KISHANLAL HARIRAM MAHETA,KHEDA V. THE ITO, KHEDA CIRCLE, NADIAD

ITA 106/AHD/2025

AI Insights

The case revolves around an appeal by Kishanlal Hariram Maheta against the order of the Commissioner of Income-tax (Appeals), which confirmed the addition of Rs.4,91,000 to the assessee's income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer under Section 69A of the Income Tax Act, 1961, on the grounds that the source of cash deposits in the assessee's bank account was not substantiated. The assessee, engaged in the business of cotton seeds cake and flour, argued that these deposits were from cash sales and were recorded in the books. The Tribunal, after considering the submissions and evidence provided, concluded that the additions made were unjustified as the assessee had sufficient cash in hand from business operations to account for the deposits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31091 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N. J. VYAS
• Assessee Lawyers: DHINAL SHAH
• Section: 143(2); 250; 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA R. KAMBLE, JUDICIAL MEMBER ITA No. 106/Ahd/2025 Assessment Year: 2017-18 Kishanlal Hariram Maheta, 14, Nirman Society, Nadiad Road, Kapadwanj-387620 Dist: Kheda, Gujarat [PAN – ACOPM 5400 A] Vs. The Income Tax Officer, Kheda Circle, Nadiad, Dist: Kheda (Appellant) … (Respondent) Assessee by Shri Dhinal Shah, AR Revenue by Shri N.J. Vyas, Sr DR Date of Hearing 19.03.2025 Date of Pronouncement 02.04.2025 O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)/ ADDL / JCIT(A), Mysore [hereinafter referred to as \"CIT(A)\" for short] dated 16.12.2024 passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as \"the Act\" for short] for the Assessment Year (AY) 2017-18. 2. The solitary issue raised by the assessee is as under: - “The learned CIT(A) has erred in confirming the addition of Rs.4,91,000/- being the deposits made in the bank account under Section 69A in as much as the bank deposits in the bank accounts are duly recorded in the books of accounts and therefore Section 69A is not applicable on the facts of the case and therefore Section 115BBE is not applicable on the facts of the case. Further in as much as deposits in bank account represents the cash sales of M/s. Maruti enterprise which is recorded in the books of accounts.” 3. The assessee is into the business of cotton seeds cake and flour as retailer. The assessee filed return of income on 19.01.2018 declaring total ITA No. 106/Ahd/2025 Kishanlal Hariram Maheta Vs. ITO Assessment Year: 2017-18 Page 2 of 5 income at Rs.3,69,640/-. Notice u/s 143(2) of the Act was issued to the assessee on 24.09.2018. The Assessing Officer observed that the assessee has not filed reply and, therefore, once again the statutory notices were issued to the assessee. In response to the subsequent notices, the assessee filed details. The Assessing Officer observed that the cash deposits of Rs.7,41,000/- in the Bank of Baroda’s account pertained to assessee’s individual proprietary concern viz. Maruti Enterprise. The source of cash deposited was asked to be substantiated, for which the assessee furnished the reply and stated that out of total cash deposits of Rs.7,41,000/-, Rs.4,91,000/- had deposited in the form of old currency and balance amount of Rs.2,50,000/- had made in the form of new currency. The cash deposited amounting to Rs.4,91,000/- in the form of old currency was sourced from cash on hand and balance amount of Rs.2,50,000/- was sourced from cash sales received during that period. On verification of bank statements, the Assessing Officer observed that the assessee had deposited cash of Rs.8,000/- only on 04.11.2016. After taking cognisance of the assessee’s reply and the details, the Assessing Officer made addition of Rs.4,91,000/- as unexplained money u/s 69A of the Act. 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. AR submitted that the assessee is a retailer of cotton seeds cake and flour, and the major sales of the assessee are on cash basis to various agriculturists, consumers and small businessmen working in the rural areas. The day-to-day cash generation was being used for purchases of various goods and the balance amount was kept in the hands of the assessee, including the cash on hand with employees. The average sales of ITA No. 106/Ahd/2025 Kishanlal Hariram Maheta Vs. ITO Assessment Year: 2017-18 Page 3 of 5 the assessee is of more than Rs.5,40,000/- per month as against the monthly purchase of Rs.4,80,000/-. Sales up to 18.11.2016 was Rs.44,27,960/- and the purchase was of Rs.39,54,803/-. Cash sales was of Rs.41,61,460/- and purchase by cash was Rs.31,27,439/- and the transaction by bank was Rs.8,27,364/-. Thus, the Ld. AR submitted that the assessee has sufficient cash in hand and, as per the requirement of assessee’s business exigencies, the assessee is required to have cash in hand for the purchase and sales. Therefore, the Ld. AR submitted that the Assessing Officer as well as the CIT(A) has totally ignored the details filed by the assessee. 6. The Ld. DR submitted that the assessee is not maintaining any books of accounts and the details of cash sales and purchase was not filed during the assessment as well as before the CIT(A). The Ld. DR relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Assessing Officer is not questioning the assessee’s business exigencies which was categorically mentioned in paragraph No. 5.1 of the assessment order that the cash was deposited of Rs.7,41,000/- in Bank of Baroda account pertaining to assessee’s proprietary concern viz. Maruti Enterprise. Thus, the assessee is having cash in hand as per the requirement of his business and, in fact, the assessee is in the business of trading in edible oil and various food grains on retail and wholesale basis in his proprietary concern. The set up of the business has already been explained by the assessee before the Assessing Officer as well as before the CIT(A) through various details. ITA No. 106/Ahd/2025 Kishanlal Hariram Maheta Vs. ITO Assessment Year: 2017-18 Page 4 of 5 Merely not maintaining the books of accounts cannot deny the fact that the assessee is conducting the business which required a lot of cash in hand for selling and purchasing of the cotton seeds cake and flour. The assessee has also produced before me the return of income of the previous assessment year, i.e. AY 2016-17 and the subsequent assessment year i.e. AY 2018-19 which also set out that the assessee is continuously having the cash in hand. Therefore, the CIT(A) as well as the Assessing Officer has totally ignored the evidences filed by the assessee during the assessment proceedings. Therefore, the addition made u/s 69A of the Act will not sustain. Thus, the appeal of the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 2nd April, 2025 Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 2nd day of April, 2025 Btk* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY True Copy Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "