SANTOSH SHIVRAM POTADAR,KAVATHE MAHANKAL V. AO WARD 4 SANGLI, SANGLI

ITA 193/PUN/2025

AI Insights

The case involves Santosh Shivram Potadar, who appealed against the order of the National Faceless Appeal Centre, Delhi, which sustained an addition of Rs. 15,00,000 to his income for the assessment year 2017-18. The addition was initially made by the Assessing Officer (AO) due to unexplained cash deposits during the demonetization period. The CIT(A) reduced the addition but did not delete it entirely. The Tribunal examined the explanations provided by the assessee regarding the source of the cash deposits, which were claimed to be from earlier withdrawals intended for purchasing immovable property. The Tribunal found the explanations satisfactory, leading to the deletion of the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652942 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: SMILE Microfinance Limited Vs. ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYANAND JAWALIKAR
• Assessee Lawyers: NIKHIL S. PATHAK
• Section: 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.193/PUN/2025 Assessment Year : 2017-18 Santosh Shivram Potadar, C.S.No.441/A, Yuvawani Chowk, Kavathe Mahankal, Sangli – 416405, Maharashtra PAN : AMVPP8366M Vs. Income Tax Officer, Ward-4, Sangli Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : This appeal filed by the assessee pertaining to the assessment year 2017-18 is directed against the order dated 24.12.2024 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Assessment Order dated 19.12.2019 passed u/s.143(3) of the Act. 2. Assessee has raised following grounds of appeal : “1. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not deleting the entire unlawful addition of Rs. 30,32,500/- made by AO on basis of conjectures and surmises being cash deposited into bank account from earlier available cash withdrawals which is not established to be utilised for any other purpose/ investment. 2. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the addition of Rs.15,32,500/- made by AO on account of cash re-deposited from available cash duly substantiated on the basis of self presumed reasoning. Assessee by : Shri Nikhil S. Pathak Revenue by : Shri Dayanand Jawalikar Date of hearing : 10.06.2025 Date of pronouncement : 16.06.2025 ITA No.193/PUN/2025 Santosh Shivram Potadar 2 3. That on the facts and in the circumstance of the case and in law, Ld. CIT(A) erred in not deleting the entire unlawful addition of Rs.30,32,500/- ignoring cited precedents which squarely supported assessee's case on similar facts. 4. That the Id. CIT (A) has further erred in sustaining the addition made by Id.AO by treating the cash deposited in the bank account of the assessee as being from unexplained sources u/s 68 of the Income Tax Act, 1961 and invoking provisions of sec 115BBE of the Act. Appellant prays that since the cash so deposited in the bank are not the credit entries in the books of accounts, the addition so made us 68 is bad in law and the same deserves to be deleted, as well as consequent invoking of provisions of sec 11588 of the Act is bad in law and deserves to be revoked. 5. That the appellant craves leave to add amend, modify, rescind, supplement or alter any of the grounds started herein above, either before at the time of hearing of this appeal.” 3. Assessee has also raised following additional Ground : “1] The assessee submits that in case, if any addition is warranted on account of unexplained cash deposits in the bank account, the learned A.O. has erred in levying tax@ 60% without appreciating that the amendment enhancing the tax rate @ 60% u/s 115BBE was introduced subsequently and hence, the said amendment was not applicable to the case of the assessee. The appellant submits that the additional ground raised is legal in nature and as all the facts are on record, the assessee requests for admission of the above ground.” 4. The only grievance of the assessee is that ld.CIT(A) erred in sustaining the addition of Rs.15,32,500/- for the alleged unexplained cash deposit in the bank account. By way of additional ground, assessee assailed the impugned order stating that ld.CIT(A) erred in confirming the action of AO invoking section115BBE of the Act inspite of the fact that the provision giving rise to calculation of tax on the income referred to in sub- clauses (a) and (b) of section 115BBE of the Act are effective from 01.04.2017. ITA No.193/PUN/2025 Santosh Shivram Potadar 3 5. Brief facts of the case are that the assessee is an individual and income of Rs.5,40,480/- declared in the return of income for A.Y. 2017-18 furnished on 28.10.2017. Case selected for scrutiny through CASS for the “abnormal increase in cash deposit during demonetization period in comparison to pre-demonetization period”. After valid serving of statutory notices, learned Assessing Officer (AO) carried out the assessment proceedings and even though the assessee made detailed submissions, but ld. AO was not satisfied and he concluded the assessment making addition for unexplained cash deposit of Rs.30,32,500/-. Income assessed at Rs.35,72,980/-. 6. Aggrieved with the addition made by AO, assessee preferred appeal before the First Appellate Authority and partly succeeded as ld.CIT(A) deleted 50% of the total addition made by AO and sustained the addition of Rs.15.00 lakh. Now the assessee is in appeal before this Tribunal. 7. Ld. Counsel for the assessee submitted that the cash deposited in the bank account is duly explained with the withdrawals made from the same bank account in past few months which was for the purpose of purchasing immovable property but the transaction could not materialise and the assessee has re- deposited the cash bank in the bank account. Reference made to the various details appearing in the paper book running into 61 pages. So far as the additional ground is concerned, he submitted that the tax rate of 60% referred in section115BBE of the Act came into effect from 01.04.2017 and therefore not leviable in the case of assessee. Ld. Counsel placed reliance on the judgment of Hon’ble High Court in the case of SMILE Microfinance Limited Vs. ACIT in W.P.No.2078/2020 order dated 19.11.2024. ITA No.193/PUN/2025 Santosh Shivram Potadar 4 8. On the other hand, ld. Departmental Representative supported the orders of the lower authorities. 9. We have heard the rival contentions and perused the record placed before us. Firstly we will take up the issue on merit regarding addition of Rs.15.00 lakh sustained by ld.CIT(A). In Ground No.2, assessee has inadvertently mentioned the addition sustained by ld.CIT(A) at Rs.15,32,500/- however from perusal of the finding of ld.CIT(A) appearing on page 9, we find that ld.CIT(A) has only confirmed the addition of Rs.15.00 lakh. 10. Now the issue before us is whether assessee has explained the nature and source of the alleged cash deposit. Our attention is drawn to the bank statement as well as cash book. Withdrawals from the bank are duly reflected in the cash book. From going through the cash book, we notice that though there are regular transactions of cash deposits/withdrawals from bank and other cash expenses but major amount of withdrawals are Rs.5.00 lakh on 20.04.2016, Rs.2.00 lakh on 04.07.2016, Rs.3.50 lakh on 14.07.2016, Rs.12.40 lakh and Rs.8.10 lakh on 16.09.2016, Rs.2.40 lakh on 27.09.2016 and Rs.5.00 lakh on 24.10.2016. All these withdrawals are from the bank account referred and utilised by the assessee for the purpose of business. Cash in hand as on 01.04.2016 is Rs.35,965/- and cash balance as on 24.10.2016 is Rs.43,49,428/-. The said balance appearing in the cash book is part of regular books of account which have not been rejected by the Assessing Officer as he has accepted the book results. The said cash balance has been utilised for depositing in the bank account during the demonetization period. Ld. Counsel for the assessee has claimed that cash withdrawn on 16.09.2016 was for the purpose of purchase of immovable property but the same could ITA No.193/PUN/2025 Santosh Shivram Potadar 5 not be materialised and the available cash in hand was deposited in the bank account. Even for the sake of argument, it is found that assessee has not withdrawn cash for purchase of immovable property even then the withdrawal of cash is from the regular bank account and cash in hand available in the books is sufficient enough to explain the source of alleged cash deposit. Ld.CIT(A) has given the relief without discussing the facts in detail. The facts placed before us clearly demonstrate the source of cash deposit of Rs.30,32,500/- made by the assessee through bank account. Under these given facts and circumstances, we are of the considered view that since the assessee has successfully explained the source of alleged cash deposit, no addition is called for. Impugned addition of Rs.15.00 lakh stands deleted. Effective grounds of appeal raised on merit are allowed. Since addition of Rs.15.00 lakh has been deleted, additional ground raised by the assessee is merely academic in nature and the same is dismissed as infructuous. 11. In the result, appeal of the assessee is allowed as per the terms indicated above. Order pronounced on this 16th day of June, 2025. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 16th June, 2025. Satish ITA No.193/PUN/2025 Santosh Shivram Potadar 6 आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब\u0014च, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune "