KAMALESH KANTILAL PATEL,RATNAGIRI V. INCOME TAX OFFICER, RATNAGIRI

ITA 2267/PUN/2024

AI Insights

The case involves Kamalesh Kantilal Patel, who appealed against the order of the National Faceless Appeal Centre (NFAC) which confirmed the addition of Rs. 11,51,000 as unexplained cash credit during the demonetization period in India. The Assessing Officer (AO) had initially made this addition under section 69A of the Income-tax Act, 1961, based on the scrutiny of cash deposits in specified bank notes. The Tribunal examined the sources of the deposits, which included withdrawals from a partnership firm and refunds of advances, both of which were accepted as legitimate. However, the claim of Rs. 3,14,500 as recovery of receivables was not substantiated adequately, leading to the sustenance of that part of the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24783 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD PAWAR
• Assessee Lawyers: PRAMOD S SHINGTE
• Keywords: Unexplained cash credit; Presumptive income

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.2267/PUN/2024 Assessment Year : 2017-18 Kamalesh Kantilal Patel, 1 Vaibhav Vasahat, Korle Road, Lanja, Ratnagiri-416701 Maharashtra PAN : BODPP5141P V/s ITO, Ward-1, Ratnagiri Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal pertaining to Assessment Year 2017- 18 at the instance of assessee is directed against the order dated 20.09.2024 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) which in turn is arising out of Assessment Order dated 22.12.2019 passed u/s.143(3) of the Act. Assessee by : Shri Pramod S Shingte Revenue by : Shri Vinod Pawar Date of hearing : 26.12.2024 Date of pronouncement : 07.01.2025 ITA No.2267/PUN/2024 Kamalesh Kantilal Patel 2. Tersely, the facts of the case emanating from the record are that the assessee is an individual and declared income of Rs.5,55,110/- in the return of income for A.Y. 2017-18 furnished on 10.01.2018. The case selected for scrutiny through CASS for examining the cash deposit during demonetization period followed by validly serving of statutory notices u/s.143(2)/142(1) of the Act. The assessee apart from being engaged in Construction business is also a partner in M/s. Sai Samarth Plaza. Ld. Assessing Officer observed that the assessee has deposited Rs.1,01,000/- and Rs.10,50,000/- on 10.11.2016 and 15.11.2016 respectively with The Palus Sahakari Bank Ltd. in Specified Bank Notes (SBNs) during the demonetization period. The assessee stated that the source of the alleged deposit is cash received from outstanding loans and advances, sundry debtors and sundry receivables. Ld. AO however observed that the assessee has shown sundry debtors at Nil in the return filed for A.Y. 2016-17 and also no information was provided about the cash in hand. Accordingly, the contentions of the assessee were brushed aside and addition of Rs.11,51,000/- was made u/s.69A of the Act and provisions of section 115BBE of the Act was also invoked. 3. Aggrieved assessee preferred appeal before the ld.NFAC and during the course of assessment proceedings before the ld.NFAC it was contended that the source of Rs.11,51,000/- ITA No.2267/PUN/2024 Kamalesh Kantilal Patel comprises of Rs.1,36,500/- received on account of amounts withdrawn from partnership firm, Rs.7.00 lakh received from refund of advances and Rs.3,14,500/- from recovery of the advances and the list of the parties from whom the refunds are received was also filed. However, ld. NFAC was not satisfied because in the income-tax return for A.Y. 2016-17 the assessee has not reflected any cash in hand by holding as under : “5.3.2 I have perused the submissions made by the appellant and the facts brought out by the AO and find that details of debtors and cash deposited during demonetisation period do not conform with the information furnished in ITR as observed by the AO. And against this observation of the AO, the appellant says, \"none of the required figures were reflected in the return filed. This was due to inadvertent mistake. Not even cash in hand was reflected. It does not mean that there was no cash in hand at all as at 31.03.2016.\" Here we must understand that the information furnished in ITR has to be sacrosanct speaking true details of the business, in the instant case the appellant has stated to have admitted that none of the required figures were reflected in the return filed that puts the appellant in gray area. Under these circumstances, the AO is right in rejecting the cash book of the appellant. Further, the appellant has furnished the affidavits in respect of the refund of advances form 17 odd persons with their name and Adhaar details without the PAN and ITR which is not sufficient prove the veracity of transactions and creditworthiness of the payer. 5.3.3 In view of the above discussion, sole ground of the appeal of the appellant is dismissed.” 4. Now the assessee is in appeal before the Tribunal. 5. The ld. Counsel for the assessee apart from referring to the balance sheet as on 31.03.2016 and 31.03.2017 also referred to ITA No.2267/PUN/2024 Kamalesh Kantilal Patel the affidavit of various parties, copies of whom were placed in the paper book pages 11 to 78 stating that proof of recovery of advances from various sundry debtors/receivables have been furnished along with identity proof and notarized affidavits. It was also submitted that in the return of income for A.Y. 2016- 17 the assessee inadvertently did not fill any detail in the column provided for the Presumptive Taxation Scheme but it should not be taken against the assessee. 6. On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities. 7. I have heard the rival contentions and perused the material on record. The only issue that arises for my consideration is whether the ld.NFAC was justified in confirming the addition for unexplained cash credit of Rs.11,51,000/-. Before me, ld. Counsel for the assessee submitted that the details of Rs.11,51,000/- is on account of cash received from the following parties : Sr.No. Source Amount (Rs.) 1 Amount withdrawn from Partnership Firm –Sai Samarth Plaza 1,36,500/- 2 Refund of Advances 7,00,000/- 3 Recovery of Receivables 3,14,500/- Total 11,51,000/- ITA No.2267/PUN/2024 Kamalesh Kantilal Patel 8. So far as the amount withdrawn from the partnership is concerned, the same is not in dispute as the copy of capital account of Sai Samarth Plaza is placed on page 10 of the paper book which provides detail of the withdrawals. 9. So far as the remaining two items are concerned regarding refund of advances, the assessee has furnished list of 17 persons who have sworn on the affidavits stating that they have given the amount in cash to the assessee prior to the demonetization period scheme. Their proof of identity is also furnished. The Revenue authorities before declining the claim of the assessee ought to have carried out the verification by way of calling the persons to record the statements u/s.131 of the Act. No such exercise has been carried out. Therefore, even if the cash received from those debtors are below Rs.20,000/- on each day creates doubt but in absence of any cross verification, the claim of the assessee cannot be denied. Therefore, to the extent of Rs.7.00 lakh received as cash from refund of advances is hereby also accepted. 10. So far as the amount of Rs.3,14,500/- is concerned, the same is claimed to be recovery of receivables. It is an admitted fact that the assessee had not given any bifurcation of the said sum in the income-tax return for A.Y. 2016-17. Even if the assessee falls under the Presumptive Taxation Scheme, he has ITA No.2267/PUN/2024 Kamalesh Kantilal Patel to provide the detail of cash, bank, stock and receivables etc. In absence of any other concrete evidence and proof of genuineness of sundry debtors the claim of the assessee having received Rs.3,14,500/- as recovery of receivables did not have any merit and the said claim is not allowed. In other words, the addition of Rs.3,14,500/- is sustained as against the addition made by the AO at Rs.11,51,000/-. Thus, assessee gets part relief. 11. In the result, the appeal of the assessee is partly allowed. Order pronounced on this 07th day of January, 2025. - Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे/Pune; \u0001दनांक / Dated : 07th January, 2025 Satish ITA No.2267/PUN/2024 Kamalesh Kantilal Patel आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “(SMC)” ब\u0014च, पुणे/ DR, ITAT, “(SMC)” Bench, Pune. 5. गाड\u0018 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune "