RAMNIKBHAI GOVINDBHAI AKHARI,SURAT V. INCOME TAX OFFICER, WARD 3(2)(8), SURAT

ITA 753/SRT/2024

AI Insights

The case revolves around an appeal by Ramnikbhai Govindbhai Akhari against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs.6,00,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer following the scrutiny of the assessee's bank transactions during the demonetization period, which revealed a significant cash deposit compared to the declared income. The Tribunal found that the assessee had provided sufficient evidence, including bank statements and previous years' income tax returns, to substantiate the source of the cash deposits. Consequently, the Tribunal reversed the CIT(A)'s decision and directed the deletion of the addition.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26789 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 10-07-2024
• Other Referred Cases: Nileshkumar Maganlal Shah vs. ITO, Bhulabhai Nathubhai Patel vs. ITO, Jigishaben Jatinkumar Bamania vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MINAL KAMBLE
• Assessee Lawyers: P. M. JAGASHETH
• Keywords: Set aside; Unexplained cash credit; Salary income
• Section: 250; 68

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.753/SRT/2024 Assessment Year: (2017-18) (Physical Hearing) Ramnikbhai Govindbhai Akhari, 88, 1st Floor Chitrakut Society, Laxmikant Ashram Road, Katargam, Surat - 395004 Vs. The ITO, Ward – 3(2)(8), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AJFPA7763C (Appellant) (Respondent) Appellant by Shri P. M. Jagasheth, CA Respondent by Shri Minal Kamble, Sr. DR Date of Hearing 06/11/2024 Date of Pronouncement 22/11/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 24.06.2024 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2017-18. 2. The grounds of appeal raised by the assessee are as under: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of 6,00,000/- on account of unexplained cash credit u/s.68 of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in invoking provisions of section 115BBE of the Act and levying surcharge at 25 percentage which is not applicable on above addition. 2 ITA No.753/SRT/2024/AY.2017-18 Ramnikbhai Govindbhai Akhari 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case. Hence the case may please be set aside and restored back to the CIT(A) or AO. 4. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 3. Brief facts of the case are that the assessee filed his return of income on 01.08.2017, declaring total income of Rs.2,39,040/-. The case was selected for limited scrutiny for the reasons that there was large cash deposit during demonetization period as compared to returned income. The assessee had deposited cash of Rs.6,00,000/- in his bank account No.2701110110001164 maintained with Bank of India, Surat. In response to the show cause notice by the AO, assessee replied that he is regularly assessed to tax since 2006-07 and he had already filed necessary documents and explanations for the cash deposited during demonetization period. He had cash on hand of Rs.6,66,687/-, Rs.8,71,262/- and Rs.5,30,414/- in AYs.2014-15, 2015-16 and 2016-17 respectively. He also furnished cash flow statement for AY.2017-18 which shows opening cash on hand of Rs.5,30,414/-. The AO did not accept contention of assessee that there was cash on hand of Rs.5,30,414/- as on 01.04.2016. He further observed that assessee had withdrawn only small amounts of around Rs.5,000/- to Rs.10,000/- for his household and miscellaneous expenses. Hence, it is not possible to accumulate such huge 3 ITA No.753/SRT/2024/AY.2017-18 Ramnikbhai Govindbhai Akhari amount as opening cash balance. Therefore, he added Rs.6,00,000/- and taxed the same u/s 115BBE of the Act. 4. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The assessee filed detailed submissions vide letter dated 06.03.2024 which is extracted at pages 4 to 10 of the appellate order. Subsequently, vide reply dated 13.06.2024, assessee submitted copy of cash book and cash flow statement for the period 01.04.2016 to 31.03.2017. The CIT(A) has reproduced the reasons given by the AO for making the addition of Rs.6,00,000/- at para 4.1 at pages 11 to 16 of the appellate order. The finding of the CIT(A) is given at para 4.1.3 of the appellate order. He has observed that the small withdrawals of Rs.5,000/- to Rs.10,000/- might have been used for routine household expenses and such withdrawal could not explain accumulation of opening balance of Rs.5,30,414/- as on 01.04.2016. He further stated that the salary income of the assessee was Rs.1,60,000/-, Rs.2,08,000/- and Rs.2,28,240/- for AYs.2015-16, 2016-17 and 2017-18 respectively. The assessee had marginal income from other sources. Therefore, savings of Rs.6,00,000/- for cash deposit was not accepted. Hence, the CIT(A) dismissed the appeal of assessee. 5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Learned Authorized Representative (Ld. AR) submitted paper book enclosing returns of income, bank account statements and various decisions of ITAT, Surat in favour of various assessees. The Ld. AR submitted there were cash balances of Rs.6,66,687/-, Rs.8,71,262/- and Rs.5,30,414/- as 4 ITA No.753/SRT/2024/AY.2017-18 Ramnikbhai Govindbhai Akhari on 01.04.2014, 01.04.2015 and 01.04.2016 respectively. The assessee had filed ITR – 4 for AY.2015-16 which shows cash in hand of Rs.8,71,263/- and the cash in hand was Rs.6,66,688/- for AY.2014-15. For AY.2017-18, assessee has filed return in Form ITR – 1 “SAHAJ” which Form is for salaried assessees. In ITR-1 SAHAJ, profit and loss account and balance sheets are not to be filed. Therefore, assessee had not showed opening cash in hand of Rs.5,30,414/-. However, the availability of cash cannot be disbelieved due to the opening cash balances of earlier years as well as cash withdrawals which are duly supported by the ITRs, cash book, bank statement etc., submitted by the assessee. The Ld. AR has relied upon the decisions of ITAT, Surat in the cases of Nileshkumar Maganlal Shah vs. ITO, ITA No.563/SRT/2023, Bhulabhai Nathubhai Patel vs. ITO, ITA No.67/SRT/2024 and Jigishaben Jatinkumar Bamania vs. ITO, in ITA No.4/SRT/2024. He, therefore, requested to delete the addition. 6. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) of the Revenue supported the orders of lower authorities. He submitted that there was no large cash withdrawal by the assessee. There was no reason to hold huge cash in hand for such long period. Hence, the explanation of assessee should be rejected. 7. We have heard both the parties and perused the materials available on record. We have also deliberated the decisions relied upon by the Ld. AR. There is no dispute that the assessee has shown cash in hand of Rs.8,71,262/- and Rs.6,66,687/- for AYs.2015-16 and 2014-15 respectively. These are supported 5 ITA No.753/SRT/2024/AY.2017-18 Ramnikbhai Govindbhai Akhari by ITR-4 for AYs.2015-16 and 2014-15 respectively. The assessee has claimed cash in hand of Rs.5,30,414/- for AY.2016-17 which has not been accepted by AO and CIT(A). The reasons for not accepting the claim is that assessee had withdrawn very small amounts which could not justify accumulation of such huge cash in hand. Such outright rejection is not proper because the opening cash balance for AY.2014-15 and 2015-16 are duly supported by the returns filed by the assessee to the Department. In absence of any evidence to the contrary that the said cash balance was invested or spent for some other purpose, availability of cash in the hands of the assessee cannot be rejected. Further, in the paper hook, the assessee has given copy of the bank account statement for the period 01.04.2015 to 31.03.2017, which reveals that assessee had also withdrawn Rs.1,00,000/- in cash on 17.06.2016. Therefore, the claim of the assessee that the deposit was made out of opening cash balance and cash withdrawal is supported by the ITRs and other documentary evidences furnished by the assessee. Under similar circumstances, the Co-ordinate Bench of ITAT, Surat in case of Nileshkumar Maganlal Shah (supra), after relying on various decisions, deleted the addition of Rs.7,00,000/- made by the AO. In view of the above facts and the decision cited supra, we set aside the order of CIT(A) and direct the AO to delete the addition of Rs.6,00,000/-. Accordingly, ground no.1 is allowed. 6 ITA No.753/SRT/2024/AY.2017-18 Ramnikbhai Govindbhai Akhari 8. The next issue pertains to levy of tax u/s 115BBE of the Act. We have already deleted the addition made by AO u/s 68 of the Act. Hence, question of applying rate u/s 115BBE of the Act does not arise. The ground no.2 is allowed. 9. The other grounds are general in nature and do not require adjudication. 10. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 22/11/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 22/11/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat 7 ITA No.753/SRT/2024/AY.2017-18 Ramnikbhai Govindbhai Akhari Date Initial 1. Draft dictated on (dictation sheet is enclosed with main file.) 22.11.2024 } PS 2. Draft placed before author 22.11.2024 PS 3. Draft proposed & placed before the second member 22.11.2024 4. Draft discussed/approved by Second Member. 22.11.2024 5. Approved Draft comes to the Sr.PS/PS 22.11.2024 6. Kept for pronouncement on 22.11.2024 7. File sent to the Bench Clerk 22.11.2024 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Draft dictation sheets are attached PS "