SADIK DAUDBHAI NANDOLIYA,SURAT V. ITO, WARD 2(1), BHARUCH

ITA 889/SRT/2024

AI Insights

This case involves an appeal by Sadik Daudbhai Nandoliya against the order of the Commissioner of Income Tax (Appeals), which confirmed additions made by the Assessing Officer under sections 69A and 143(3) r.w.s 147 of the Income Tax Act. The additions were based on unexplained cash deposits and credits in the assessee's bank account, which the Assessing Officer treated as income from undisclosed sources. The Tribunal examined the evidence and arguments presented, including the nature of the assessee's business and the source of the deposits and credits in the bank account. The Tribunal noted the lack of documentary evidence supporting the assessee's claims but also acknowledged the legal principle that withdrawals from the bank account should be considered when assessing the source of subsequent deposits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126271 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: JIGAR ADHIYARU
• Keywords: Grounds of appeal; ICICI Bank; Subsequent Assessment; Total Turnover; National Faceless Appeal; Commissioner; Commissioner of Income Tax; Statistical purposes; Deleted; Sale of Milk; Source of cash deposit; Department; Explanation; Withdrawn
• Section: 148; 271(1)(c); 44AD; 69A; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER I.T.A. No. 889/SRT/2024 (Assessment Year: 2012-13) Sadik Daudbhai Nandoliya, Plot No.C-1/4763/64, GIDC, GIDC, Ankleshwar, Bharuch, Gujarat-393002 Vs. Income Tax Officer, Ward-2(1), Bharuch [PAN No.AGNPN7960R] (Appellant) .. (Respondent) Appellant by : Shri Jigar Adhiyaru, A.R. Respondent by: Shri Mukesh Jain, Sr. DR Date of Hearing 21.04.2025 Date of Pronouncement 25.04.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 20.06.2024 passed for A.Y. 2012-13. 2. The assessee has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the Ld. C1T(A) has grossly erred in confirming the addition of Rs.13,09,188/- u/s 69 A and in confirming another addition of Rs.8,78,300/- u/s 69A of the Act as made by the AO in the assessment order u/s 143[3] r.w.s 147 of the Act dated 09.12.2019. These two additions as confirmed by the CIT(A) may kindly be deleted being the same bad in law and devoid of any merit. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the addition of Rs.11,09,188/- out of total addition of Rs.21,87,488/- as made by the AO u/s 69A of the Act in the assessment order despite ITA No.889/Srt/2024 Sadik Daudbhai Nandoliya vs. ITO Asst. Year –2012-13 - 2– the fact that there was cash deposits of Rs.13,09,188/- on account of sale of vegetables and milk as admitted by the Ld. CIT(A) himself in his appeal order. The Ld. CIT(A) in the appeal order himself has accepted the plea of the appellant that being a vendor of vegetables and milk he was doing the business in cash. Thus, this addition of Rs.11,09,188/- as confirmed by the Ld. CIT[A] out of total cash deposits of Rs.13,09,188/- is devoid of any merit, illogical and illegal and also contrary to his own stand and therefore such addition may kindly be deleted. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in confirming the addition of Rs.11,09,188/- which was part of total cash deposits of Rs.13,09,188/- despite the fact that this particular amount of Rs.13,09,188/- was deposited in cash in bank because of sale of vegetables and milk. The Ld. CIT(A) has contradicted himself by confirming this addition of Rs.11,09,188/- in view of the fact that he in the appeal order has raised the only issue with regard to the credits appearing in the bank which were other than cash deposits and has not raised any issue in respect of sources of any cash deposits. Thus, this addition of Rs.11,09,188/-as confirmed by the Ld. CIT(A) is devoid of any merit and against his own stand as taken in his appeal order. In view of this, this addition of Rs.11,09,188/- may kindly be deleted. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that benefit of the income of Rs.1,97,885/-(i.e. almost 2,00,000/-) on account of sale of vegetables and milk as reflected u/s 44AD of the Act itself was shown by the appellant as profit in the return of income and therefore there is no question of deletion of any such amount of Rs.2,00,000/- which itself was offered as income in the return of income and which was never part of any addition. Thus, the Ld. CIT(A) was required to delete this addition of Rs.11,09,188/- also as the submission of the appellant that he was a small vendor of vegetables and milk and was doing business in cash was found to be plausible/ acceptable by the Ld. CIT(A) in the appeal order itself. In view this, this addition of Rs.11,01,188/- as confirmed by the CIT(A) without assigning any reason in the appeal order is liable to be deleted being the same illegal, illogical and devoid of any merit. 5. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in confirming the addition of Rs.8,78,300/- on the ground that on one hand it was claimed by the appellant that he was a small vendor and on the other hand there were credits appearing in his bank accounts i.e. other than cash deposits. The ld. CIT(A) has wrongly held that there was no occasion to receive the payment by cheque and the appellant in his submission has not given the source of receipt/ nature of credits. The addition of Rs.8,78,300/- as made u/s 69A of the Act has been confirmed by the ld. CIT(A) illegally and without considering the merit of the case. In view of this, this addition of Rs.8,78,300/- as confirmed by the Ld. CIT(A) may kindly be deleted. 6. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in initiating the penalty proceedings u/s 271(1)(b), 271(1)(c) & 271F of the Act. The penalty proceedings as initiated u/s 271(1)(b), 271(1)(c) & 271Fof the Act being unlawful and devoid of any merit kindly be quashed. ITA No.889/Srt/2024 Sadik Daudbhai Nandoliya vs. ITO Asst. Year –2012-13 - 3– 7. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has grossly erred in charging interest u/s 234A, 234B and 234C of the Act and therefore the same may kindly be cancelled. 8. The appellant craves leave to add, alter or amend any of the aforesaid ground or grounds if necessary” 3. The brief facts of the case are that for the impugned assessment year, the Assessing Officer observed that the assessee had deposited cash of Rs. 14,74,188/- in his bank account. The assessee had not filed his return of income for the impugned assessment year and accordingly notice under Section 148 of the Act was issued to the assessee. In response to notice under Section 148 of the Act, the assessee filed return of income declaring total income of Rs. 1,97,885/- including net agricultural income of Rs.1,65,000/-. The Assessing Officer noted that the assessee has claimed that it is engaged in the business of selling milk and vegetables. In the return of income, the assessee has shown income from sale of vegetables and milk and had declared a total turnover of Rs. 23,85,188/- and offered his taxable income on presumptive basis @ 8% of the total turnover declaring taxable income to the tune of Rs. 1,90,816/-. However, the Assessing Officer noted that the assessee had deposited cash at different places in India, in it’s bank account held with ICICI Bank. Further, the Assessing Officer noticed that the amounts which had been deposited by the assessee had been withdrawn within a very short period, ranging from one day to one week. Accordingly, the Assessing Officer was of the view that considering the above facts, the claim of the assessee that it is engaged in the business of selling of milk and vegetables was not found to be acceptable. Accordingly, the Assessing Officer treated the cash deposits of Rs. 14,74,188/- as income earned by the assessee from undisclosed sources, and after giving benefit of agricultural ITA No.889/Srt/2024 Sadik Daudbhai Nandoliya vs. ITO Asst. Year –2012-13 - 4– income of Rs. 1,65,000/- as declared by the assessee in it’s return of income, the balance amount of Rs. 13,09,188/- was added as income of the assessee. Further, on verification of the bank statement of the assessee, the Assessing Officer also observed that there were certain credits amounting to Rs. 8,78,300/- appearing in the assessee’s bank account, for which the assessee could not provide any plausible explanation. Accordingly, this amount was added as income of the assessee under Section 69A of the Act. In appeal, Ld. CIT(A) give partial relief to the assessee. 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). Before us, the Counsel for the assessee filed written submission and also took various oral arguments before us. In sum and substance, the Counsel for the assessee submitted that the assessee is a small vendor engaged in sale of milk and vegetables. The assessee had sold milk and vegetables to various vendors from whom certain amounts in cash was received which were directly deposited in his bank account at various locations across the country. The Counsel for the assessee submitted that there is no bar on the assessee from receiving cash from various locations across India and depositing the same in his bank account. Further, the Counsel for the assessee submitted that for subsequent years, the assessee had filed it’s return of income and had offered income from sale of milk and vegetables on presumptive basis. Accordingly, in light of these fact, the Counsel for the assessee submitted that the additions are liable to be deleted. 6. On going through the facts of the instant case, we observe that though the assessee has claimed that it was engaged in the business of supply of milk and vegetables, it is seen that amounts were deposited in assessee’s bank ITA No.889/Srt/2024 Sadik Daudbhai Nandoliya vs. ITO Asst. Year –2012-13 - 5– account at various location across India. On being asked, the Counsel for the assessee submitted that the assessee has not proof of supply of milk and vegetables to various vendors across places in India. No details of persons to whom milk and vegetables were supplied across India were furnished and neither any proof of transportation of milk and vegetables to various locations across India was furnished before us. We note that even for subsequent assessment years, though the assessee is claiming that it is engaged in the supply of milk and vegetables, there is no documentary evidence maintained by the assessee regarding supply of milk and vegetables to various locations across India. Further, we also note that the assessee has given no plausible explanation as to why the cash so deposited in his bank account was withdrawn by the assessee at such short intervals. Accordingly, in our considered view, looking into the assessee’s facts, the assessee has not been able to give any satisfactory explanation regarding the source of cash deposits and credit entries in his bank account. Further, in the alternative, the Counsel for the assessee took another argument that even if the assessee is unable to substantiate the source of deposits / credits appearing in his bank account, however, it is an established law that the entire deposits / credits appearing in the bank account of the assessee cannot be added as undisclosed income of the assessee, without giving credit for withdrawals made by the assessee from the same bank account. The Counsel for the assessee submitted that it is a well-established law that in case the Department is unable to demonstrate that the cash withdrawn by the assessee from the same bank account was utilized elsewhere by the assessee, then it has to be presumed that the subsequent deposits in the same bank account were sourced out of the withdrawals earlier made by the assessee from the same bank account. We find force in the ITA No.889/Srt/2024 Sadik Daudbhai Nandoliya vs. ITO Asst. Year –2012-13 - 6– aforesaid legal contention made of the assessee and are of the considered view that it is well settled law the entire cash deposits / credits cannot be held to be the undisclosed income of the assessee, without giving the assessee the credit for the withdrawals made by the assessee from the same bank account (unless the Department is able to demonstrate that the cash was utilized by the assessee for some other purpose and that the said withdrawals made by the assessee in cash were not available for re-deposit). Accordingly, the matter is set-aside to the file of the Assessing Officer for carrying out the necessary verification and to decide the issue in accordance with law, after due verification. 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced under proviso to Rule 34 of ITAT Rules, 1963 on 25/04/2025 Sd/- Sd/- (BIJAYANANDA PRUSETH) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 25/04/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, सूरत / DR, ITAT, Surat 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, सूरत/ ITAT, Surat "