MRS PRIYA PRAPHULLA CHAVAN,MUMBAI V. INCOME TAX OFFICER, WARD-41(2)(4), MUMBAI

ITA 2708/MUM/2024

AI Insights

The case involves Mrs. Priya Praphulla Chavan, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which confirmed the addition of Rs.49,04,221 to her income for the Assessment Year 2016-17. The addition was initially made by the Assessing Officer (AO) under section 68 of the Income Tax Act, treating the receipts from certain parties as unexplained income due to non-compliance with TDS requirements and non-response to notices. The Tribunal, however, found that these receipts were part of the gross income already declared by the assessee from her car hiring business and thus should not be taxed again as unexplained income.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26474 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-11-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 14-05-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: VINITA NARA JUNIOR OF
• Keywords: Unexplained cash credit; Income from undisclosed sources; TDS
• Section: 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.2708/Mum/2024 (Assessment Year :2016-17) Mrs. Priya Praphulla Chavan 401, 402, Laxmi Residency, B-Wing Shree Ekveera SRA CHS, V B Phadke Marg Gavandpada Mulund East Mumbai – 400 081 Vs. Income Tax Officer, Ward-41(2)(4) Kautilya Bhavan Bandra Kurla Complex Bandra East Mumbai-400 051 PAN/GIR No.BOUPK3659G (Appellant) .. (Respondent) Assessee by Ms. Vinita Nara (Junior of Shri. Dharan Gandhi, Adv) Revenue by Shri Krishna Kumar, Sr. DR. Date of Hearing 26/11/2024 Date of Pronouncement 27/11/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 19/03/2024 passed by NFAC, Delhi for the quantum of assessment passed/s.143(3) for the A.Y.2016-17. ITA No.2708/Mum/2024 Mrs. Priya Praphulla Chavan 2 2. The assessee is aggrieved by addition of Rs.49,04,221/- made u/s.68 by the ld. AO. At the outset, it is seen that the ld. CIT(A) has passed exparte order whereby he has confirmed the addition made by the ld. AO by treating the entire receipts as ‘unexplained income’ to be added u/s.68 for Rs.49,04,221/-. 3. Before us ld. Counsel submitted that assessee was running business of car hiring wherein, she took the car on hire basis and provided to various companies. Assessee had shown gross receipts of Rs.58,56,887/- and net profit of Rs.12,51,821/- from such business. The ld. AO to verify the contract receipts had issued notices to nine parties from whom assessee has received an amount of Rs.49,04,221/-. In most of the cases there was no compliance and in two cases where compliance was made, AO observed that TDS was not deducted. Accordingly, he treated the entire receipts from these parties as ‘unexplained income’ of Rs.49,04,221/-. Ld. Counsel further submitted that this amount of Rs.49,04,221/- is part of the gross receipts declared by the assessee on which assessee had already disclosed huge net profit and there was no reason to tax the entire contract receipt as income and that to be income from other sources. Thus, the addition made by the ld. AO is arbitrary. 4. On the other hand, ld. DR submitted that since ld. CIT(A) has passed exparte order, therefore, the matter can be restored back to the file of the ld. CIT(A). 5. After considering the relevant facts brought on record, it is seen that, it is not in dispute that assessee had declared income ITA No.2708/Mum/2024 Mrs. Priya Praphulla Chavan 3 from car hiring business at Rs.12,51,821/- on total gross receipts from business was Rs.58,56,887/-. Once assessee had declared net profit of more than 22%, then how the part of the gross receipts which had been shown on the credit side can be added as income from undisclosed sources to be added u/s.68. Simply, because the parties have not deducted TDS or no compliance of notice u/s. 133(6) has been made by the parties, it does not lead to inference that receipts from them already shown as income, is undisclosed. When the amount of income has been shown as receipts in the profit and loss account then same cannot be taxed as unexplained credit u/s.68. The ld. AO at the best could have held that the net profit shown by the assessee from such receipts is low or could have applied higher net profit. But here in this case assessee itself had disclosed more than 22% of the net profit, therefore there cannot be any scope of enhancing the net profit. Accordingly, the addition made by the ld. AO is arbitrary and unsustainable on facts and thus is deleted. 6. In the result, appeal of the assessee is allowed. Order pronounced on 27th November, 2024. Sd/- (GIRISH AGRAWAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 27/11/2024 KARUNA, sr.ps ITA No.2708/Mum/2024 Mrs. Priya Praphulla Chavan 4 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "