RAJKUMAR K. DOSHI HUF,PUNE V. ITO, WARD 14(5), PUNE, PUNE

ITA 2422/PUN/2024

AI Insights

The case involves Rajkumar K. Doshi HUF, who appealed against the order of the National Faceless Appeal Centre, Delhi, which confirmed an addition of Rs. 14,00,000 to the assessee's income for the Assessment Year 2017-18. The addition was initially made by the Income Tax Officer (ITO) during the assessment proceedings, alleging the amount represented unexplained money deposited in a bank account during the demonetization period. The assessee contended that the deposits were from legitimate sources, including a refund of share application money from Pratap Tea Company Pvt. Ltd. and past savings. The Tribunal, after examining the evidence and submissions, concluded that the assessee had adequately explained the sources of the deposits, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474112 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2025
• 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: SANJAY K. DHIVARE
• Assessee Lawyers: NIKHIL PATHAK
• Section: 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.2422/PUN/2024 Assessment Year : 2017-18 Rajkumar K. Doshi HUF, 6/148, Opp. Manmath Karyalay St. Road, Baramati - 413102 Maharashtra PAN : AACHR8544N V/s ITO, Ward-14(5), Pune Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal pertaining to Assessment Year 2017-18 at the instance of assessee is directed against the order dated 25.09.2024 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) which in turn is arising out of Assessment Order dated 25.12.2019 passed u/s.143(3) of the Act. 2. Assessee has raised following grounds of appeal : “On facts and in law, 1] The Id. CIT(A) erred in confirming the addition of Rs. 14,00,000/- made on account of unexplained money u/s. 69A r.w.s. 115BBE of the Act. 2] The Id. CIT(A) erred in holding that the appellant had failed to prove the sources of the cash deposited in bank account of Rs. 14,00,000/- during the demonetization period and hence, the addition made by the Id. A.O. was justified. Assessee by : Shri Nikhil Pathak Revenue by : Shri Sanjay K. Dhivare Date of hearing : 03.02.2025 Date of pronouncement : 11.02.2025 2 ITA No.2422/PUN/2024 Rajkumar K. Doshi 3] The Id. CIT(A) failed to appreciate that cash deposited by the assessee in the bank account was mainly out of the cash received by it from Pratap Tea Company Pvt. Ltd. as a refund of the share application money and hence, as the sources of the said cash deposited in the bank account were duly explained, there was no reason to make any addition on account of unexplained money u/s. 69A r.w.s. 115BBE in the hands of the assessee. 4] The Id. CIT(A) erred in not appreciating that Pratap Tea Company Pvt. Ltd. had refunded share application money to the assessee in cash and the same was duly accounted for in its books much prior to the demonetization period and therefore, there was no reason to disbelieve the claim of the assessee and hence, the addition made u/s. 69A r.w.s. 115BBE is not justified and the same may kindly be deleted. 5] The Id. CIT(A) failed to appreciate that the assessee had also past savings in cash which were also deposited in the bank account and hence, there was no reason to make any addition u/s. 69A r.w.s 115BBE of the Act.” 3. Brief facts of the case are that the assessee is a Hindu Undivided Family (HUF) and furnished return of income for the A.Y. 2017-18 on 14.02.2018 declaring income of Rs.2,98,310/-. After the case selected for scrutiny through CASS valid notices u/s.143(2)/142(1) were served upon the assessee. As per the information, assessee was found to have deposited Rs.14.00 lakh in the bank account maintained with Central Bank of India during the demonetization period. During the assessment proceedings, it was submitted by the assessee that source of cash deposit is out of earlier income and saving of cash balance as on 31.03.2016 totalling to Rs.14,94,983/-. On further examination of details filed by the assessee, ld. AO observed that the assessee has claimed to have received refund of share application money from Pratap Tea Company Pvt. Ltd. (PTCPL) at Rs.12,61,880/- during F.Y. 2013-14 and this amount remained as cash in hand with 3 ITA No.2422/PUN/2024 Rajkumar K. Doshi the assessee HUF. Ld, AO in order to verify the core contents of submissions filed by the assessee issued notice u/s.133(6) of the Act to the Principal Officer of PTCPL to which necessary reply was furnished along with ledger account of assessee HUF and copies of annual returns of PTCPL for financial ending 31.03.2013, 31.03.2014 and 31.03.2015. Certified true copy of resolution passed by PTCPL for refund of share application money was also filed. Karta of the HUF was the Director of PTCPL. However, ld. AO was not satisfied with the contention that the cash received from F.Y. 2013-14 was available with the assessee for such a long time and he finally concluded the assessment making addition of Rs.14.00 lakh and assessed the income at Rs.16,98,310/-. 4. Aggrieved assessee preferred appeal before the ld.CIT(A) reiterating the same submissions and also filing the details of cash in hand available for depositing in its bank account held with Central Bank of India during the demonetization period however ld.CIT(A) affirmed the view of the AO and dismissed the assessee’s appeal. 5. Aggrieved assessee is now in appeal before this Tribunal. 6. Ld. Counsel for the assessee referring to the paper book containing 212 pages stated that the assessee is maintaining details of cash book from past many years and the major source of alleged cash deposit is from the refund of share application money received from PTCPL and accumulated income of past many years. He further submitted that the details of PTCPL filed before the lower 4 ITA No.2422/PUN/2024 Rajkumar K. Doshi authorities are duly supported by documentary evidence and no discrepancy whatsoever have been found in those details. He thus prayed that impugned addition deserves to be deleted. 7. On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities. 8. I have heard the rival contentions and perused the record placed before me. I notice that the assessee is a HUF and Karta of the HUF is director in Pratap Tea Company Pvt. Ltd. The only issue that arises for my consideration is whether the ld.CIT(A) was justified in affirming the action of the AO making addition of Rs.14.00 lakh alleging to be unexplained cash deposit u/s.69A of the Act along with invoking section 115BBE of the Act. It has been argued by ld. Counsel for the assessee that the source of alleged cash deposit mainly includes Rs.12,61,880/- on account of refund of share application money along with cash out of other accumulated income of past many years and the opening cash balance as on 01.04.2016 was Rs.14,94,983/- and the same was the source of the alleged cash deposit. The assessee has furnished the cash book for F.Yrs. 2013- 14 to 2016-17. During F.Y. 2013-14, assessee received refund of share application money of Rs.12,61,880/- on 20.08.2013. The said sum was given by the assessee during F.Y. 2010-11 when the company needed funds for carrying out the business activity and was interested in issuing the equity shares. However, subsequently during F.Y. 2013-14 when it was found that the business was not 5 ITA No.2422/PUN/2024 Rajkumar K. Doshi moving in the positive direction due to stiff competition and there was lack of promising few projects, it was decided to refund the share application money pending for allotment and vide resolution dated 12.07.2013 along with other shareholders assessee HUF has also refunded the amount of Rs.12,61,880/-. This transaction of refunding of share application money has been duly incorporated in the audited financial statement of PTCPL for F.Y. 2013-14. It is also noticed that PTCPL has furnished its income-tax return and annual return of F.Y. 2013-14 and also affirmed this fact in the reply furnished to the notice issued u/s.133(6) of the Act. PTCPL has verified this fact of refunding of share application money to the assessee. Therefore, undisputedly, there was a cash receipt from PTCPL during F.Y. 2013-14 amounting to Rs.12,61,880/-. Further, assessee HUF has furnished the cash book from F.Yrs. 2013-14 to 2016-17 and apart from the amount received from PTCPL assessee HUF also held cash in hand of Rs.19,87,010/- as on 01.04.2013 and the same has been utilised for various purposes including drawings for the HUF family and as on 01.04.2016 the opening cash in hand was Rs.14,94,982/-. 9. Now the only reason observed by the lower authorities denying the claim of the assessee is that why the cash in hand was kept for such a long time. I however fail to find any merit in such observation of lower authorities because unless and until the assessee is unable to explain the source of income, doubts cannot be raised for keeping cash in hand from declared sources for long time. Since assessee in the instant case has successfully explained the source of 6 ITA No.2422/PUN/2024 Rajkumar K. Doshi alleged cash deposit which is from Cash in hand from explained and genuine source, I therefore fail to find any merit in the finding of the ld.CIT(A) and the same deserves to be set-aside and I am inclined to hold that since the assessee has successfully explained the source of alleged cash deposit of Rs.14.00 lakh no addition u/s.69A r.w.s.115BBE of the Act is called for. Impugned addition stands deleted and Grounds of appeal raised by the assessee are allowed. 10. In the result, the appeal of the assessee is allowed. Order pronounced on this 11th day of February, 2025. - Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे/Pune; \u0001दनांक / Dated : 11th February, 2025 Satish आदेश क\u0002 \u0003ितिलिप अ\tेिषत / Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant. 2. \r\u000eयथ\f / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, “(SMC)” ब\u0014च, पुणे/ DR, ITAT, “(SMC)” Bench, Pune. 5. गाड\u0018 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune "