SEEMA RAHUL BHANDARI,NASHIK V. CIT(A), PUNE, PUNE

ITA 1513/PUN/2025

AI Insights

The case involves an appeal by Seema Rahul Bhandari against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs.14,83,500 to her income for the Assessment Year 2017-18. The addition was initially made by the Assessing Officer under section 144 of the Income Tax Act, 1961, citing unexplained cash deposits during the demonetization period. The assessee argued that these deposits were from her business activities, which were duly recorded and disclosed. The Tribunal found procedural lapses in the assessment process, particularly the lack of a notice under section 143(2), and ruled in favor of the assessee.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840384 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 13-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH HALADKAR THROUGH VIRTUAL
• Assessee Lawyers: PRATIK BHANDARI
• Keywords: Source of fund; Competent authority
• Section: 144

Judgement Text

" आयकर अपीलीय अधिकरण ”एस एम सी” न्यायपीठ पुणे में। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC” :: PUNE BEFORE DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपऩल सं. / ITA No.1513/PUN/2025 निर्धारण वषा / Assessment Year: 2017-18 Seema Rahul Bhandari, Shop No.3, Jadhav Market, M.G.Road, Opp.Tempo Stand, Nashik – 422001. V s Income Tax Officer, Ward-1(1), Nashik. PAN: AIVPB4651M Appellant/ Assessee Respondent /Revenue Assessee by Shri Pratik Bhandari Revenue by Shri Rajesh Haladkar (through virtual) Date of hearing 19/02/2026 Date of pronouncement 23/02/2026 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18 dated 12.07.2024 emanating from the Assessment Order passed under section 144 of the I.T.Act, dated 03.12.2019. Printed from counselvise.com ITA No.1513/PUN/2025 [A] 2 1.1 Submission of Assessee : “Respected Sir I hereby submit the following details regarding the nature, structure, and operational modalities of my business for your kind reference and consideration. I am engaged in the trading of computer peripherals, including but not limited to keyboards, mice, printers, scanners, monitors, USB drives, networking equipment, and related accessories. These products are essential for both personal and professional use and are subject to ongoing demand due to regular technological advancements My business is operated through a physical retail outlet located in a commercial electronics market that experiences considerable footfall. The outlet primarily caters to walk-in customers such as students, small businesses, office professionals, and local computer service providers. The majority of my sales are conducted in cash, as this is a common mode of payment in retail businesses involving small to medium-value transactions All such transactions are properly recorded through sales invoices and inventory records These are fully reflected in my books of accounts and have been duly disclosed in the Income Tax Returns filed for the relevant assessment years I respectfully submit the following clarification regarding the cash deposits reflected in my bank account and the corresponding Income Tax Return (ITR) filing in response to the scrutiny as well as the appeal proceedings initiated under the Income Tax Act.1961: I respectfully submit that during the scrutiny proceedings, no specific queries or notices were raised regarding the source or justification of the cash deposits in my bank account Had such inquiries been made. I would have readily and promptly provided all necessary supporting documents and explanations I had voluntarily filed my return of income in physical form, in accordance with the applicable norms at that time duly disclosing all sources of income, including the cash deposits in question. Printed from counselvise.com ITA No.1513/PUN/2025 [A] 3 The cash deposits currently under scrutiny are not disproportionate when viewed in the context of the scale and nature of my business operations. These deposits were fully accounted for in my books of accounts and were voluntarily disclosed in the original return filed well before the issuance of any inquiry or notice Had there been any intention to conceal income, I would not have proactively filed a return (physically submitted copy of the Income Tax Return is available) or declared the cash deposits. My actions clearly reflect transparency, good faith, and a genuine intent to comply with all statutory obligations. Explanation regarding unexplained money under section 69A I respectfully submit that the treatment of the disclosed cash deposits as \"unexplained money\" under Section 69A of the Income Tax Act is unjustified, particularly when these amounts have been duly recorded in my books of accounts and fully disclosed in my return of income. Section 69A is intended to address instances of concealment not to penalize taxpayers who have made timely, voluntary, and complete disclosures I am a mediocre businessman and is honestly discharging all my statutory dues without any delay since the inception of my business. I have also filed my income tax return accordingly and never ever invaded any tax liability. The tax amount ordered on me is impossible to pay, as my actual earnings were never been more than that which have been declared Hence, my prayer is to quash the demand and immune me from this pesky issue.” Delay condoned : 1.2 There is a delay of 256 days in filing appeal before this Tribunal. Assessee has filed condonation petition along with Affidavit. Substantial justice is more important than procedural Printed from counselvise.com ITA No.1513/PUN/2025 [A] 4 delays. In these facts, we are convinced that there is reasonable and sufficient cause for delay. Hence, Delay is condoned. Findings & Analysis : 2. We have heard both the parties and perused the records. In this case, Assessment Order has been passed for A.Y.2017-18 u/s.144 of the Act. In the assessment order, Assessing Officer has observed that Assessee had made cash deposits of Rs.14,83,500/- in Shri Samartha Sahakari Bank and The Nashik Merchant Co- operative Bank Limited, during the Demonetization Period. Assessing Officer observed in the assessment order that Assessee had filed Return of Income on 23.07.2019 and Assessing Officer(AO) treated it as non est return. Accordingly, Assessing Officer made addition of Rs.14,83,500/-. 3. Ld.CIT(A) confirmed the addition, though assessee had made an elaborate submission before ld.CIT(A), which has been reproduced by ld.CIT(A) in his order. In this case, Assessee is a Trader trading in Computer Peripherals like mouse, keyboard, usb drives etc. Assessee has filed copy of the license obtained under Shop and Establishment Act from the Competent Authority. The Printed from counselvise.com ITA No.1513/PUN/2025 [A] 5 said license is dated 21.02.2009. We have perused the copy of the bank statement filed by the assessee in the paper book and noted that along with the cash deposits, there were payments through banking channel to entities like New Track Computers Private Limited, Praveen Agencies, Rahul Traders etc. The Bank Statement does show assessee’s business as Computer Shop. Thus, it is very well established that assessee is trading in computer peripherals. The Bank Account in which there were cash deposits also have payments made to entities like New Track Computers Private Limited, which apparently proves that Assessee had purchased certain items from those entities. In these facts and circumstances of the case, the entire cash deposits which are pertaining to the business of the assessee cannot be added to the total income. Only the profit of the business can be taxed. In this case, in the Return of Income, Assessee had shown gross total income at Rs.3,23,649/-. It has been pleaded by the ld.AR for the Assessee that the Gross Total Income shown in the Return of Income includes profit element on the cash deposits of Rs.14,83,500/-. In these facts and circumstances of the case, we agree with the ld.AR and accordingly, we direct Assessing Officer to delete the addition of Rs.14,83,500/-. Printed from counselvise.com ITA No.1513/PUN/2025 [A] 6 4. In this case, ld.AR submitted that no notice u/s.143(2) was served on assessee. We have perused the assessment order and it does not mention service of notice u/s.143(2) of the Act. Ld.DR for the Revenue also could not prove that notice u/s.143(2) was served on assessee. In this case, in para 8 of the assessment order, Assessing Officer has mentioned that Return of Income for A.Y.2017-18 was filed on 23.07.2019. However, it is an incorrect fact. Ld.AR in the paper book filed copy of the Return of Income for A.Y.2017-18 filed on 28.07.2017. We had asked ld.DR for the Revenue that when Assessee had filed Return of Income on 28.07.2017, why AO has mentioned incorrect date and why notice u/s.143(2) was not served!. Ld.DR could not answer. On perusal of the Return of Income, it is observed that Return of Income was filed on 28.07.2017 for A.Y.2017-18 in ITR-V with ASK No.201710343044. The said return of income was filed manually. Since assessee has filed return of income u/s.139(1) of the Act, it was mandatory to serve notice u/s.143(2) of the Act, however, in this case, no notice u/s.143(2) has been served on assessee. Therefore, the Assessment Order is bad in law. Printed from counselvise.com ITA No.1513/PUN/2025 [A] 7 5. In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 23 February, 2026. Sd/- Sd/- VINAY BHAMORE Dr.DIPAK P. RIPOTE JUDICIAL MEMBER ACCOUNTANT MEMBER पपणे / Pune; ददिधंक / Dated : 23 Feb, 2025/ SGR आदेशकीप्रनिनलनपअग्रेनषि / Copy of the Order forwarded to : 1. अपऩलधर्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. नवभधगऩयप्रनिनिनर्, आयकर अपऩलऩय अनर्करण, “एस एम सऩ” बेंच, पपणे / DR, ITAT, “SMC” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधिपसधर / BY ORDER, / / TRUE COPY / / सहधयक रनिस्ट्रधर /Assistant Registrar आयकर अपऩलऩय अनर्करण, पपणे/ITAT, Pune. Printed from counselvise.com "