MUMTAZBIBI SHAIKH,NAVSARI V. ITO, WARD-3, NAVSARI

ITA 751/SRT/2025

AI Insights

The case involves Mumtazbibi Shaikh, who appealed against the order of the Additional/Joint Commissioner of Income Tax (Appeals) - 4 Mumbai, which upheld the AO's addition of Rs. 2,79,500 to the assessee's income for the Assessment Year 2017-18. The addition was made under Section 68 of the Income Tax Act, concerning unexplained cash deposits in old denomination notes. The assessee argued that the cash deposits were part of her business turnover from trading and repairing of cell phones, which was accepted under Section 44AD of the Act. The Tribunal found that the AO had incorrectly treated part of the cash deposits as unexplained and that the cash deposits were within the normal business operations of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 825189 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 14-07-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY UKE
• Assessee Lawyers: RAJESH UPADHYAY
• Section: 143(3); 44AD

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA No.751/SRT/2025 Assessment Year: 2017-18 Mumtazbibi Shaikh Dasera Tekri, Khergam, Chilkli, Navsari – 396040 Gujarat [PAN – CMRPS 1937 D] Vs. Income Tax Officer, Ward-3 Navsari - 396445 (Appellant) (Respondent) Assessee by Shri Rajesh Upadhyay, AR Revenue by Shri Ajay Uke, Sr. DR Date of Hearing 10.12.2025 Date of Pronouncement 29.12.2025 O R D E R PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of ADDL/JCIT (A)-4 Mumbai dated 30.06.2025 for the Assessment Year (AY) 2017-18 in the proceeding u/s 143(3) of the Act. 2. The brief facts of the case are that the assessee had filed return of income for AY 2017-18 on 28.03.2018 declaring total income of Rs.2,98,620/-. The case was selected for a scrutiny under CASS to examine the cash deposits. As per the information, the assessee had made cash deposit of Rs.1,11,38,620/- in his bank account with SBI. In the course of assessment, the assessee submitted that the actual cash deposit made in the bank account was Rs.13,29,970/- only. It was further Printed from counselvise.com ITA No. 751/SRT/2025 Mumtazbibi Shaikh Vs. ITO, Ward 3 AY: 2017-18 2 explained that assessee was engaged in the business of trading and repairing of cell phone and the profit was disclosed under Section 44AD of the Act. Accordingly, the assessee had disclosed income of Rs.3,27,346/- on turnover of Rs. 20,96,766/-. The AO noticed that out of total cash deposit of Rs.13,29,970/- in the bank account, deposit of Rs. 2,79,500/- was in old denomination notes which was held as un-explained and added to income. The assessment was completed u/s 143(3) of the Act on 13.12.2019 at total income of Rs.5,78,120/-. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority which was decided by the Ld. CIT vide the impugned order and the appeal of the assessee was dismissed. Now the assessee is in second appeal before us. The following ground has been taken in this appeal: “1. Ld. CIT(A), NFAC, Delhi has erred in law and on fact to upheld A.O.’s addition of Rs. 2,79,500/- made u/s 68 of the Act over looking the fact that the said amount is a part of appellant’s trading and repairing business of cellphones [mobile] prior to demonetization period, on which the appellant has offered profit u/s 44AD of the Act; which was also accepted by the A.O. under the scrutiny assessment proceedings.” 4. Shri Rajesh Upadhyay, Ld. AR of the assessee submitted that the entire cash deposit of Rs.13,29,970/- represented the turnover of the assessee. He explained that the AO was not correct in treating the cash deposit of Rs. 2,79,500/- in old notes as un-explained while accepting the balanced cash deposit of Rs.10,50,470/- as explained. The Ld. AR submitted that the original information available with the AO regarding cash deposit of Rs.1,11,38,620/- in the bank account was itself wrong. Printed from counselvise.com ITA No. 751/SRT/2025 Mumtazbibi Shaikh Vs. ITO, Ward 3 AY: 2017-18 3 Further considering the nature of business and the explanation regarding the cash deposits, the AO was not correct in making the addition. 5. Per contra, Shri Ajay Uke, Ld. Sr. DR supported the order of the lower authorities. 6. We have considered the rival submissions. It is found that the case was selected for scrutiny to examine the cash deposit of Rs.1,11,38,620/- in the bank account of the assessee. In the course of assessment, no inquiry was made by the AO from the bank regarding the actual amount of cash deposit. The AO had accepted the explanation of the assessee that cash deposit of Rs.13,29,970/- only was made in the bank account. As regarding source of cash deposits, the assessee had explained that he was engaged in trading and repairing of cellphone and the cash deposit represented his turnover. It is further found that the assessee had disclosed turnover of Rs.20,96,766/- which was far in excess of the cash deposits in the bank account. The AO had accepted the cash deposit of Rs.10,50,470/- as explained but disallowed the cash deposit of Rs. 2,79,500/- made in old denomination notes. Considering the fact that the entire cash deposit was covered by the turnover of the assessee during the year, the AO was not correct in making addition for cash deposit of Rs.2,79,500/- made in old denomination notes. The cash deposit in the old denomination notes was not excessive or unreasonable considering the turnover of the year. The assessee had also explained that a part of the cash deposit in the old denomination notes represented his past savings. In fact, the CBDT has issued a direction that the cash deposit in old denomination notes to the extent of Rs.2,50,000/- will be treated as Printed from counselvise.com ITA No. 751/SRT/2025 Mumtazbibi Shaikh Vs. ITO, Ward 3 AY: 2017-18 4 explained and not been enquired into. Considering this fact also the addition as made by the AO cannot be held as justified. We are of the considered opinion that the assessee had duly explained the cash deposits in the bank account which was part of his turnover. Accordingly, the AO is directed to delete the addition of Rs. 2,79,500/- made in respect of cash deposit in the bank account in old denomination notes. The ground taken by the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 29th December, 2025. Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated 29th December, 2025 Nimisha Arora Copies to: (1) The appellant (2) The respondent (3) The PCIT (4) The CIT(A), concerned (5) Departmental Representative (6) Guard File TRUE COPY By order COPY Assistant Registrar ITAT, Surat/Ahmedabad Printed from counselvise.com "