RAMESH GULABJI GHELOT ,MUMBAI V. ITO, WD 4(1), MUMBAI

ITA 6592/MUM/2024

AI Insights

Mr. Ramesh Gulabji Ghelot, engaged in the wholesale business of food grains and oil, filed his income tax return for the assessment year 2017-18, declaring an income of Rs.11,46,430. His return was processed under section 143(1) and later selected for scrutiny due to large cash deposits during the demonetisation period. The AO noted a deposit of Rs.49,99,000 in old currency and, after the Assessee failed to satisfactorily explain the source of these deposits, added Rs.16,99,000 as unexplained money to his income under section 69A. The Assessee's appeal to the Commissioner of Income Tax (Appeals) was unsuccessful, leading to the current appeal before the Tribunal. The Tribunal, after considering the Assessee's business nature and previous years' deposit patterns, ruled in favor of the Assessee, deleting the addition made by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313071 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• 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: MANOJ KUMAR SINHA; LD.
• Assessee Lawyers: MAYUR GOSRANI
• Keywords: Business income

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No.6592/M/2024 Assessment Year: 2017-18 Mr. Ramesh Gulabji Ghelot Shop No.4, Aakansha Galaxy, Achole Road, Nalasopara, Vasai, Nalasopara, Dist. Palghar Mumbai- 401209 PAN: AFAPG8642P Vs. Income Tax Officer, Ward 4(1), Ashar IT Park, 6th Floor, Road No. 16Z, Wagle Industrial Estate, Thane (W), Mumbai-400604. (Appellant) (Respondent) Present for: Assessee by : Shri Mayur Gosrani Revenue by : Shri Manoj Kumar Sinha,Ld. Sr. D.R. Date of Hearing : 09.04.2025 Date of Pronouncement : 28.04.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 07.10.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18. 2. In this case, the Assessee being an individual engaged in the business of wholesaler food grains and oil, had filed his return of income at Rs.11,46,430/-on dated 13.12.2017, which was initially processed u/s 143(1) of the Act, however, subsequently selected for scrutiny through CASS to verify (large value cash deposit during ITA No.6592/M/2024 Mr. Ramesh Gulabji Ghelot 2 demonetisation period). The Assessing Officer (AO) by observing that the Assessee during the demonetisation period had deposited Rs.49,99,000/- in account No.CC/365 maintained with Bassein Catholic Co-operative Bank in old currency i.e. Rs.1000/- and Rs.500/- specified from the bank show caused the Assessee, in response to which the Assessee neither complied with nor furnished any details. Thus, considering the peculiar facts and circumstances of the case, the AO by observing “that though the Assessee has maintained books of account but not audited the same and filed within the due date and also could not offer satisfactory explanation about the nature and source of these deposits and credits and therefore considering the value of cash deposits in old currency to the tune of Rs.16,99,000/- (Rs.49,99,300/- – Rs.33,00,000/- deposited on 03.11.2016) as opening cash balance as on 08.11.2016”, treated the said amount as deemed un-explained money u/s 69A of the Act and added the same to the total income of the Assessee. 3. The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, however, of no avail, as the Ld. Commissioner affirmed the aforesaid addition by dismissing the appeal of the Assessee. 4. The Assessee, before this Court, has explained that during the A.Y. 2015-16, 2016-17, 2017-18 & 2018-19 the Assessee has made following sales/cash sales and the amounts deposited in cash are as under: ITA No.6592/M/2024 Mr. Ramesh Gulabji Ghelot 3 Asses sment Year Sales Cash Sales % of Cash Sales to Total Sales Cash Deposits % Cash Deposit to Total Sales 2015-16 18,43,47,003 14,97,59,423 81.24% 14,79,43,925 80.25% 2016-17 23,14,93,548 18,72,62,042 80.89% 18,53,88,043 80.08% 2017-18 25,64,07,724 19,47,46,186 75.95% 19,11,10,859 74.53% 2018-19 26,17,08,490 19,61,28,300 74.94% 18,59,21,492 71.04% 5. On the other hand, the Ld. D.R. refuted the claim of the Assessee. 6. Heard the parties and perused the material available on record. This Court has given thoughtful considerations to the peculiar facts and circumstances of the case and convinced by the claim of the Assessee that more or less the Assessee is doing transactions of cash sales to the extent of approximately 75% to 80% and during the immediately preceding year, specifically in the month of November 2015, the Assessee had deposited Rs.94,02,122/-, whereas in the November of instant assessment year, the Assessee had deposited Rs.86,05,320/- only, which is below than the amount deposited in earlier year and thus the amount deposited which is in controversy cannot be considered as exorbitant and/or unreasonable and/or unjustified and therefore this Court is unable to sustain the addition made by the AO and affirmed by the Ld. Commissioner. Consequently, the addition made by the AO is deleted. ITA No.6592/M/2024 Mr. Ramesh Gulabji Ghelot 4 7. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 28.04.2025. Sd/- (NARENDER KUMAR CHOUDHRY) JUDICIAL MEMBER * Kishore, Sr. PS Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. "