum of Rs.5,50,000/- was received from a partner towards his capital account. Thereafter, certain payments were made and eventually there is proper reflection in the cash book of all the cash deposits during demonetization period. On none of the intervening days, the cash balance has turned into negative. It is further relevant to note that balance in the partners’ capital account at the end of the year stands at Rs.2,55,06,344/- as against the last year’s closing balance of capital at Rs.2,55,68,286/-. Detailed copies of partner’s current and fixed capital accounts have been annexed to the balance sheet in Note No.4, which shows that the partners had made substantial capital contributions to the firm. Closing cash in hand stands at Rs.3,74,580/- The above narration of the factual panorama reveals that the assessee was having sufficient capital balance of partners and opening cash in hand. After meeting certain expenses incurred in cash, the assessee deposited Rs.16.81 lakh in its bank account, still leaving balance of cash in hand on 30-12-2016, being, the last day of demonetization ITA No. 916/PUN/2022 Ace Constructions 4 scheme at Rs.3,86,991/- and such balance at the end of the year came to Rs.3.74 lakh. This depicts the amount of cash deposited in the bank account during demonetization period was from the assessee’s business operations only, which was properly accounted for in the books of account. I, therefore, order to delete the addition sustained in the first appeal. 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 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 ITA No. 916/PUN/2022 Ace Constructions 5 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. *