NAM TECHNOLOGIES PRIVATE LIMITED ,MUMBAI V. ACIT 14(2)(2), MUMBAI

ITA 3015/MUM/2025

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NAM Technologies Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the addition of Rs. 1,34,73,500 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, following information received under 'Operation Clean Money' that the assessee had deposited a significant amount during the demonetization period. The Tribunal, after reviewing the documentary evidence provided by the assessee, including bank statements and cash books, concluded that the assessee had discharged its burden of proving the source of the deposits, which were regular business transactions and not unexplained cash.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669003 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Smt. Krishna Agarwal vs. ITO, Ajit Bapu Satam vs. Deputy Commissioner of Income Tax, Sudhirbhau Pravinkant Thaker vs. ITO, Ward-5(1), Ahmedabad
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: TARANG MEHTA
• Keywords: Principle of natural justice; Deemed to accrue or arise in india
• Section: 143(3); 142(1); 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 3015/Mum/2025 (Assessment Year: 2017-18) NAM Technologies Private Limited 4, Neelkanth Shopping Arcade, Opp. Fine Arts Hall, Chembur, Mumbai – 400071 Vs. ACIT-14(2)(2), Mumbai PAN/GIR No. AAFCA9204L (Appellant) : (Respondent) Assessee by : Shri Tarang Mehta, Adv. Respondent by : Shri Leyaqat Ali Aafaqui, SR AR Date of Hearing : 18.06.2025 Date of Pronouncement : 23.06.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18. 2. The assessee has raised the following grounds of appeal: “1. The learned CIT(A) has erred in law and on facts in passing the appellate order, which is invalid and bad in law. 2. The learned CIT(A) has erred in law and on facts in upholding the order passed u/s 143(3) r.w.s 147 of the Act which is illegal and bad in law. 3.That on the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the addition of Rs.1,34,73,500/-under Section 69A of the Act. ITA No. 3015/Mum/2025 (A.Y. 2017-18) NAM Technologies Pvt. Ltd. 2 4.That on the facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that the assessment order passed is in violation of principles of natural justice.” 3. Brief facts of the case are that the assessee company is engaged in the business of Network Equipments ITES (Software and Hardware) and Facility Management Services and Operations. The assessee had filed its return of income dated 31.10.2017, declaring total income at Nil. The assessee’s case was selected for complete scrutiny under CASS, for the reason that the learned Assessing Officer (ld. A.O. for short) received information under ‘Operation Clean Money’ that the assessee had deposited Rs. 1,34,73,500/- during demonetization period and notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. After duly considering the assessee’s submission, the ld. AO made an addition of Rs. 1,34,73,500/- u/s. 69A of the Act, thereby determining total income at Rs. 1,34,73,500/- under the normal provisions and Rs. 28,28,595/- as deemed income u/s. 115JB of the Act, vide assessment order dated 26.12.2019, passed u/s. 143(3) of the Act. 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 04.03.2025, upheld the addition made by the ld. AO on the ground that the assessee had failed to substantiate the source of cash deposits made in its bank account during the demonetization period. 5. The assessee is in appeal before us, challenging the impugned addition. 6. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that in the second round of appeal before the ld. CIT(A), the assessee had furnished all the details pertaining to the transactions along with the cash book for F.Y. 2015-16 and ITA No. 3015/Mum/2025 (A.Y. 2017-18) NAM Technologies Pvt. Ltd. 3 F.Y. 2016-17 and the bank statement of the three banks in which the cash was deposited. Further, the ld. AR stated that the audited balance sheet for previous year and the relevant assessment year was also furnished along with month wise cash deposits and withdrawals for F.Y. 2015-16 and 2016-17. The ld. AR further contended that the assessee’s nature of business involved handling cash and the bank statements reflected regular withdrawals and deposits in the regular course of business. The ld. AR submitted that all these details were furnished during the appellate proceeding and the same was not considered by the ld. CIT(A). The ld. AR relied on the following decisions of the Tribunal, where on identical facts, the additions were deleted in the hands of the assessee. a. Smt. Krishna Agarwal vs. ITO, ITA No. 53/Jodh/2021, dated 07.09.2021, b. Ajit Bapu Satam vs. Deputy Commissioner of Income Tax, [2023] 147 taxmann.com 222 (Mumbai – Trib.). c. Sudhirbhau Pravinkant Thaker vs. ITO, Ward-5(1), Ahmedabad, [2017] 88 taxmann.com 382 (Ahmedabad – Trib.) 7. The learned Departmental Representative ('ld. DR' for short) for the revenue on the other hand controverted the said fact and stated that the assessee’s nature of business is not cash incentive and that assessee has failed to prove by cogent evidence that the cash deposits were from the earlier income, savings or withdrawals which were maintained in the regular course of business. The ld. DR also pointed out that there was significant cash deposit just before demonetization was declared raising a suspicion that the assessee anticipated the demonetization notification. The ld. DR relied on the order of the lower authorities. ITA No. 3015/Mum/2025 (A.Y. 2017-18) NAM Technologies Pvt. Ltd. 4 8. Having heard the rival submissions and perused the materials available on record. The only issue that requires adjudication is whether the assessee has explained the nature and source of the cash deposits made by it during demonetization period. On verification of the documentary evidence furnished by the assessee, it is observed that the opening balance in the cash account book for F.Y. 2015-16 was Rs. 14,204/- and the closing balance was Rs. 22,04,204/- and that the opening balance in the cash account book on 01.04.2016 i.e., much prior to the demonetization period was Rs. 1,21,42,398/- and the closing balance was Rs. 1,28,03,192/-. On perusal of the bank statements for earlier years and before the demonetization period, it is noticed that there have been several withdrawals. Pertinently, the audit balance sheet as on 30.08.2016, reflected cash and cash equivalent amount to Rs. 1,39,44,476/-. Further, in the audit balance sheet for the relevant assessment year, the assessee has disclosed that it had Specified Bank Notes (SBNs) amounting to Rs. 1,34,73,500/- and others amounting to Rs. 34,61,993/- which establishes the fact that the assessee’s nature and source of the cash deposit was out of its regular course of business. It is observed that the ld. CIT(A) had earlier dismissed the appeal of the assessee ex parte and the assessee was in appeal before the Tribunal, where the same was remanded back to the ld. CIT(A) for adjudication and in the second round of appeal, the assessee is said to have furnished all the documentary evidences which are before us. The ld. CIT(A) in his order has not discussed the financials of the assessee and has also failed to establish that the details furnished by the assessee are not reliable. This according to us, is not justifiable as the ld. CIT(A) ought to have discussed in detail with regard to the documentary evidences furnished ITA No. 3015/Mum/2025 (A.Y. 2017-18) NAM Technologies Pvt. Ltd. 5 by the assessee. In our view, the assessee is said to have discharged its primary onus casted upon it to establish the source of the deposits made by it during the demonetization period. On consideration of the provisions of Section 69A of the Act which explains that when the assessee has not recorded in the books of accounts any money, bullion, jewellery or other valuable articles, the nature and source of which is not explained or when the explanation offered by the assessee is not to the satisfaction of the ld. AO, then, it is deemed to be the unexplained money of the assessee. In the present case in hand, the assessee has given sufficient explanation along with documentary evidences to explain the nature and source of the cash deposit made in its bank account which the ld. CIT(A) has not faulted with expressly. In the absence of any such finding, we deem it fit to hold that the assessee has discharged its onus by corroborative evidence and the revenue has failed to contradict the same. The case laws relied upon by the ld. AR also supports the assessee’s contentions. 9. From the above observation, we deem it fit to allow ground no. 3 raised by the assessee and direct the ld. AO to delete the impugned addition. As there was no argument on the legal ground raised by the assessee, the same is rendered academic and requires no separate adjudication. 10. In the result, the appeal filed by the assessee is hereby allowed. Order pronounced in the open court on 23.06.2025 Sd/- Sd/- (VIKRAM SINGH YADAV) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA No. 3015/Mum/2025 (A.Y. 2017-18) NAM Technologies Pvt. Ltd. 6 Mumbai; Dated: 23.06.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "