MANOJ KUMAR AGARWAL,NEW DELHI V. ITO, WARD-45(2), DELHI

ITA 2485/DEL/2024

AI Insights

The case involves Manoj Kumar Agarwal, who appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed an addition of Rs.19,25,000 to his income for the Assessment Year 2017-18, deemed as unexplained money. The addition was initially made by the Income Tax Officer following scrutiny of the assessee's bank deposits during the demonetization period, which were suspected to be withdrawals and subsequent deposits of cash. The Tribunal examined the explanations and documents provided by the assessee, including details of his business activities and the nature of the deposits, and found them satisfactory, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471500 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: JATIN
• Keywords: Condonation of delay; Business income; Capital asset converted into stock in trade
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH‘SMC’: NEW DELHI BEFORE MS. MADHUMITA ROY,JUDICIAL MEMBER ITA No.2485/Del/2024 (ASSESSMENT YEAR 2017-18) Manoj Kumar Agarwal K-418, Raghuvir Nagar New Delhi-110027 PAN-ADAPA9875G Vs. Income Tax Officer, Ward-45(2), Delhi (Appellant) (Respondent) Assessee by Shri Jatin, CA Department by Shri Sanjay Kumar, Sr. DR Date of Hearing 25/02/2025 Date of Pronouncement 26/03/2025 ORDER PER MADHUMITA ROY, JM: The appeal preferred by the Assessee is directed against the order dated 07/03/2023 passed by the Ld. Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘Ld. CIT(A)’] arising out of the order passed by Income Tax Officer, Ward-45(2), New Delhi (hereinafter referred to as the ‘Ld. AO’) under section 143(3) of the Income Tax Act (hereinafter referred to as ‘the Act’), for the Assessment Year 2017-18. 2. The appeal is barred by limitation, in support of which an application for condonation of delay has also been filed, the 2 ITA No.2485/Del/2024 Manoj Kumar Agarwal vs. ITO explanation rendered by the assessee in support of the delay seems to be genuine. Hence, the delay is condoned. 3. The assessee has come up in appeal against addition of Rs.19,25,000/- on account of unexplained money. 4. The brief facts leading to this issue are that the assessee filed its return of income for the year under consideration on 30.10.2017 declaring total income at Rs.4,93,960/-. The case was selected for scrutiny on the basis of CASS particularly for cash deposit during demonetization and abnormal increase in sales with decrease in profitability compared to preceding previous year. 5. In fact, the assessee engaged in the business of trading in Atta and other Kiryana goods deposited a sum of Rs.28,45,000/- during demonetization period in his bank account maintained with Oriental Bank of Commerce, explanation whereof with the details was asked for by the Ld. AO. The assessee duly replied stating the fact that these deposits were made out of business receipts i.e., cash receipts against cash sales. The AO was of the opinion that compare to Financial Year 2015-16, there was ahigh rise in the sales made by the assessee which again declined in Financial Year 2017-18. The Assessing Officer made addition of Rs.19,25,000/- being deposite made by old currency note and addition of Rs.9,20,000/- being deposits made by new currency and/or smaller denomination notes. 3 ITA No.2485/Del/2024 Manoj Kumar Agarwal vs. ITO The Ld. CIT(A) deleted the addition of Rs.9,20,000/- and confirmed the addition of Rs.19,25,000/-. 6. The assessee submitted before authorities below and before us that he commenced a new business of distributor in the name and style M/s Ganga Roller Flour Mills Pvt. Ltd. from 3rd September, 2016, relevant documents whereof duly being submitted before us. Prior to 3rd September, 2016, the appellant was running small grocery shop. In the month of September, 2016 being the first month of business, the assessee made sales of Rs.18,65,493/- and in the month of October,2016 it increased to Rs.55,77,518/-. 6. The basis of such addition made by the Ld. AO was that this deposit was made during demonetization period in fractured sums; “cash was withdrawn and deposited back” in rebuttal, the assessee submitted that deposits were made early demonetization period mainly Rs.9,00,000/- on 10th November, 2016, Rs.6,25,000/- on 11th November, 2016 and Rs.4,00,000/- on 12th November, 2016. It was specifically pointed out by the assessee that no cash withdrawal ever been made from appellant’s savings or current accounts during demonetization period, proof of which duly placed before the authorities below and before this Bench too, perusal of which established the facts in favour of the assessee. 7. The Ld. DR, on the other hand, relied upon the order passed by the Ld. AO. 4 ITA No.2485/Del/2024 Manoj Kumar Agarwal vs. ITO 8. Having heard the Ld. Counsels appearing for the parties and having regard to the facts and circumstances of the case and also upon perusal of the documents in support of the case made out by the assessee as mentioned in foregoing paragraphs, the cash deposits are found to be genuine particularly having regard to the business expansion and resultant fact of increase sales thereto. The addition is, thus, found to be arbitrary and not justified. Moreso, the same is found to have been made only on surmises and conjectures and in the absence of any cogent evidence in the hands of the Revenue, the addition is not maintainable in the eyes of law and thus deleted. 9. In the result, appeal of the assessee is allowed. Order pronounced on 26/3/2025. - Sd/- Sd/- (MADHUMITA ROY) JUDICIAL MEMBER Dated: 26/03/2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "